An old-fashioned Steel City brawl has erupted in Pittsburgh between the city and its financial overseer over gambling revenue.
The courts, Pennsylvania Auditor General Eugene DePasquale and lawmakers are all in the mix as well.
Pittsburgh officials are suing the Intergovernmental Cooperation Authority, accusing ICA of illegally withholding $10 million in annual gambling host city revenue funds the past two years related to the Rivers Casino on the north shore.
State lawmakers formed the ICA to oversee Pittsburgh's finances in 2004, while the city flirted with bankruptcy and its bonds were junk.
The ICA maintains that Pittsburgh needs to shore up its pension system and that state law, which provides Pittsburgh the revenue as a gambling host city, also gives the authority control of the funds. ICA also wants Pittsburgh to implement an in-house employee payroll system that could save about $1 million annually.
"The Intergovernmental Cooperation Authority, so ironically named, has never given us a reason in writing," Pittsburgh finance director Paul Leger said in an interview. "The city's position is that the $20 million belongs to taxpayers to fund a budget that ICA has approved."
The Allegheny County Court of Common Pleas will hear the case after its own judge, Christine Ward, denied an ICA motion to transfer it to the Commonwealth Court of Pennsylvania.
"Our basic question is, where is the money? Is it in a bank account, is it in someone's pocket or in a state account? And where is the interest on that money?" said Leger. "We have no access to their records. We've made right-to-know requests and have gotten only 5% of what we're looking for."
Messages seeking comment were left with ICA Chairman Nicholas Varischetti and Jones Day attorney Laura Ellsworth, who is representing the authority. The Varischetti family's vast business holdings include a minority interest in the National Football League's Pittsburgh Steelers.
Pittsburgh is also under the Act 47 workout program for distressed communities, which the state Department of Community and Economic Development coordinates.
"This dispute is unusual," said David Fiorenza, a professor at Villanova School of Business. "I have seen county government work with the host municipality but not to the agreements I see with Pittsburgh and the ICA."
Fiorenza cited the positive relationships in eastern Pennsylvania involving Delaware County and the city of Chester, site of a Harrah's casino, and Montgomery County and Upper Merion Township regarding a Valley Forge facility.
"The track record for both ICA and the cities has always been about control," he added. "From what I can tell from the Pennsylvania Gaming Commission, ICA is the only agency with any kind of issue related to gaming revenue."
Mayor Bill Peduto last week submitted the city's $517.5 million 2016 operating budget to the ICA, as well as its 2016 capital budget and 2016-2020 five-year financial plan.
DePasquale's office is reviewing ICA's operations from fiscal 2013 through 2015, including its contracts, gambling-revenue dispersal and even its role in the city's future.
"I will also look at areas where I can help bring about a positive solution for the people of Pittsburgh, including bridging some of the issues between the ICA and the city," said DePasquale, a Pittsburgh native and former state representative.
Standard & Poor's raised Pittsburgh's general obligation bond rating to A-plus in January 2014, citing its efforts toward structural budget balance and strong available fund balance. Moody's Investors Service revised its outlook to positive on Pittsburgh GOs in October 2014 while maintaining its A1 rating. Fitch Ratings assigns an A rating.
According to Leger, the terms of ICA's creation called for disbanding it after three budgets passed under its watch.
"They're still around, to my amazement," he said.
Leger also accused ICA of wasting taxpayer money, citing the authority's use of seemingly vacant space at the One Oxford Centre complex across from City Hall. City officials, said Leger, found the ICA office barren while delivering documents.
"There are no people, no financial records," he said. "The bill [$7,000 annually] is paid out of money paid to ICA by the legislature. Why do that? If they only need the office on rare occasion, why don't they just rent space at City Hall and help provide the city with some revenue?"
State lawmakers have also weighed in, along party lines. Sen. Wayne Fontana, D-Pittsburgh, filed a bill to disband the authority, calling it "unnecessary, redundant and a waste of taxpayer dollars."
Republican leaders defended ICA. In a joint statement, Senate President Pro Tempore Joe Scarnati, R-Brockway and House Speaker Mike Turzai, R-Marshall Township, called ICA "an integral part of the oversight of the City of Pittsburgh."