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City Council votes to spend leftover funds despite recovery team's opposition
Wednesday, January 12, 2005

Pittsburgh City Council approved some small budget changes yesterday that were opposed by the Act 47 recovery team, which may also get it in hot water with the city's fiscal oversight board.

In related news, two councilmen also proposed changing the tax collection methods for the city's new payroll and occupation taxes.

Council voted 6-3 yesterday to shift $71,000 in funds left over from its budget last year into a 2005 account for council and the city clerk's office, to pay for stenography, consultants and other services. Council was budgeted to spend just $45,000 on those services this year.

The city's Act 47 economic recovery coordinators opposed the move, saying the city should hoard all its leftover money to build its fund balance, pay for capital expenses or meet other needs.

Co-coordinator Dean Kaplan said the recovery plan did not explicitly prohibit the transfer of funds, but that the city's policy should be to use funds from the previous year only to cover old obligations, not to pay for new needs.

The five-member oversight board has long criticized the Murphy administration and council methods of moving monies around in city budgets, and the board's executive director, Henry Sciortino, said the panel will be examining council's latest move.

"This is the kind of transfer or shift in revenues we need to be diligent about," Sciortino said.

Council members voting to approve the budget move said other city departments have been allowed to transfer similar monies around and council was unfairly being singled out for criticism. The bill now goes to Mayor Tom Murphy for approval.

"I hope [Murphy] vetoes, because I'll be the guy motioning to override the veto," Councilman Jim Motznik said.

Councilmen Alan Hertzberg, William Peduto and Gene Ricciardi voted against the budget move.

Motznik and Ricciardi introduced bills to change collection methods of the new payroll and occupation taxes, largely to placate restaurant owners that complained about them last week.

The Murphy administration wants businesses to base the first quarterly payment of the new 0.55 percent tax on their payrolls from October through December 2004. Restaurant owners complained that was unfair, in part because that is their biggest quarter of the year, so the councilmen proposed that the first 2005 payment be based on the first quarter of 2004 instead.

Murphy administration officials fear the plan will leave the city short $41 million budgeted from the payroll taxes for use through the year, since the payroll-rich fourth quarter 2004 payment would be deleted from their estimates.

Motznik and Ricciardi also said businesses should be given more leeway to judge which of their employees will be exempt from the new $52 occupation tax. Those making less than $12,000 yearly are supposed to be exempt from the new tax, paying the former $10 worker tax fee instead.

Currently, all workers will be required to pay the $52 annually, with low-income workers required to apply for a refund at the end of the year, using their federal tax returns to show they made less than $12,000. The latest council proposal, which is nonbinding, asks the Murphy administration to "revisit" that refund policy.

First published on January 12, 2005 at 12:00 am
Tim McNulty can be reached at tmcnulty@post-gazette.com or 412-263-1542.
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