Last week Pittsburghers were treated to an all-too-rare spectacle: Mayor Tom Murphy acting with prudence, restraint, and diplomacy.
So now we're probably really screwed.
In recent months, Murphy has struggled with both the city's financial crisis and with the Intergovernmental Cooperation Authority, a panel appointed by state legislators to help solve it. But instead, both Murphy and the ICA board have waited for the other to propose such tough solutions as job cuts in public safety or new taxing powers.
Last week, Murphy turned to the last resort for any politician: governing responsibly. He submitted a budget plan to the ICA compiled by another financial oversight group, whose efforts Murphy called a "thoughtful, well crafted plan" to cut costs and raise taxes on workers and previously exempt businesses. But unlike previous budgets Murphy has submitted -- which outraged ICA members by relying on tax revenue that didn't exist -- this one includes a fall-back if new taxes aren't passed: a 49 percent hike in the property tax over the next five years. Compared to Murphy's earlier phantom budgets, this one has generated little outcry so far. Maybe he ought to recklessly engage in responsible budgeting more often.
But Murphy took an even more serious step, agreeing to give the ICA control of any new taxes that are created. Under Murphy's proposal, he and city council would maintain control of current revenues; additional money -- from new taxes or increased revenues from old ones -- would be controlled by the ICA.
Such a gesture was just about inevitable; the ICA originally sought control over all city revenues. Then too, since any new tax must be approved by the state, and given Harrisburg's disdain for the flinty Murphy, the only way he was going to get new tax money was by renouncing some of his claim on it. Some critics, including myself, urged he either step down or renounce plans to run for re-election. But instead of abandoning his claim to the office, he's abandoning some of the office's power.
Unfortunately, Murphy's successors will be saddled with that choice. State law mandates that the ICA panel will be overseeing city finances for at least seven years, and some of the city's most pressing fiscal problems may get worse before it's over.
As City Controller Tom Flaherty observed at a June 21 press conference, Pittsburgh's "structural problem" is that "40 percent of its real-estate value [is] tax-exempt" because it is owned by universities, government agencies, hospitals, and other non-profits. And nobody, Flaherty says, "is addressing that problem at all." In a June 15 letter to the ICA, Murphy notes that Duquesne University just bought a student rental property for $22 million. The building will continue housing students, but because it's owned by a non-profit, local governments will have $700,000 less tax money to provide its residents with police protection, or to clean up after their bar crawls. Even if the city gains new taxes to plug such holes -- a big if -- that money will be under the ICA's control.
So it's no longer just our tax base that's being eroded; it's the control our elected officials have over it. Murphy's compromise will bring home an uncomfortable truth we've been able to avoid until now: Much of our budget will soon be controlled by officials we didn't elect and can't get rid of.
So far, there's been little outcry about the anti-democratic nature of the deal, no doubt partly because the people we did elect haven't covered themselves in glory. But the quiet could end soon. The ICA panel is made up of five white males, a fact that generated public outrage when they were appointed this spring. Efforts to add women and minorities to the board have gone nowhere in Harrisburg since then, but the situation will likely be even more intolerable when the board gets hold of the purse strings.
Of course, there's no guarantee the ICA will have any revenue to control. As Flaherty points out, among other things the current bailout plan proposes raising the city's once-a-year occupational privilege tax to nearly $150 -- even though legislators have previously opposed increases only a third that size. "I don't think the rest of this agreement is worth a bucket of spit," says Flaherty. Murphy, in other words, may have been forced to sell his birthright for a mess of pottage. And for not enough cash to fill the potholes.