Recovery Plan to Be Drafted for Pittsburgh

The state declared Pittsburgh financially distressed Monday, opening the way for the naming of an outside overseer who will draw up a recovery plan for the Steel City.

The designation by Pennsylvania’s Department of Community and Economic Development was requested by Mayor Tom Murphy to help stave off bankruptcy.

Pittsburgh is projecting a $42-million deficit for next year, and its credit rating hit junk-bond status in October. The city has laid off hundreds of employees in the last few months and closed swimming pools and police stations.

The mayor has said the city is too dependent on property taxes and must overhaul its tax code now that the steel mills are gone and the many hospitals and universities that now play a major role in Pittsburgh’s economy are largely tax-exempt.

Among other things, the “financially distressed” designation could empower the city to impose a commuter tax with approval from a judge instead of the Legislature. The mayor has tried in vain for years to get state lawmakers to back a tax on suburbanites who work in the city.

The outside overseer will draft a financial recovery plan that could include a commuter tax and various spending controls. The plan would be subject to approval by the mayor and City Council.

Cities designated financially distressed can also get state grants and loans.

Economic Development Secretary Dennis Yablonsky said the designation does not amount to a takeover.

“The state’s role is to provide strong oversight and develop a partnership with the city in order to ensure that residents receive vital services,” he said.

Since the law was enacted in 1987, more than a dozen communities have been designated.