Summary
Why Was PICA Created?
The Pennsylvania Intergovernmental Cooperation Authority (PICA) was created in 1991 as a response to Philadelphia’s severe fiscal crisis. The City of Philadelphia faced budget deficits, cash shortages, and the looming threat of default, and the City struggled to maintain essential services and meet its financial obligations. These fiscal troubles had dire consequences, which were a loss of investment-grade credit ratings, making it even harder to secure funding and borrow money. Recognizing the need for intervention, the Pennsylvania General Assembly passed the PICA Act , establishing an independent authority with a bi-partisan board to oversee financial planning and provide the City with a structured path to recovery. By implementing long-term financial oversight and ensuring responsible budgeting, PICA was designed to work cooperatively with City of Philadelphia leadership to prevent fiscal collapse and support restoration of Philadelphia’s fiscal health.
The Original Components of the PICA Act
At its core, the PICA Act was created to enforce financial discipline in Philadelphia. The Act created PICA as an independent oversight authority with a five-member governing board appointed by state officials, each with expertise in finance and management. PICA’s primary role is to require Philadelphia to develop financial recovery plans, ensuring balanced budgets and preventing future deficits. To support these efforts, the Authority was given the power to issue bonds and provide financial assistance while also overseeing municipal budgeting. Additionally, the Act allowed for the imposition of taxes to generate revenue for financial recovery. To further safeguard against fiscal crises, the legislation also prohibits the City filing for federal bankruptcy protection, ensuring that financial crises are addressed through structured reforms .