Tuesday, February 12, 2008

Things I Find Interesting - Part III

So, there's this big article in the electronic version of the PG, hidden right after the jump outlining an impending crisis in the finances of Allegheny County.

As the state prospers under Mr. Rendell's surplus projections and the city recovers from financial despair, the economic forecast and health of the county's finances is an increasingly debatable issue among politicians and local government experts.

Some say the county with its ongoing deficits is steadily sliding into a major financial crisis, much like Pittsburgh did a few years ago, because its costs of operation are either going up or remain unchanged, and yet it continues with little or no new revenue...

Mr. Onorato cut 200 jobs to balance the 2008 budget, the second time in five years that he has eliminated jobs to cut costs...

In years past, county leaders have relied on annual or periodic updates in property assessments to provide additional revenue without increasing tax millage. Mr. Onorato calls that a "back-door tax increase" and refuses to follow that path...

Those choices have limited the amount of additional revenue the county has available year after year.

In challenging his critics to embrace a new era when the county does not rely solely on property tax increases for new revenue, Mr. Onorato continues to weather a political firestorm over his push for the two new taxes and the $19.9 million payment the county received from state gambling revenues. The gambling money was supposed to be for airport debts and Mr. Onorato used it for the first payment on $42 million the county spent to help build the passenger terminal at Pittsburgh International Airport.
And so on. For the record, Mr. Briem of Pitt doesn't seem as alarmist as his colleague Mr. Strauss over at CMU.

However, the dirty little, unsubstantiated secret, whispered and murmured in the back of County Offices is that Allegheny County is, effectively, broke, but some fancy footwork (I dare not say "cooked books") has made it seem that they're operating in the black. The rumor continues on to say that the breadth of the problem is even worse than the City's own financial crisis, but they've been very good at concealing it.

From my own personal experience, I've heard many criticisms of County Government including "they hire too many consultants," "they have too much middle management," "they provide services inefficiently or ineffectively," and "the guy in charge is a third rate CPA who wants to be governor." I cannot speak for the veracity or validity of such claims, but considering how many people have independently voiced them to me, I cannot easily dismiss the sneaking suspicion that something is wrong in the County Office of Budget & Finance.

Above all, I find that interesting.


Anonymous said...

Here's a little something to chew on...$50 million. That's the size of the hole in the county's budget from last year. They, er, re-appropriated (so THAT's what it's called!) that much money last year from Alcosan (which is broke), the Airport Authority (which is also broke), Port Authority (which is also broke) and CCAC (which is also broke). Ask any fellow bureaucrat and you will hear all kinds of crazy stories about one-time reverse appropriations that took place throughout those agencies and the county last year. And the much vaunted fund balance still ended up running dry. With all of that, they still needed the drink/rental car tax and taking the $19.9 million from the airport at the end of the year. The TRIB actually reported this (http://www.pittsburghlive.com/x/pittsburghtrib/search/s_502452.html) but no one really reads the trib so it died. The new parlor game is guessing how big next year's budget hole is going to be. I have heard $100 million get tossed out to knowing head nods. When you add the numbers up, next year is going to be bad. Real bad.

Anonymous said...

Bring back Larry Dunn!

Anonymous said...

'they have too much middle management'

you must have worked here at one time eh? and we are supposedly the 'professional' portion of the bureaucracy. not sure this management style would fly in the private sector.

anyways, i know of at least one $10 million 'one-time appropriation.' odd how that one missed press coverage. hmmm...

Bram Reichbaum said...

Anonymous #1 your link isn't working.

Anonymous said...

Here it is. http://www.pittsburghlive.com/x/pittsburghtrib/search/s_502452.html

Anonymous said...

ARRRRRGGGGGHHHH! Here it is (I hope)


Anonymous said...

Whatever. ADB, pardon the full length article.

Controller Mark Patrick Flaherty on Thursday said Allegheny County needs to stop using one-time cash fixes to plug holes in its budget.
County officials last year used more than $31 million in "singular sources of revenue" to fund operating deficits, said Flaherty during the release of his 2006 financial report. The sources of money included $8 million from restructuring a Port Authority of Allegheny County bond and $10 million for decertifying beds at the John J. Kane Regional Centers.

Those deficits should concern a county that only has about $15 million, roughly 3 percent of its general service budget, in a "rainy day" fund, he said.

"The financial health of the county is stable," Flaherty said. "But we're incurring some financial constraints that need to be addressed."
Flaherty said his upcoming audit of the Port Authority of Allegheny County could identify ways to save more money this year. Changes at the Kane hospitals and to the county jail's inmate health care plan could help the budget. The county needs to determine how to support an underfunded 911 system and growing health care costs, he said.
The county's general fund balance increased by $80,000 to $18.2 million in 2006 and, for the third consecutive year, the county's debt dropped. Federal financial support dropped by $23 million in 2006, though state revenue went up $31 million.

Chief Executive Dan Onorato said some credit for the county's financial health belonged to his consolidation and cost-reduction efforts.

"(Flaherty's) report confirms that the fiscal policies I've implemented as chief executive are paying off," Onorato said. "We'll continue to grow our fund balance and live within our means."

Me: I love that quote at the end from the Tax Man. Here we sit 10 months later and there are two new taxes and NO fund balance. Check out the numbers, though. In 2006, $31 million in takebacks, and a NET $8 million increase from the state and feds and a million out of the fund balance for a total of $40 million. This year, the fund balance dropped to zero AND they swiped $20 mil from the airport (Happy New Year!) AND $40 million in additional one time takebacks from CCAC and others and the $25 million drink tax fiasco. So, to sum it up, the Tax Man blew through $40 million in last year's budget and nearly $100 million this year. Thank God there's a CPA in the big office!

O said...

We'll forgive you anonymous (anonymii?).