Will PICA matter this year?

Posted: April 30, 2013

THE PENNSYLVANIA Intergovernmental Cooperation Authority.

The name seems to embody governmental minutiae, a bureaucratic backwater with little relevance to taxpayers. At times in the past, that's not far from how PICA operated.

But this year, the state board that oversees Philly's finances could play a dynamic role in shaping the city's budget plans. And it's already caught up in a political tango between City Hall and Harrisburg.

"A lot of people are eyeing PICA," said Zack Stalberg, president of the good-government group Committee of Seventy. "The stakes are really much higher this year. It might be the last Nutter budget that anybody pays attention to."

The board, which must approve the mayor's five-year plan each year for the city to keep its state bonds, cast its first nonunanimous vote last year, approving Mayor Nutter's proposal 4-1. Four members must vote yes for passage, meaning that the plan was one "nay" away from the trash bin.

If that happens and the administration can't come up with an acceptable revised plan, Philly would lose its PICA-financed bonds and state funding, a devastating blow to the city's finances.

PICA chairman Sam Katz, the former mayoral candidate, flirted with that prospect last year but ended up voting to approve the plan. This year, he's vowing to vote no if the city doesn't reach agreements with municipal unions that have been working without contracts since 2009 - which few expect will happen before PICA takes up the plan in late summer.

So, what's a mayor to do?

Nutter "has got to be concerned that his five-year plan [should] get approved by PICA, and one way to do that is to have a plan that makes sense and another way to do that is to control who's looking it over," said a source with experience in Philly's municipal-finance scene.

And so it was for Sam Hopkins, the board member who cast the dissenting vote last year. After serving less than one full term, Hopkins won't be reappointed this year, said state Sen. Jay Costa, the Pittsburgh Democrat who controls that board spot.

The deadline for the appointment was in January. Costa said his announcement will come in the next couple weeks.

Asked why it won't be Hopkins, Costa said, "I can't specifically say there was any particular reasons why, but we just wanted to look at some other folks." He denied that Nutter or anyone acting on his behalf asked that Hopkins be canned.

Democrats and Republicans in Harrisburg and Philadelphia, as well as current and former PICA officials, were interviewed for this story. Although few agreed to be named, Nutter's meddling with the board this year is an open secret.

"Woe to those who oppose Michael Nutter," Councilman Jim Kenney said.

Nutter spokesman Mark McDonald wrote in an email, "The Mayor talks with Pennsylvania legislators on a regular basis. The subjects of those conversations are private communications." Nutter also tried unsuccessfully to get Gov. Corbett not to reappoint Katz, who has been critical of the mayor and considered challenging his 2011 re-election, according to sources connected to the governor's office.

Katz, who is more vocal than most of his predecessors as PICA chairman, raises questions about the administration's budgeting. Citing the unresolved labor contracts, a multibillion-dollar hole in the pension fund, the school district's structural deficit and other factors, he said things may be worse than in 1991, when Philly was facing insolvency and PICA was created to help it borrow cash.

"When that chicken comes home to roost, people are going to say, 'What was PICA doing? I thought we had a fiscal-oversight board,' " Katz said.

If the vote were taken today, before a fifth member is named, Nutter's five-year plan would be defeated with Katz's dissent alone. But the other PICA board members, Joseph DiAngelo, Michael Karp and Greg Rost, are not expected to vote against the plan.

"You've got to be really careful to play games like that and shut the city down," said DiAngelo, dean of the business school at Saint Joseph's University, who was appointed by state Senate Republicans. "We're just there to oversee and make sure things are reasonable."

But Katz said he thinks there's a chance PICA will reject the plan.

"I can be very persuasive," Katz said. "All it takes is two."

On Twitter: @SeanWalshDN


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