– With its duties fulfilled, and now expiring as of this week, the Intergovernmental Cooperation Authority (ICA) was recognized today by Speaker of the House of Representatives Mike Turzai (R-Allegheny) for the integral role it played in leading Pittsburgh out of Act 47 distressed status.
“In 2004, chronic overspending, mounting debt and underfunded pension liabilities threatened to bankrupt Pittsburgh,” Turzai explained. “As city officials lobbied state government for a bailout, it became clear that an independent authority composed of financial and management experts was needed to guide the city’s recovery efforts.
“I prepared oversight legislation and composed a detailed report on the city’s financial state, in coordination with then-Sen. Jane Orie (R-Allegheny). Now, 15 years later, we see the ICA worked, and Pittsburgh is on much better financial footing.”
Turzai authored Act 11 of 2004
, which established the Intergovernmental Cooperation Authority Act for Cities of the Second Class, thereby providing for financial and budgetary oversight for Pittsburgh. Act 11
worked in conjunction with Act 47 of 1987
, the Municipalities Financial Recovery Act, which helps municipalities in economic and fiscal distress resulting from structural changes in their local economies or from managerial deficiencies.
The city sought Act 47 status after legislation was moving through both chambers. Turzai, Orie and then-Sen. Jack Wagner (D-Allegheny) introduced legislation modeled after Act 11 of 2004, which Turzai originally sponsored as House Bill 2006.
The ICA board and Act 47 put constraints on city overspending and overborrowing. There were also demands placed on Pittsburgh to pay down its significant debt. The ICA pushed the city to recognize retiree health care benefits, which were previously unrecognized on its books and funded on a pay-as-you-go basis. Creation of the Other Post-Employment Benefits (OPEB) Trust Fund began to put a dent in this liability, and legacy workers’ compensation liabilities were also significantly reduced.
Turzai cautions that termination of the ICA does not mean the city is on fully healthy financial footing, citing the current mere 61% funding of pensions. While this marks significant improvement over the 34% funded ratio of 2010, a tremendous liability with which the city must deal still exists.
Success of the ICA in Pittsburgh led Turzai to design a similar authority for Cities of the Third Class in Act 124 of 2018
. The City of Harrisburg is currently operating under such an authority.
Attached is a copy
of Pittsburgh’s financial status in a report dated Oct. 19, 2004, in letter form to ICA members, which was signed by Rep. Turzai and his fellow Allegheny County Republican legislators.
Representative Mike Turzai
Speaker of the House
Pennsylvania House of Representatives
Media Contact: Christine Goldbeck
717.787.7977 (office) 570.205.0736 (cell)