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Editorial: Unnecessary advice

Council doesn't need another financial adviser

Wednesday, December 20, 2000

Pittsburgh City Council should reconsider its initial decision to spend $36,000 on a two-year contract with Greg Zappala as its "first financial adviser." Mr. Zappala, the son of state Supreme Court Justice Stephen A. Zappala Sr., is president of RRZ Public Markets Inc., a municipal finance company that has handled $40 billion of financial work for school districts, municipalities and authorities throughout Pennsylvania.

The proposed contract, which is scheduled for a vote today, calls for Mr. Zappala to advise council on a broad variety of matters, including the $359 million operating budget, its $900 million debt and the city's pension fund. But there are already enough cooks in the city's fiscal kitchen.

Council now employs someone whose task, at least in general terms, is to advise it on budget matters and fiscal operations. That staff member, Scott Kunka, says he doesn't have the kind of day-to-day understanding of the bond market and other investment-related matters that Mr. Zappala possesses.

Others who support hiring Mr. Zappala say Mr. Kunka is mainly a "numbers cruncher" for council in determining what its response should be to the mayor's annual budget requests. They also say that just as the mayor has somebody to advise him on investment matters - PNC Capital Markets - so, too, should council.

This sort of symmetry strikes us as unnecessary. We find it hard to believe, given Mr. Kunka's background and experience, that he wouldn't be able to broaden his portfolio sufficiently to advise council on investment-related matters. More to the point, we see no evidence that this aspect of the Murphy administration's management of city finances cries out for a new level of scrutiny by council. Only recently two agencies improved the ratings for city bonds.

Finally, council already has demonstrated that in one area, at least, it had no need for Mr. Zappala's expertise. On the assumption that council would do away with the mayor's $60 million Pittsburgh Development Fund, Mr. Zappala's firm came up with an idea to establish an escrow account, financed by a new bond issue, that would pay off the 1994 bond issue that created the development fund. However, council voted 7-1 last week not to abolish the fund, and rightly so.

We don't question Mr. Zappala's qualifications. We very much question the utility of council creating a sort of parallel universe in this area. Council should thank Mr. Zappala for the advice he already has provided, shelve the contract and save the money.

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