Friday, February 24, 2006

Why the City of Pittsburgh May Always be an Act 47 Community

Recently, Pittsburgh City Councilwoman Twanda Carlisle called for the City of Pittsburgh to be removed from "distressed" status under Pennsylvania's Municipalities Financial Recovery Act of 1987, commonly known as "Act 47." News stories would lead you to believe that the debate is solely about whether the City of Pittsburgh has its fiscal house in order and whether it still needs oversight from an Act 47 Coordinator appointed by the state.

Most people don't realize, however, that Act 47 not only provides for a process of oversight, but it also legislatively overrides another Pennsylvania law called Act 111. Act 111 of 1968 - the Police & Firefighter Collective Bargaining Law - was passed to prohibit strikes by police and firemen. In place of strikes, the law provides for a binding arbitration process., under which a three-person board is appointed to resolve disputes between municipalities and their police & fire unions. According to the law, the determination of the arbitration board is a mandate to the Mayor and City Council, with no right of appeal.

As a result, under Act 111, the largest single group of operating costs in the City budget – police and fire services – is ultimately controlled by an unelected arbitration board, not by the elected representatives of the City. Over one-third of the City’s expenditures are for public safety costs, and so it is impossible for the City to solve its fiscal problems if it cannot control these costs. Yet under Act 111, an arbitration board can force the City to accept a collective bargaining agreement that it cannot afford.

Although other states have laws that provide for arbitration in return for a prohibition on strikes, those laws have limits or criteria designed to prevent arbitrators from making "budget-busting" decisions. Pennsylvania's law has no such limits or criteria - arbitration boards can and do legally make awards that go far beyond a municipality's ability to pay. Act 111 is not just a problem for the City of Pittsburgh, but for any Pennsylvania municipality with a police or fire union. (The Allegheny Institute for Public Policy issued a detailed report a year ago on the problems with Act 111 and the comparisons with other states, called Addressing the Imbalance in Pennsylvania's Act 111.)

Act 47 solves the problem with Act 111 through a single sentence. Section 252 of Act 47 says "A collective bargaining agreement or arbitration settlement executed after the adoption of a [financial recovery] plan shall not in any manner violate, expand or diminish its provisions." In other words, in a community that has been declared "distressed" under Act 47, if the financial recovery plan says the City can only spend so much on police and fire services, then an arbitration board cannot make an award which goes beyond that, and if it does, the City is not mandated to follow it.

Even if the City of Pittsburgh is able to achieve a balanced budget, as soon as it is removed from the protection of Act 47, Act 111 will come back into force, and arbitration boards will once again be able to mandate salary increases, benefit increases, or work rule changes that could send the City back into a deficit, thereby justifying Act 47 distressed status once again. So calls for removing the City from Act 47 oversight may well be thinly disguised efforts to bring Act 111 back into effect. There is no sense in removing the City from Act 47 if Act 111 will send it back there once again.

The solution? Amend Act 111 to add the Section 252 sentence from Act 47 and make it apply to all municipalities, all the time. Alternatively, modify Act 47 to allow municipalities that have been distressed to enter a "maintenance" status, whereby state oversight is no longer needed, but Section 252 still applies.

1 Comments:

Anonymous Bethany Kriznik said...

Mr. Miller,
I am a native of the North Hills (McCandless) and currently a graduate student in Public Policy and Administration at the London School of Economics. I'm beginning research for my dissertation and am very interested in the financial situation of the City of Pittsburgh, particularly in regard to the Act 47 oversight board. I don't have a fully developed topic yet, but found your blog and was wondering if you'd be open to communicating with me and sharing some of your knowledge. My email is B.L.Kriznik@lse.ac.uk.

Thanks!

10:10 AM  

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