Pittsburgh City Councilman Patrick Dowd today called City Controller Michael Lamb to the table to explain a disbursement of $51 million in the proposed 2009 city budget. The money, as described in the budget, would be put into a “restricted fund in the nature of an irrevocable trust” to reduce outstanding city debt. Dowd questioned how allocating money to an account would necessarily eliminate the city’s bond obligations. He likened the situation to a mortgage. Dowd says that a person putting money into a savings account does not make the mortgage obligations disappear, but that the only way to fulfill mortgage obligations is to pay them. The councilman says that the Mayor and ICA intend to allocate the funds to a debt service repayment account in order to claim they have a balanced Five-Year Financial Forecast for the city. His concern is that the debt will not actually be paid.
Dowd’s motion to withhold a tentative vote during the budget hearing, and proposed amendment to the budget bill during the Finance and Law Committee meeting failed to pass each by votes of 5-2. The proposed 2009 Capital Budget passed a preliminary vote also by a count of 5-2.
Councilman Rev. Ricky Burgess later offered bill 2008-0962 which would require an amended Act 47 Financial Recovery Plan for the city be submitted to council by March 25, 2009. He says the plan needs to be reconsidered in light of the current financial crisis. Burgess says the revised plan will offer the forum for the debt repayment account to be discussed.
The budget will go up for final approval next week.