City Finance Update

Pittsburgh’s Financial Future

April 12, 2011 Post AgendaCouncilman William Peduto, Finance Chair

Recap of 2011 Operating and Capital Budget Post Agenda April 5, 2011

Operating Budget on target for 2011 Capital Budget has deficiencies due to:

Slow State and Federal Reimbursements Unexecuted sale of the Courts Building to State Need to clear old encumbrances and projects

As a result, may need to use a small portion of the City’s $40M “rainy day” fund balance to fund all of 2011 Capital Plan

Best Practice Review City does some things well Needs improvement on issues such as

communication Need for ERP Financial System

2011 - 2017 Budgets2011 - 2017 Budgets

  2011 2012 2013 2014 2015 2016 2017

REVENUES 443,033,600

463,761,100

473,746,100

481,004,000

490,748,000

496,882,350

503,093,379

EXPENDITURES 450,087,572

466,411,213

470,320,829

476,510,774

485,646,706

491,627,790

499,869,750

OPERATING RESULT 5,022,028

(2,650,113)

3,425,271

4,493,226

5,101,294

5,254,560

3,223,630

BEGINNING FUND BALANCE 44,795,746

37,741,774

35,091,661

38,516,932

43,010,158

48,111,452

53,366,012

Transfer to PAYGO - - - - - - -

Reserve Fund Balance Transfer (12,076,000) - - - -    

ENDING FUND BALANCE 37,741,774

35,091,661

38,516,932

43,010,158

48,111,452

53,366,012

56,589,642

Operating Budget 2011-2017

Dependent upon PPA PILOT $9.3M Must continue to watch Healthcare and

Pension Costs Debt service must be properly

restructured Reassessment may impact RET Revenue Must continually look for efficiencies and

new revenue sources

Revenues vs Expenditures

440,000,000

450,000,000

460,000,000

470,000,000

480,000,000

490,000,000

500,000,000

510,000,000

2012 2013 2014 2015 2016 2017

Revenues

Expenditures

Total to Pension Funding 2010-2017 $586 Million*MMO increases biennially estimated, Employee Contributions annually taken from PMRS, Additional Contribution increases– assumption are estimates and are not actuarial certified

Pension YEAR MMO Parking Tax Dedication Additional

Employee Contributions Total Revenue Into Fund

2010 $ 45,000,000 $ 13,376,000 $ 48,000,000 $ 9,200,000 $ 115,576,000

2011 $ 46,400,000 $ 13,376,000 $ 3,600,000 $ 9,591,713 $ 72,967,713

2012 $ 48,720,000 $ 13,376,000 $ 5,000,000 $ 9,916,846 $ 77,012,846

2013 $ 48,720,000 $ 13,376,000 $ 5,000,000 $ 10,259,332 $ 77,355,332

2014 $ 51,156,000 $ 13,376,000 $ 5,000,000 $ 10,566,287 $ 80,098,287

2015 $ 51,156,000 $ 13,376,000 $ 5,000,000 $ 10,863,609 $ 80,395,609

2016-2017 $ 53,413,800 $ 13,376,000 $ 5,000,000 $ 11,153,176 $ 82,942,976

Pension & Debt

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

$180,000,000

Pension MMO+Dedication+ $63,376,000 $67,096,000 $67,096,000 $69,532,000 $69,532,000 $71,789,800 $72,684,840

DEBT $87,655,572 $87,688,159 $87,691,648 $87,702,599 $87,692,429 $87,704,798 $87,425,935

2011 2012 2013 2014 2015 2016 2017

Capital Needs 2011-2017

$20-$30 Million needed annually in “City” funds, either PAYGO, Bond or combination

Major items include street maintenance, demolition and vehicle acquisition

State/federal matching, TIP projects $120-$160M needed for 2012-2017

Capital Funding Continued efficiencies in the operating budget,

development of new revenue sources may allow for dedication of excess operating dollars to PAYGO

Act 47 Plan suggests restructuring of debt/issuance of “new” money tax exempt bonds for 2012-2017

Debt can be structured to correspond with long term plan

Just like a mortgage to fit your annual payment ability, bonds can be issued in different terms 10, 20 or 30 year payment schedules

Debt Service$87,700,000 $68,900,000

$30,700,000$28,800,000

$-$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Extra Dollars

Debt Payment

Debt Cliff – Available Funds

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

Additonal $ $229,637 $18,830,657 $56,991,378 $56,986,337 $56,984,042 $58,862,527 $58,859,687 $58,860,697 $87,655,572

2017 2018 2019 2020 2021 2022 2023 2024 2025

Sample Debt Service

The City of Pittsburgh General Obligation Bonds, Series of 2008 Series 2006C Debt Service Projection

Annual Date Principal Coupon Interest Debt Service Debt Service 3/1/2009 1,254,675.00 1,254,675.00 9/1/2009 1,254,675.00 1,254,675.00 2,509,350.00 3/1/2010 1,254,675.00 1,254,675.00 9/1/2010 1,254,675.00 1,254,675.00 2,509,350.00 3/1/2011 1,254,675.00 1,254,675.00 9/1/2011 1,254,675.00 1,254,675.00 2,509,350.00 3/1/2012 1,254,675.00 1,254,675.00 9/1/2012 1,254,675.00 1,254,675.00 2,509,350.00 3/1/2013 1,254,675.00 1,254,675.00 9/1/2013 1,254,675.00 1,254,675.00 2,509,350.00 3/1/2014 1,254,675.00 1,254,675.00 9/1/2014 5,000.00 4.250% 1,254,675.00 1,259,675.00 2,514,350.00 3/1/2015 1,254,568.75 1,254,568.75 9/1/2015 5,000.00 4.250% 1,254,568.75 1,259,568.75 2,514,137.50 3/1/2016 1,254,462.50 1,254,462.50 9/1/2016 5,000.00 4.250% 1,254,462.50 1,259,462.50 2,513,925.00 3/1/2017 1,254,356.25 1,254,356.25 9/1/2017 11,905,000.00 5.250% 1,254,356.25 13,159,356.25 14,413,712.50 3/1/2018 941,850.00 941,850.00 9/1/2018 35,880,000.00 5.250% 941,850.00 36,821,850.00 37,763,700.00

3/1/2019 0.00 0.00 9/1/2019 0.00 0.00 0.00 3/1/2020 0.00 0.00 9/1/2020 0.00 0.00 0.00 3/1/2021 0.00 0.00 9/1/2021 0.00 0.00 0.00 3/1/2022 0.00 0.00 9/1/2022 0.00 0.00 0.00 3/1/2023 0.00 0.00 9/1/2023 0.00 0.00 0.00 3/1/2024 0.00 0.00 9/1/2024 0.00 0.00 0.00 3/1/2025 0.00 0.00 9/1/2025 0.00 0.00 0.00 3/1/2026 0.00 0.00 9/1/2026 0.00 0.00 0.00 Total 47,800,000.00 24,466,575.00 72,266,575.00 72,266,575.00

Actions needed for 2011-2017

• Capital budget. Analysis of various funding scenarios.

• Action on Council-Controller parking for plan.

• Cost controls. We have done a good job of keeping down costs, but we need to create more efficiencies.

• Revenue enhancements. Look for new revenue without increasing real estate or earned income taxes.

• State action. Changes in State law for pensions, non-profit payments, reassessment, etc..