• Photo by Alex Zimmerman
• Corbett (left) and Peduto at this afternoon's press conference

In a joint press conference this afternoon, Mayor Bill Peduto and Gov. Tom Corbett announced the state would continue to oversee the city's finances under Act 47.

"While Pittsburgh continues to take considerable steps in its efforts in stabilizing the city's financial position, many conditions that originally lead to [a] distressed determination have not been alleviated," Corbett said.

He added that legacy costs — like the city's pension obligations — "remain a concern" and continue to "jeopardize the city's ability to maintain a sustainable budget."

The city has been in Act 47 status since late 2003; Peduto has long supported remaining in oversight until the city's finances are under control. (One of his first acts as mayor was to send Corbett a letter asking that the city remain under Act 47.)

"We were looking at a $90 million structural deficit of a $400 million budget, and there was no solution being provided," Peduto said. "The tools that come with Act 47 that will allow us to finally solve long term problems that we've only addressed, but not really gotten to the core [of]."

The intergovernmental Cooperation Authority, a separate state body created in 2004 that also oversees the city, signaled its support for continued Act 47 status in a press release.

The announcement this afternoon will almost certainly rankle police and firefighters' unions, whose contracts are up later this year. Act 47 can rein in salary increases during contract disputes, because it requires arbitrators to take into account the city's overall financial health when setting a pay rate.

In a response to Peduto's Jan. 7 letter to Corbett, Joseph King, president of the firefighters' union wrote that the only reason Peduto wants to keep the city under Act 47 status is to "wrongfully deny the City's first responders (firefighters and police) a meaningful right to engage in the collective bargaining process that is guaranteed by Act 111 and the Pennsylvania Constitution."

Peduto responded this afternoon by arguing that the city's budget is a zero-sum game. Money spent in one place must "come from the budget to solve our streets [...] or take care of the basic necessities," he said.

Corbett's decision means the city will have to create another five-year recovery plan, since the last plan was created in 2009.

Peduto noted, however, that the city may not have to be under Act 47 "in just a few years. It's an exit strategy."