Wednesday, June 3, 2009

Peduto: New Act 47 Will Raise Taxes, Fix Little

Pittsburghers might easily see hikes in their property, wage and real estate transfer taxes under the new Act 47 Five-Year Plan if it is approved -- and even then the City would merely be financially "treading water" while "our infrastructure continues to crumble".

That is one message Councilman Bill Peduto imparted to the Comet yesterday during a 40-minute interview that covered his proposed stimulus oversight legislation, the new Act 47 Plan and the city's unfolding pensions crisis.

Peduto ran for Mayor in 2005, finishing second behind the late mayor Bob O'Connor and ahead of present City Controller Michael Lamb. Thereafter Peduto became a sharp critic of Mayor Ravenstahl, who succeeded Mayor O'Connor. Peduto briefly ran an insurgent campaign against Ravenstahl in the 2007 Special Election before withdrawing from that race, citing the new Mayor's popularity and a lack of interest in the city at that time for divisive politics.

When Peduto's close ally Doug Shields was reelected unanimously as Council President in early 2008, he appointed Mr. Peduto as that body's Finance Chair, in what many considered to be a provocative maneuver.

The following is an unedited 9-minute excerpt from our interview with Peduto.


0:39 - Pittsburgh's three pension funds, Peduto says, are "sort of pooled together" through the Comprehensive Municipal Pension Trust Fund, which mitigates some of the immediate danger.

0:45 - However, he says the pensions will need "an infusion of cash" in the next two years.

1:48 - Describes "the frustrating part" -- when "there's no money".

3:30 - "We could probably squeeze out" five years under the proposed Act 47 plan.

4:14 - Mr. Peduto's own financial plan, on the desk before him, he describes as containing the "structural changes" he kept talking about continually. (PDF) These include such measures as a statewide single-payer health care system for municipal employees, altering the state sales tax such that a percentage of the proceeds remains in the locality from which it is generated, and specific intergovernmental service consolidations. All that would be in addition to locking-in the commuter and non-profit payroll tax opportunities alluded to in the Act 47 Plan. "This solves a 20 year problem for the next 20 years."

5:10 - Predicts that even if the State Legislature fails to come through with any changes or support, Mayor Ravenstahl will eventually "muster five votes" in support of the present Act 47 5-Year Plan. "The Governor will be calling."

6:45 - Predicts that passage of the plan will result in "keeping our heads above the water" as "infrastructure crumbles further".

8:00 - Points that Pittsburgh's problem is common to Erie, Meadville, Wilkes-Barre, Johnstown, York, Washington, Duquesne, Braddock and others -- which will "all die" if nothing gets done -- and what that will mean for him.


  1. Chris Briem said some things about the three municipal pensions.

    It seems clear to me that the bulk of any new taxes relatec to the amended Act 47 plan will be on Pittsburgh residents. An increase in the EMS tax will of course affect suburnites who work in the City as well as City residents who work in our orders. I will say that I personally know some companies do not collect the $52 tax, and I wonder if more will conveniently forget to collect that tax if it goes up. I don't know what percentage of local employers don't pay the tax, but I know it is not zero. FWIW.

  2. I want Peduto as my benevolent dictator; the governorship just wouldn't do him justice.