State board that oversees Philadelphia’s finances gets extended for 25 years
The PICA board was set to expire next year, but Mayor Jim Kenney's administration got behind a bipartisan effort to extend its life.
The Harrisburg-appointed board established in the early 1990s to oversee Philadelphia’s long-term financial plans and borrow on the city’s behalf has been extended for 25 years.
Gov. Tom Wolf on Thursday signed bipartisan legislation to effectively renew the Pennsylvania Intergovernmental Cooperation Authority, better known as PICA, which was created in 1991 and was set to expire next year. The extension lasts through January 2047.
Mayor Jim Kenney’s administration advocated to extend PICA, saying it saves taxpayer dollars by providing a state backstop for the city’s borrowing, improving its standing with lending institutions.
The legislation was authored by State Rep. Martina White, a Northeast Philadelphia Republican, and it was cosponsored by Reps. Jared Solomon, a Northeast Philadelphia Democrat, and Joanna McClinton, the Democratic minority leader from West Philadelphia.
The House passed the bill in mid-June, and the Senate approved it on June 30 as state lawmakers approached the end of their session. The legislation sailed through both chambers unanimously despite opposition from some of the city’s municipal unions, which have long contended that the PICA Act gives the city license to shortchange unions in the name of balancing its five-year financial plan.
» READ MORE: A state board that oversees Philly’s finances ends in 2023. But the city is working to extend it.
Harvey Rice, PICA’s executive director, said in a statement that under the board’s oversight, the city has achieved higher fund balances, improved its credit rating, and reformed its pension system.
“As these past 30 years have demonstrated, PICA has played a key and significant role in helping to ensure Philadelphia’s sound fiscal governance,” he said.
The governor appoints one member to PICA’s five-person board, as does each of the Democratic and Republican leaders of both chambers of the General Assembly. The panel reviews the city’s five-year financial plan, approved by City Council at the same time as the city budget. If the board votes to reject the city’s plan, Philadelphia could lose state funding.
In addition to providing oversight, the authority is also authorized to borrow on Philadelphia’s behalf. It issued more than $1 billion in bonds in the early 1990s when the city nearly filed for bankruptcy amid a severe fiscal crisis. The bonds are paid back through a 1% wage tax on Philadelphia residents.
The city keeps excess wage tax revenue, which it can use to help fund its $5.8 billion budget. Last year, PICA sent the city $462.7 million after its bond repayments cost $37.2 million.
City Council and the administration last month agreed to cut Philadelphia’s wage tax from 3.8398% to 3.79% for city residents, and from 3.4481% to 3.44% for people who work in Philadelphia but live outside the city.