Auditor General Wants To Disband Oversight Group And Move Gaming Revenue Into Pensions

Nov 10, 2015

 

State Auditor General Eugene DePasquale said he wants to disband the Intergovernmental Cooperation Authority.
Credit Erika Beras / 90.5 WESA

The state auditor general said Tuesday that he wants to disband a financial oversight group that's no longer needed in order to funnel funds into city pensions. 

Auditor General Eugene DePasquale said during a press conference that after looking at the Pittsburgh Intergovernmental Cooperation Authority’s operating budget, he recommends the ICA be dissolved – with the caveat that the city applies all state gaming revenue towards pension costs.

“My recommendation is that the City of Pittsburgh commit to the General Assembly and to the governor that all future gaming monies would be used to pay down the unfunded pension liability for police, firefighters and non-uniformed personnel,” he said.

The ICA is a financial oversight group that was formed by the state legislature in 2004, a time of extreme financial distress in Pittsburgh. At the time, hundreds of city employees had been laid-off, services were impacted and the city’s credit rating had been downgraded.

The ICA and Mayor Bill Peduto have also been in disagreement over the organization's authority to withhold $12.8 million in state gambling tax revenue from the city. Peduto had asked DePasquale to review the ICA.

Because Pittsburgh is in better financial shape now, DePasquale said efforts could be better put elsewhere. If that money is applied towards pensions, he said he would continue auditing that money to ensure it's spent on what it is designated for.

“The law that was passed by the General Assembly in 2004 did not intend the ICA to be a permanent agency,” said DePasquale.

DePasquale issued seven recommendations for the ICA and five for the City of Pittsburgh as to how they can better work so they can better work together.

He said his recommendations are based on Pittsburgh’s more recent financially-sound budgets. DePasquale said there are flaws in the law that created the ICA – for one, it doesn’t clearly explain what a balanced budget is – but that’s what would be the basis for the dissolution of the ICA.

According to a report DePasquale released Tuesday, state law permits the ICA be terminated once a city has become financially sound the way Pittsburgh has in the last few years.

ICA Chairman Nick Varischetti also issued a statement praising the work the group has done over the last decade, crediting the organization for reforming the city’s outdated tax structure, modernizing business practices, checking its outsized debt load and addressing unfunded pensions.

“Since 2009, the ICA has dedicated nearly $35 million, or more than 58 percent of the total gaming proceeds under the ICA's exclusive control, to bolster Pittsburgh's ailing pension,” Varischetti said.

“To be certain, the ICA has been proud to have been an integral part of Pittsburgh's fiscal turnaround.”

The report said the ICA has legal authority over state gambling revenue, which the Peduto administration has opposed.