Pittsburgh Post-Gazette
March 17, 2011

By Joe Smydo, Pittsburgh Post-Gazette
Disregarding Mayor Luke Ravenstahl’s concerns about how to pay for it, Pittsburgh City Council gave preliminary approval Wednesday to a financial management system that supporters said will prevent confusion over how much money the city has for operating expenses and capital projects.

Council voted unanimously to approve an intergovernmental agreement with Allegheny County, a step that paves the way for the city to piggyback on an upgraded version of the county’s existing financial management system. “This is a management tool that will help us better manage every department in this city,” Controller Michael Lamb said.

However, some members said they voted for the merger to keep the project moving but will reserve the right to explore less costly alternatives. City solicitor Daniel Regan told council that approval of the intergovernmental agreement doesn’t mean the city must follow through with the project.

The mayor’s office has estimated startup costs at about $9 million. Council’s budget office has estimated costs of about $3.8 million in the first year of implementation, with total costs of about $5 million over five years.

Councilman Bill Peduto called for a series of special meetings next month to address the city’s short- and long-term financial challenges, including how to cover operating costs, the capital budget and implementation of the new financial management system. He also called for a forensic audit to establish a “baseline” for city finances before the new management system is implemented.

In recent weeks, council and the mayor’s office have disagreed over whether the city has $25 million for capital projects this year. Council says the money exists; Mr. Ravenstahl’s office says it doesn’t.

Supporters said the new system will provide a real-time look at city finances, preventing such confusion in the future. “We need to know what these numbers are, and the residents need to know what these numbers are,” said council President Darlene Harris, citing a “critical” need for the new system.

City finance director Scott Kunka has said that council used “every last dollar” for a pension bailout last year and didn’t appropriate new money for the capital budget this year. “Where the money went is well known,” he said.

At the behest of two state-appointed oversight boards — the Intergovernmental Cooperation Authority and the Act 47 recovery team — the city for years has explored merging financial management systems with the county.

Council last year authorized spending as much as $10 million on the project.

However, Mr. Ravenstahl has balked in recent weeks, saying the system is supposed to be funded with proceeds from the sale of the Municipal Courts Building to the state. The status of that deal is uncertain.

The city and state agreed on the $9 million deal in 2008, but the latter never provided the money. On Wednesday, Henry Sciortino, executive director of the Intergovernmental Cooperation Authority, said Gov. Tom Corbett is reviewing all capital expenditures, including the Municipal Courts Building deal, because of major state budget woes.

Frustrated council members talked about charging rent to court offices that use the building or to shutting it down until the state comes through with the $9 million.