Despite recommendations, PICA approves Nutter's five-year plan

The state-appointed board that oversees Philly’s finances unanimously approved Mayor Nutter’s five-year plan today, despite calls to reject the plan from the city controller and the board's own staff.

Members of the Pennsylvania Intergovernmental Cooperation Authority, or PICA, spent an hour questioning the administration about low fund balances in the out years of the plan and about unresolved labor disputes. But in the end, they voted 5-0 to approve the plan.

PICA Chairman Sam Katz

PICA Chairman Sam Katz said earlier this year that he would vote against the plan if Nutter did not resolve disputes with the city’s major unions, three of which have been working without contracts since 2009.

Two weeks ago, Nutter gave up his four-year fight against the International Association of Fire Fighters Local 22 over the contract period that ended July 1 by dropping his appeal of an arbitration award for that time. Administration officials said that because of improved tax revenues, the city can now afford the increased costs and would struggle to prove in court that it didn’t have the money for the award. 

Also this year, the administration budgeted some money for unresolved contracts with the city’s two major bargaining units of the American Federation of State, County and Municipal Employees. Those amounts, based on the administration's last positions in negotiations, are still well below what the unions are hoping to get.

PICA, which was created in the early 1990s to help the city issue bonds during a major financial crisis, must annually approve the administration’s five-year financial plan. It only takes two of the five board members to vote it down.

If that happens, and the administration cannot come up with a revised plan that satisfies the board, Philly loses hundreds of millions of dollars in state aid.

The plan came close to being defeated last year. Former board member Sam Hopkins voted against it, and Katz considered joining him.

Hopkins was not renominated by state Senate Democratic Leader Jay Costa despite serving less than one full term. Sources told the People Paper earlier this year that the Nutter administration asked that Hopkins be removed from the board.

City Controller Alan Butkovitz yesterday recommended that PICA reject this year’s plan due to its extremely low fund balances, bottoming out at $8.5 million, at the end of the plan, which will take place in the next mayor's administration. Those balances are low, in part, because of Nutter’s decision to drop his appeal of the firefighters award - something Butkovitz had called on the administration to do. 

Katz said that while he has major concerns about the plan, they did not justify withholding $350 million in state aid and sending the city's finances into a tailspin.