CITY of PITTSBURGHCITY of PITTSBURGH

FISCAL OUTLOOKFISCAL OUTLOOK

Councilman William Peduto, Finance ChairCouncilman William Peduto, Finance Chair

Pittsburgh City CouncilPittsburgh City Council

December 12, 2008December 12, 2008

354,729,318372,319,841

$14,592,430

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

REVENUES EXPENDITURES Fund Balance

REVENUES vs EXPENDITURES 2004

Operating Result

-$17,590,523

414,384,978396,632,819

38,131,791

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

REVENUES EXPENDITURES Fund Balance

2005 Revenues vs Expenditures

Operating Result

+$17,752,159

437,674,708400,946,313

80,574,118

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

REVENUES EXPENDITURES Fund Balance

2006 Revenue - Expenditures - Fund Balance

Operating Result

+$36,728,395

448,337,860425,657,607

89,530,372

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

REVENUES EXPENDITURES Fund Balance

2007 Revenue - Expenditures - Fund Balance

Operating Result

+$22,680,253

435,901,773416,667,338

20,833,367

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

REVENUES EXPENDITURES Fund Balance

2008 Revenues - Expenditures - Fund Balance

Operating Result

+$19,234,435

441,416,100 437,976,013

24,273,454

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

REVENUES EXPENDITURES Fund Balance

2009 Revenue - Expenditures - Fund Balance

Operating Result

+$3,440,087

2004-09 Revenue vs Expenditures

320,000,000

340,000,000

360,000,000

380,000,000

400,000,000

420,000,000

440,000,000

460,000,000

Revenue 354,729,318 414,384,978 437,674,708 448,337,860 435,901,773 441,416,100

Expenditures 372,319,841 396,632,819 400,946,313 425,657,607 416,667,338 437,976,013

2004 2005 2006 2007 2008 2009

2004-2009 Fund Balance

$14,592,430

38,131,791

89,530,372

24,273,454

20,833,367

80,574,118

$-

$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

$100,000,000

Fund Balance $14,592,430 38,131,791 80,574,118 89,530,372 20,833,367 24,273,454

2004 2005 2006 2007 2008 2009

2004-2014 Revenue vs Expenditures

300,000,000

320,000,000

340,000,000

360,000,000

380,000,000

400,000,000

420,000,000

440,000,000

460,000,000

480,000,000

500,000,000

Revenue 354,729,318 414,384,978 437,674,708 448,337,860 435,901,773 441,416,100 441,081,100 448,868,100 452,837,100 458,100,100 464,971,602

Expenditures 372,319,841 396,632,819 400,946,313 425,657,607 416,667,338 437,976,013 441,012,215 448,687,177 452,763,935 457,966,104 488,510,596

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Deficit Returns

Fund Balance 2004-2014

$14,592,430

38,131,791

(23,538,994)

89,530,372

80,574,118

24,730,393

24,596,397

24,523,262

24,342,339

24,273,454

20,833,367

$(40,000,000)

$(20,000,000)

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Flat Lines

Fund Balance Depleted

6,000,000

18,318,500

26,887,280

25,000,000 24,590,013

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2007 2008 2009 2010 2011 2012 2013

PAY AS YOU GO CAPITAL BUDGET FUNDING

? ?

PAYGO Gone?

Estimate Estimate Estimate Estimate Estimate Estimate Estimate 2008 2009 2010 2011 2012 2013 2014

REVENUES 435,901,773 441,416,100 441,081,100 448,868,100 452,837,100 458,100,100 464,971,602 EXPENDITURES 416,667,338 437,976,013 441,012,215 448,687,177 452,763,935 457,966,104 488,510,596

Fund Balance 20,833,367 24,273,454 24,342,339 24,523,262 24,596,397 24,730,393 (23,538,994)

Capital Reserve (PAYGO) 18,318,500 26,887,280 25,000,000 24,590,013 0 0 0

Debt Reserve (Defeasance) 45,370,000 46,731,100 44,005,314 37,106,492 23,230,968 -

84,521,867 97,891,834 93,347,653 86,219,767 47,827,365 24,730,393

Assuming a 1.5% increase in Dept

Expenditures +Debt Service increases $23.5

MillionStructural Deficit

Returns

PAYGO Funds exhausted

Refinance, use fund balance or increase

Revenue

PAYGO Capital Budget Funding gone in 2012

Structural Deficit Returns in 2014

PENSION CRISIS

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Fund Assets Fund Liabilities

2003 Pension

$312,471,000

$765,764,000

-$453,492,000

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

Fund Assets Fund Liabilities

2005 Pension

$373,608,000

$843,383,000

-$469,775,000

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

Fund Assets Fund Liabilities

2007 Pension

$375,368,000

-$523,880,000

$889,248,000

$375,368$373,608$312,471

$899,248

$843,383

$765,764

$(523,880)$(469,775)$(453,293)

$(600,000)

$(400,000)

$(200,000)

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

2003 2005 2007

UNFUNDED LIABILITY

FUND LIABILITY

FUND ASSETS

Distribution of LiabilityDistribution of Liability

MUNICIPAL23%

($119.6 Million)

($404.3 Million)

3,479 Members

Police & Fire77%

4,309 Members

-$524 Million-$524 Million$93,827 per

member

$34,378 per member

Pension Funding by Fund

-100,000,000

-50,000,000

0

50,000,000

100,000,000

150,000,000

200,000,000

Dec-0

7

Mar

-08

Jun-

08

Sep-0

8

Dec-0

8

Mar

-09

Jun-

09

Sep-0

9

Dec-0

9

Mar

-10

Jun-

10

Sep-1

0

Dec-1

0

Mar

-11

Jun-

11

Sep-1

1

Dec-1

1

Mar

-12

Jun-

12

Sep-1

2

Dec-1

2

Mar

-13

Jun-

13

Sep-1

3

Dec-1

3

Mar

-14

Jun-

14

Sep-1

4

Dec-1

4

POLICE Fund

FIRE Fund

Municipal Fund

According to University of Pittsburgh’s Chris BriemAccording to University of Pittsburgh’s Chris Briem

Police Fund negative by March 2012 – Fire Negative by June 2014Police Fund negative by March 2012 – Fire Negative by June 2014

The Pension Problem

• The economic market may remain flat for the foreseeable future

• State contributions to pension fund may decrease as more municipalities start to draw on the state’s fixed pool of revenue

• Low interest rates that safe bonds are offering may push down future expected returns and push up required contribution levels

The Future

• Pay as you Go Capital Ends – 2011

• Reserve Plans Depleted – 2013

• Deficit Spending Returns – 2013

• Police Pension Funds Depleted – 2011

• Fire Pension Funds Depleted - 2014

2009 – 2014New 5-Year Plan to Solvency

• Restructure City Government

• Statewide Pension Reform

• Statewide Municipal Healthcare

• Regional Government Consolidation

• Fair Payments In Lieu Of Taxes

• Regional Revenue Sharing

Next Steps

• Now - Council Budget Director meets with Mayor's Budget Director, Controller's Representative, Act 47 and Oversight Board to review Act 47 initial draft

• January ‘09 - Act 47 submits initial plan to Council. Council begins full budget hearings on the five year plan

• January ’09 – February ’09 -Televised budget hearings and public hearings

• March ’09 - Council debates recommendations to five year plan and approves a series of amendments to the plan by March 25th

• April ’09 - Act 47 submits final plan to Council• May ’09 - Council votes on the plan• June ’09 – Plan is ready for Mayor’s signature