Oversight board approves Phila. financial plan

The board that oversees Philadelphia's finances voted unanimously Tuesday to approve the city's five-year fiscal plan, despite continued concern about the impact of unresolved labor contracts.

The five members of the Pennsylvania Intergovernmental Cooperation Authority board sided against their own staff report, which had recommended that the Nutter administration's plan be rebuffed.

Although the plan includes money to pay wage increases to firefighters and municipal employees represented by AFSCME District Councils 33 and 47, the report worried that the costs of settling those contracts could be greater than anticipated.

The blue- and white-collar workers represented by the two councils have been working without new contracts since 2009.

The city recently settled a three-year contract fight with the union that represents firefighters and paramedics, but the two sides already are back at the bargaining table working on the next contract.

City Controller Alan Butkovitz, who gives an annual report on the five-year plan, also had urged the board to vote against the plan, but for a different reason. Butkovitz said Monday that the city's fund balance could reach dangerous levels in some years of the plan - as low as $8.5 million in the 2017 fiscal year, an amount that could be wiped out if the city had to deal with a natural disaster or a couple of bad snowstorms.

City Finance Director Rob Dubow wrote to board chair Sam Katz on Tuesday saying the fund balances ultimately could be larger than the numbers predicted.

The current fiscal year, Dubow said, is likely to end with $20 million more in reserves than expected. The five-year plan could gain millions more through an accounting change related to the Department of Human Services, which is mostly funded through state and federal grants.

"These are not going to result in robust outcomes, just more comfortable ones," Katz said.

Under the 1991 state law that created PICA, the city must submit a balanced five-year plan annually. The board has never voted down a plan.

Rejecting a plan would trigger a process that could lead to the city's losing hundreds of millions in state funding - an action Katz has likened to a "nuclear option" out of proportion with most objections to a particular plan. He said the PICA staff report raised good questions, but he did not feel the labor issue warranted use of such punitive action.

Katz said he wished Mayor Nutter, who is seeking permission from the courts to impose a contract on D.C. 33, would resolve the contract stalemates in the final two years of his administration.

"My concern right now is that I'm not sure we're in negotiations. We're not, we're in litigation," he said. "My hope is that they get a contract, because a contract puts to bed the uncertainty."