Thursday, February 5, 2009

City Passed-Out During Financial Summit

Right. What's all this, then?

The mechanics of a debt reduction agreement are the subject of talks between the city Law Department and the state-picked Intergovernmental Cooperation Authority. Representatives of both offices were invited to the 10 a.m. meeting, but didn't attend.

Nor did the state's Act 47 recovery team, which works with the ICA to monitor city finances, and drafted an initial debt reduction pact that has been scrapped.

City Solicitor George Specter and ICA Executive Director Henry Sciortino said, separately, that they didn't attend because until the debt agreement is done, there's nothing to talk about.

Councilwoman Darlene Harris -- who joined Mr. Dowd and Councilwoman Tonya Payne at the meeting that was skipped by the other five council members -- suggested that it may not be the best time to lock up money. "I believe that [officials] are considering what could happen with the economy the way it is now. That's why I think it's smart that that money is just sitting there right now." (P-G, Rich Lord)

So many places to go with this.

Number one, this meeting of the Council was originally scheduled for Monday, Jan. 26. It was rescheduled during the week of Jan. 19th to Monday, Feb. 2nd at 10:00 AM -- the morning immediately following the Superbowl.

Suspicious minds might wonder whether Council President Shields, knowing the meeting was called by Councilman Dowd to address "his" issues and knowing Dowd to be less of a Steelers fanatic, rescheduled it to an impossible time in order to thwart his political rival.

If that was the case, that would be hilarious -- too funny to likely be true. Mr. Shields is ordinarily more protective of the Council's authority in decision making.

Of greater importance than the politics is the actual issue of what Pittsburgh does with that hard-saved money.

Financial uncertainty "is a part of the equation," Mr. Sciortino said. "We all have the same fears and concerns about the economy. ... We're not going to disregard what is certainly an unprecedented set of circumstances in our world."

Financial uncertainty exists at all times, but I wonder what is the precise reason for keeping liquid assets as liquid as possible during a major recession? Financial advisers rarely recommend money "just sit there", to my knowledge. Quite literally, the City of Pittsburgh gave $45.3 million to an account at the Controller's office almost under the table, under management of the ICA without any actual instructions.

Although a controversial "draft defeasement agreement" was officially rejected, it appears as though it is being respected on an ad-hoc, month-to-month basis. I wonder if a new agreement is even being worked on or not.

It is the ICA's charge to reduce Pittsburgh's debt. If our previous lengthy blog post on ICA director Henry Sciortino did not give you an inkling of some of the issues involved in this business, then read this more interesting article:

Government is big business, and each year contractors, boards and agencies compete for a piece of it. But there are few instances so conspicuous and unseemly as the nexus between politics and business as there is with bond issues and municipal finance. Bond selling and underwriting requires a degree of comfort, expertise and nuance that puts it at odds with public bidding, and most are dealt with through professional service agreements... (Birmingham Weekly, Kyle Whitmore)

Another recent tale of woe involving bond deals in both New Mexico and Pennsylvania can be found here. The PA Governor appoints the chair of the ICA board.

My point is this: there seems to be a bug going around. Recessionary times are tough, but that's all the more reason to make sure Pittsburgh's hard-earned savings are being used for maximum Pittsburgh results. What happened to occur on Monday was not something that inspires public confidence -- I hope it was an aberration. I'm not even sure whether three council members are sufficient to hold an official post-agenda session.


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  2. Shields or Dowd? Who should run? Who can win? Who would present the greater challenge to the mayor? Take the poll. Choose one or the other.

  3. Glad I managed to focus you all on the finances instead of the politics!

  4. Who wrote the initial five year plan? Which is to ask, what was the role of Eckert Seamans and Public Financial Management?

    So, now is Council writing the next five year plan? How does the State feel about that? Can Council simply order the State to increase its direct yearly grants to Pittsburgh, to address our debt and pension obligations? Does Dowd’s threatened actions, to postpone Council meetings until its clear what’s happening with the $45.3 million, threaten those talks on the next five year plan? What is the role of the Mayor’s five year plan? Is he still projecting deficits somewhere out there? What revenue growth rate does he see?

  5. City Solicitor George Specter and ICA Executive Director Henry Sciortino said, separately, that they didn't attend because until the debt agreement is done, there's nothing to talk about.

    These guys have it all

    Now why would they want to put all the pieces in place before discussing in with those we elected to represent us.

    Think about it.