PITTSBURGH -- City Council has approved the Act 47 financial recovery plan for Pittsburgh, which includes a big hike in the yearly occupation tax, a two-year freeze on city workers' wages and larger health care contributions from city employees.
A preliminary vote last week was 5-4 in favor of the plan. The final vote Tuesday afternoon produced an identical result, with President Gene Ricciardi, Alan Hertzberg, Bill Peduto, Doug Shields and Sala Udin casting "yes" votes.
Under the proposal, anyone who works in the city of Pittsburgh would pay an annual $145 tax, up from the current $10 fee. A payroll tax would also be instituted on for-profit businesses. Both of those taxes require state approval before taking effect.
If the state does not approve those taxes, Act 47's backup plan asks Common Pleas Court for a 0.27 percent wage tax on most commuters, a 0.37 percent city wage tax increase and a 5 percent increase in city property taxes.
The Act 47 plan slices city spending and jobs by $33 million. That includes cutting 168 jobs in the Fire Bureau and closing seven of the 32 fire stations, as well as 15 percent reductions in City Council and the offices of Mayor Tom Murphy and Controller Tom Flaherty.
Public Financial Management, of Philadelphia, and Eckert Seamans Cherin & Mellott, of Pittsburgh, were appointed by the state to put the plan together after Pittsburgh was declared financially distressed late last year.
Labor leaders have been vocal in their opposition to the plan, especially the firefighters' union president, Joe King, who claims the cuts would jeopardize public safety. Unions say they will mount a court challenge.
"We don't forget, and we will never forgive," King told council before the vote was taken.
Council members agree that the proposal is far from perfect, but they believe more jobs will ultimately be lost if the city is forced to declare bankruptcy.
"Why would I want to raise taxes? Why would I want to cut workers? Why would I want to jeopardize my own future? Because this vote isn't about me," Peduto said. "It's about the city."
"With this vote, Pittsburgh sends a strong signal ... it is now ready to productively work with our neighboring municipalities and the state to move this region and the city forward," Ricciardi said.
Mike Langley, director of the Allegheny Conference on Economic Development, also called the vote a step forward, "but it's not the finish line," he said.
"We can all come together and move forward from this point," Langley said. "We need to make sure that the cuts are put in place before we increase taxes on anyone ... We need to keep our taxes as low as possible to encourage a broader base of community support."
Murphy believes the Act 47 proposal will help to modernize Pittsburgh's tax system.
"This city cannot survive with a tax structure based upon the city we were 50 years ago, a tax structure that exempts 45 percent of all businesses from paying any business taxes," he said.
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