Tuesday, October 29, 2013

Act 47: The REST of the Story


By Shawn Carter

Yesterday's treatise on fiscal restraint was a timely reminder to those of us who have followed, for whatever reason, the City as it traveled the road to fiscal sanity and a pretty decent primer for those of you who are just now beginning to pay attention to these sorts of things.



Throughout the year, ever since Mayor Luke Ravenstahl petitioned the Secretary of the Pennsylvania Department of Community and Economic Development for rescission of the City's distressed status, it has been the topic of several local discussions.

As a City employee myself who has concerns about the impact of said rescission upon certain upcoming negotiations, I understand that Act 47 limits the damage the City's bargaining units can do the City's fiscal situation through either negotiation or binding interest arbitration.

Some background:

Act 47 forced the City of Pittsburgh, largely as the Coordinators had to drag it, kicking and screaming, to get control of its fiscal house.  Employees were let go, budgets were trimmed, maintenance on infrastructure was deferred, just to name a few.  As some of you may know, the biggest drags on the City's budget were (and still are) payments to service the City's general obligation debt and pension bond debt and legacy costs to retired City employees (most of whom happen to be policemen or firefighters).

The problem, historically, with cost-containing measures with respect to police and fire contracts is that the panel of arbitrators who get to decide the award should the City and union come to an impasse was PRECLUDED from factoring in a municipality's ability to pay in deciding the question.

Yes, that's right!  A panel of arbitrators could decide that despite the fact that a municipality could not actually pay the wages being sought, the municipality could be forced to do so anyway under a binding arbitration award.

This is where Section 252 of Act 47 steps in to safeguard the treasury of a distressed municipality.

In relevant part, Act 47 states:

     (a) General rule. Except as provided in subsection (b), a collective bargaining agreement or arbitration settlement
executed after the adoption of a plan shall not in any manner violate, expand or diminish its provisions.

In OTHER words:  Once the City has adopted a Recovery Plan pursuant to Act 47 and said Plan is filed with the Commonwealth, no police or fire contract can exceed the fiscal limits imposed by the Plan, and no panel of arbitrators can force the City to do so through arbitration.

You can see why Act 47 is a constant target for destruction.

I listened during the primaries as various candidates argued either in favor of or in opposition to remaining a "distressed" municipality.  There are legitimate arguments on either side of it.  I've read an editorial in last week's Post-Gazette in which they cited as their primary reason for supporting the candidate they endorsed was that candidate's support for remaining in Act 47.

And, despite the fact that the proponents of remaining IN Act 47 have been beating the proponents of getting OUT of Act 47 over the head for being fiscally irresponsible, here's a question the "Let's stay in Act 47" crew, myself included, have not bothered to let slip:

Does it even MATTER at this point?

We'll start with this quote --

     "We hold that Section 252 of Act 47 does not impinge upon interest arbitration awards under the Policemen and Firemen Collective Bargaining Act" - 29 A.3d 773 (2011)



Yeah, and that pretty much is what happened to our protections under Act 47, too!!!  LMFAO!

The Supreme Court of Pennsylvania, in ruling in favor of the FOP and Firefighters Local Union No. 60 in their legal battle against the City of Scranton, Pa., another "distressed" municipality, basically said that Act 47's contract protections do not apply to contracts negotiated or awarded pursuant to Act 111 of 1968 - the Policemen and Firemen Collective Bargaining Act -- the very two unions the statute was designed to reign in.

So where does that leave us?  At present, up a creek without a paddle.  Because without legislative action by the General Assembly, and FAST, the City will be without this crucial protection come the beginning of contract negotiation season (which begins July 1, 2014).

More importantly, as the Department of Community and Economic Development hasn't given a determination one way or the other on the Mayor's request, the Act 47 Coordinators aren't even in the process of developing what would be the Second Amended Recovery Plan, which by the way, does usually take some time.

So, proponents of remaining IN Act 47 have failed to mention that any future benefit of retaining the declaration of distress is dependent upon a Governor and a Legislature, all Republican-controlled, voting to enact revisions to Act 47 during a season where 25 out of 50 state Senators, all 203 members of the House and his Honor, the Governor himself, all facing re-election, knowing that statewide, policemen and firefighters represent a powerful constituency and typically support Republican statewide candidates (outside of Pittsburgh and Philadelphia).

So, what are the chances that the Republican-controlled legislature can pull off this gambit between now and June 30, 2014?  Even if they do, simply changing the law won't be sufficient, the City must adopt another Amended Recovery Plan BEFORE June 30, 2014 for the City to benefit from such a gift from Harrisburg.

We wait with baited breath.                         

12 comments:

  1. I had forgotten this thorny issue. An important thing to note first is that the Supreme Court decision in 2011 only impacts the first point; the box around raises. Even if we can't take action until say the middle of next year (and we might as well stay in to see) Act 47 still enables us to take advantage of a lot of financial analysis and pushes recommendations at the table the City probably wouldn't seriously consider otherwise.

    I stumbled across this Sept. 2002 article and was like, "Whoa, this was a long time in coming. Imagine if we had a mayor interested in actually using Act 47, instead barely tolerating it as day-to-day adversary."

    (I should probably make the distinction here that with the City's bonded debt situation so vastly improved, the ICA is evincing some of a panel now without enough to do, and can probably ride off honorably into the sunset Mission Accomplished.)

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  2. Except that without the ICA, remaining in Act 47 allows the City to petition the Allegheny County Court of Common Pleas for a non-resident earned income tax.

    So, as long as we remain distressed, we remain under double oversight.

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    1. I bet that overarching issue of enabling levying new taxes (fyi a "commuter tax" is the more likely and fair attempt to capture from the stream of daylight-only residents) can be papered over by the State...

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  3. Not unless Section 6.1 of Act 222 of 2004, page 23, line 11, gets amended.

    http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2003&sessInd=0&billBody=H&billTyp=B&billNbr=0197&pn=4802

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    1. Like I said, papered over.

      Though I suppose the ICA could always stay in business, just maybe trimmed down to board member travel and petty cash for a recording secretary. Meet, rule against any or most attempts to pillage suburbanites, and get outta there.

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  4. BTW:

    "Act 47 forced the City of Pittsburgh, largely as the Coordinators had to drag it, kicking and screaming, to get control of its fiscal house. Employees were let go, budgets were trimmed, maintenance on infrastructure was deferred, just to name a few."

    The cutbacks actually happened under Mayor Murphy some months before Act 47 kicked into gear, right? As in, "We know the price, we'll do the job ourselves."

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  5. One of the biggest issues swaying me to think Pittsburgh should be done with Act 47 is just like Shawn said, our funding, our expansion, has a State, excuse me, a Commonwealth holding the purse strings. Pittsburgh has to sack up and have a frank discussion with the region and confront how much upkeep it costs to be "the Big City" for Pennsyltucky. We're going broke because we're trying to keep the place shiny for 9-5 business weekdays and Sports and Culture on the weekend, for people who don't live here. I'm honestly still kind of confused about what Act 47 does. It's full of Redactions and Amendments and clauses, about getting out of having to pay Creditors, but if the Creditor didn't agree to not getting paid...I don't know, the State would pay???... would love some input, because the more I read, the less I seem to get what is going on.

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    1. At the present moment, "the region" would like it better if the City went bankrupt and started liquidating and clawing back those pension disbursements, or privatizing, rather than engage meaningfully in any "frank discussions" about core upkeep. I bet the SEA could keep the lights on shiny at ballgames regardless.

      First things first, we have to show this region a City government worthy of investment.

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    2. All I am saying is when you make it so the career of a Police officer or Fire Fighter becomes a job that a person with a brain doesn't want to try doing, you end up with a crime ridden city that eventually burns down. There is a reason we pay people to maintain the peace and keep us safe, and when we start writing off those costs of pensions to spare pet projects and new development, especially when you do it by giving oversight to the State, you end up scrambling in a few years to find guys not in the more lucrative field of "Private Security". That's why the military is so full of expensive contractors...they don't pay good soldiers what they are worth, so they have to pay them 5 times as much in the end.

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    3. Darren - Paying for a professional, well-trained and well compensated public safety force is important to being able to maintain one, but I do not understand your concern re: "writing off those costs of pensions to spare pet projects and new development, especially when you do it by giving oversight to the State." We need all the policing we can afford, but right now, to be frank we cannot so much afford the policing we've got, or the anything else we've got.

      Maybe you think URA / HUD "economic development" money can be reprogrammed for that purpose? Unfortunately that's not the case.

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  6. hey nice post meh, You are one of the best writers I've seen of recent. I love your style of blogging here. this post reminds me of an equally interesting post that I read some time ago on Daniel Uyi's blog: What's Extraordinary About Gurus? .
    keep up the good work friend. I will be back to read more of your posts.

    Regards

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  7. Darn that spell checkOctober 30, 2013 at 10:04 AM

    "Bated", not "baited" breath, unless you're a fish that just took a hook.

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