What’s Next for Fiscal Oversight in Philadelphia?

Shutterstock/Real Window Creative

 

Connecting state and local government leaders

COMMENTARY | Experts and officials debate future of agency that has played key role since 1992.

This analysis was written by Larry Eichel and Garrett Hincken with the Pew Charitable Trust's Philadelphia Research and Policy Initiative.

The state agency that has overseen Philadelphia’s finances since 1992—the Pennsylvania Intergovernmental Cooperation Authority (PICA)—is slated to shut down in three years. But there is a sense among stakeholders that the policy conversation about what happens next should start now.

The authority’s fate will be decided by the state legislature, but many with a stake in Philadelphia’s future say local policymakers should seek to reach agreement among themselves before turning to Harrisburg.

Building a consensus could prove challenging for several reasons, however. One is that the city is not facing a dire fiscal crisis, as it was when PICA was created nearly 30 years ago. In addition, local officials are not all on the same page about whether the authority should continue to exist and, if so, in what form.

These and other insights emerged from a January gathering organized by The Pew Charitable Trusts that brought together people hoping to shape the decision-making process about what comes next—including those who have worked for PICA, served on its board, or dealt with the authority as city officials.

Participants agreed that the agency’s existence has been a plus for the city, helping it to establish and then maintain fiscal stability and credibility. Michael Nutter, who served as mayor from 2008 to 2016, described PICA as “the most significant fiscal disciplinary tool ever enacted in the city.” He added that he was hard-pressed “to even understand the argument” for letting it die.

Others who endorsed PICA’s value included Harvey Rice, the authority’s executive director, and Eric Kim of Fitch Ratings.

As detailed in a recent Pew brief, “The Future of Fiscal Oversight in Philadelphia,” the law that created PICA requires the city to create an annual five-year fiscal plan to submit to the authority for approval. It also mandates that labor arbitrators consider the city’s ability to pay when determining salaries and benefits for its uniformed workers. These provisions and others are set to expire in 2023, when the authority finishes paying off the borrowing it did in the early 1990s to help Philadelphia emerge from its fiscal crisis.

Senator Vincent Hughes, the only state lawmaker to speak at the event, advised a cautious approach: making as few changes as possible to PICA’s current structure if city leaders look to continue the arrangement. Hughes, who represents part of Philadelphia and adjoining Montgomery County, said the best course might be to take the existing law, write in a new expiration date, and leave it at that.

“Don’t fix what ain’t broke,” Hughes said, warning that expanding the conversation could entangle Philadelphia in the contentious partisan politics of the legislature.

Among the possible changes to PICA being discussed are:

  • Expanding the authority’s purview to include the ability to conduct financial analyses of the cost of ordinances proposed by City Council or the mayor’s office. “When I look at PICA, I see an opportunity for it to have a new role in our city,” said City Council member Derek Green. “Building on its record of impartial fiscal oversight, PICA is well-positioned to inform city policy debates with neutral financial information.”
  • Using PICA’s borrowing authority to fund the city’s capital program and/or help the school district deal with aging infrastructure. The appeal of this approach is that PICA can borrow money more cheaply than Philadelphia city government because it has a dedicated funding source: a 1.5 percent tax on wages earned by city residents. A small portion of that tax has been used to finance the borrowing done by PICA in the 1990s and pay the authority’s operating expenses, with the rest going to the city.
  • Giving PICA enforcement tools beyond what it has now, a proposal voiced by former board chair Sam Katz and others. Currently, if the authority wants to disapprove a city five-year plan, its only option is to withhold hundreds of millions of dollars in revenue, which it has never done.

Mayor Jim Kenney and top members of his administration—represented at the event by Finance Director Rob Dubow—favor retaining PICA in some form.

Not everyone, though, thinks saving the authority is necessary or desirable. In the view of City Controller Rebecca Rhynhart, asking the state to extend PICA’s existence, after Philadelphia has experienced nearly three decades of fiscal stability, perpetuates the conception that the state’s largest city is a child in need of supervision.

“There has to be some sentiment that the people in charge have learned something … that we can manage ourselves the way cities across the country do,” she said.

Rhynhart noted that other cities that don’t have state oversight engage in some of the fiscal practices that came to Philadelphia through PICA, such as long-term financial planning, quarterly reporting of revenues and expenditures, and testing of revenue assumptions. Philadelphia could continue these practices on its own, she said, making them part of the city’s own processes through ordinances or amendments to the city charter.

Some PICA advocates, however, question how credible such practices would be if not conducted or reviewed by an independent group.

One aspect of the PICA law that can’t be replicated locally is the requirement that labor arbitrators consider the city’s financial position. David L. Cohen, who served as chief of staff under former Mayor Ed Rendell in the 1990s, emphasized the importance of this provision, saying that “somehow, someway, that element of PICA has to be preserved, and it’s worth whatever political battle we have to fight to make that happen.” To keep such a provision in place would require state legislation.

Since 1992, PICA has been a key player in Philadelphia’s fiscal governance, and its scheduled shutdown creates new challenges and opportunities. Even though the decisions will be difficult and the deadline for making them is still three years away, many of the people who care about the city’s fiscal stability think now is the time to get started.

Larry Eichel is a project director and Garrett Hincken is a researcher with the Pew Charitable Trust’s Philadelphia research and policy initiative.

FEATURED CASE STUDIES
Powered By The Atlas
Crowdfunding Capital for Sustainable Wastewater P3 Project in Los Fresnos, TX
Los Fresnos, TX 78566, USA
Madison Water Utility replaces 8,000 lead service lines
Madison, WI, USA
Financing Renewable Energy Project with Crowdfunding in Holyoke, MA
Holyoke, MA, USA

NEXT STORY: Taxing Internet Ads Could Raise Lots of Money, but Doubts Persist

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.