City Finance Update III

Pittsburgh’s Financial Future

April 19, 2011 Post AgendaCouncilman William Peduto, Finance Chair

Recap of Finance Post Agendas - 2011

Operating Budget on target for 2011 Capital Budget has deficiencies due to:

Slow State and Federal Reimbursements Unexecuted sale of the Courts Building to State Need to clear old encumbrances and projects May need to use a small portion of the City’s $40M “rainy day”

fund balance to fund all of 2011 Capital Plan Best Practice Review

City does some things well Needs improvement on issues such as communication Need for ERP Financial System

Recap of Finance Post Agendas 2 – 2012-2017

Operating and Capital 2012-2017 City has $20-$30m annual capital needs Biding Time for debt cliff Must ask state to enable the City to help itself – Cost

reduction initiatives, pension reform, shared services with agencies and new revenue abilities

Appropriate restructuring of debt to meet needs Continued efficiencies in the operating budget,

development of new revenue sources may allow for dedication of excess operating dollars to PAYGO

YEAR MMOParking Tax

Revenue DedicationAdditional (MMO

+)

Employee Contributio

nsTotal Revenue Into

Fund

2010

$ 45,000,000 $ 0

$ 48,000,000

$ 9,200,000

$ 102,200,000

2011

$ 46,400,000

$ 13,376,000

$ 3,600,000

$ 9,591,713

$ 72,967,713

2012

$ 48,720,000

$ 13,376,000

$ 3,600,000

$ 9,916,846

$ 75,612,846

2013

$ 48,720,000

$ 13,376,000

$ 3,600,000

$ 10,259,332

$ 75,955,332

2014

$ 51,156,000

$ 13,376,000

$ 3,600,000

$ 10,566,287

$ 78,698,287

2015

$ 51,156,000

$ 13,376,000

$ 3,600,000

$ 10,863,609

$ 78,995,609

2016-2017

$ 53,413,800

$ 13,376,000

$ 3,600,000

$ 11,153,176

$ 81,542,976

*2018-2041

$ 56,084,490

$ 26,752,000

$ 3,600,000

$ 11,718,627

$ 98,155,117

Total to Pension Funding 2010-2041 $3.4 Billion*Assumes higher MMO increases biennially, Employee Contributions annually, Additional Contribution increases to $5 Million in 2021 – assumption are estimates and are not certified by an actuary

Pittsburgh Pension Funding Breakdown

Pension & debt 2011-2025

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

$180,000,000

Pension MMO+Dedication+ $63,37 $67,09 $67,09 $69,53 $69,53 $71,78 $73,92 $87,83 $90,07 $92,41 $94,83 $97,36 $99,98 $102,7 $105,5

DEBT $87,65 $87,68 $87,69 $87,70 $87,69 $87,70 $87,42 $68,82 $30,66 $30,66 $30,67 $28,79 $28,79 $28,79 $-

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Debt Service 2011-2025$87,700,000 $68,900,000

$30,700,000$28,800,000

$-$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Extra Dollars

Debt Payment

Debt Cliff – Available Funds 2018-2025

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

Additonal $ $229,637 $18,830,657 $56,991,378 $56,986,337 $56,984,042 $58,862,527 $58,859,687 $58,860,697 $87,655,572

2017 2018 2019 2020 2021 2022 2023 2024 2025

Debt Cliff Minus Additional Pension Contribution 2017-2025

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

$100,000,000

Debt available $229,637 $18,830,657 $56,991,378 $56,986,337 $56,984,042 $58,862,527 $58,859,687 $58,860,697 $87,655,572

Additional Pension $- $13,376,000 $13,376,000 $13,376,000 $13,376,000 $13,376,000 $13,376,000 $13,376,000 $13,376,000

Available funds $229,637 $5,454,657 $43,615,378 $43,610,337 $43,608,042 $45,486,527 $45,483,687 $45,484,697 $74,279,572

2017 2018 2019 2020 2021 2022 2023 2024 2025

2011 - 2017 Budgets2011 - 2017 Budgets

  2011 2012 2013 2014 2015 2016 2017

REVENUES 443,033,600

463,761,100

473,746,100

481,004,000

490,748,000

496,882,350

503,093,379

EXPENDITURES 450,087,572

466,411,213

470,320,829

476,510,774

485,646,706

491,627,790

499,869,750

OPERATING RESULT 5,022,028

(2,650,113)

3,425,271

4,493,226

5,101,294

5,254,560

3,223,630

BEGINNING FUND BALANCE 44,795,746

37,741,774

35,091,661

38,516,932

43,010,158

48,111,452

53,366,012

Transfer to PAYGO - - - - - - -

Reserve Fund Balance Transfer (12,076,000) - - - -    

ENDING FUND BALANCE 37,741,774

35,091,661

38,516,932

43,010,158

48,111,452

53,366,012

56,589,642

Actions needed for Pittsburgh’s Future

Immediate Action Needed in 2011 Meet and provide ongoing discussions to achieve a

$9.3m PILOT with the PPA or provide viable alternatives that do not include mass service reductions or property tax increases

Administration must meet with Council and provide the necessary legal and financial support to avert State takeover of the pension

Eliminate “phantom” capital line items to assure needed 2011 Funding

Meet and provide ongoing discussions for Code and Charter changes necessary for implementation of the Enterprise Resource Planning (ERP) system

Pursue budget and accounting reform ordinances

Actions needed for Pittsburgh’s Future - 2011

Capital budget.

Immediately work to reconcile capital budget funds and projects for 2011

Analysis with Act 47 and oversight board of various long-term funding scenarios.

Action on Council-Controller parking plan to avert state takeover of pension system

Cost controls. We have done a good job of keeping down costs, but we need to create more efficiencies.

Revenue enhancements. Look for new revenue without increasing real estate or earned income taxes.

State action. Changes in State law for pensions, non-profit payments, reassessment, pursue PLCM Core Communities in Crisis recommendations, etc..

Continued Commitment from Act 47 and ICA to assure budget and five year plan is implemented

Actions Needed for Pittsburgh’s Future 2012-2017

Conversion to ERP system Fully implemented Council-Controller plan to

secure pension system Restructure/issuance of new debt for 6 year

capital program Structure new debt to meet additional pension

payments and debt cliff Pursue further efficiencies in operating budget Pursue state approval of new options for

revenues Increase enforcement of tax fraud for all

revenue sources Remain compliant with 5 year plan through

2014

Actions Needed for Pittsburgh’s Future 2018-2025

Lobby to end state oversight in 2015 Or create final 5 year plan 2015-2020 Increase pension payments additional

$13,376,000 starting in year 2018 Utilize debt cliff for additional pension

payments, capital budget & issuance of new debt

Continue to hold the line on operating expenses

Provide Pittsburgh with a long term, sustainable operating and capital budget through 2025