»Lost in transition?

A piece on Pittsburgh's fiscal crisis, from the New York Times.

Letter From Pittsburgh: Decade After Big Steel's Demise, a City Lost in Transition

January 2, 2004
By JAMES DAO

PITTSBURGH

At the Carnegie Museum of Art, a series of paintings by
Aaron H. Gorson capture what many people still consider the
quintessential images of this city that industry built. A
coal barge plies murky waters. A blast furnace scorches the
dark heavens like a supernova. Smoke-belching stacks shroud
the horizon in brown haze.

But the paintings are a century old and the Pittsburgh they
depict no longer exists. The big steel mills along the
Monongahela River, save one, gasped their last breaths a
decade ago. Shopping malls, gleaming office parks and
upscale town houses have replaced some. Others lie vacant,
the hulking skeletons of a dying species.

Call Pittsburgh Steel City these days, and many residents
will take offense. Pittsburgh, they say, is now home to
"clean industries" like bioengineering and robotics. The
bleak Dickensian tableau of big steel is virtually gone.

But so are most of the hand-dirtying, high-paying union
jobs that once made steel the fiscal marrow in Pittsburgh's
bones. And now the city is broke, relegated to junk-bond
status. Despite layoffs and service cuts, Pittsburgh will
face an $80 million budget gap in 2004 and needs to raise
taxes, officials contend.

For residents, the crisis is a reminder that despite the
city's efforts to remake itself in a postindustrial world,
it has not quite replaced all those manufacturing jobs.
This is a city lost in transition, rooted in steel but
struggling to be reborn as something higher tech and less
gritty.

"We're a tale of two cities," Mayor Tom Murphy said. "We've
had over the last nine years an unprecedented level of
development. On the other hand, the underlying financial
structure reflects a city that doesn't exist anymore."

During those years, the city underwent a striking face
lift, building new football and baseball stadiums along the
Allegheny River and a new convention center downtown. And
shoppers now browse upscale shops at the Waterfront Mall on
the site of the former Homestead steel plant, where union
workers battled Pinkerton guards a century ago.

Yet in a striking indication that Pittsburgh is striving to
move beyond its past without completely forgetting it, the
developers left 12 towering smokestacks that are
brilliantly lighted at night adjacent to the mall's movie
complex.

"Schizophrenia might be the right word for what we are
going through," said Frank Giarratani, director of the
Center for Industry Studies at the University of
Pittsburgh. "We are a steel city. But people don't know why
they think that anymore, except for the history."

The immediate causes of Pittsburgh's fiscal crisis are
hotly debated here and in Harrisburg, the state capital.
Mr. Murphy points to what he calls an archaic tax structure
and weak national economy. His critics say excessive
borrowing and overly generous labor contracts are to blame.

To relieve the budget crunch, Mayor Murphy has closed
recreation centers and public pools and reduced street
cleaning, rodent control, police patrols and bus service.
And, next year's marathon has been canceled.

Mr. Murphy, a Democrat, has asked the state to designate
Pittsburgh "distressed" under a law that would give the
city expanded taxing powers, including on commuters. Gov.
Edward G. Rendell, also a Democrat, seems inclined to
support the request, but many legislators, including some
Democrats, contend that the designation would only
stigmatize Pittsburgh.

"It's frustrating to many of us, because Pittsburgh has
become a dynamic region," said State Representative Jeffrey
E. Habay, a Republican from Allegheny County. "We've come
through the era of big seel, and it's been difficult, but
we've stabilized our job base. We're not fiscally
distressed, we're fiscally mismanaged."

Experts say that while a mixture of outdated taxes and poor
management precipitated the current crisis the region's
long-term economic health has been shaky for some time,
largely because of those silent mills. From 1974, a peak
year for steel employment, to 2002, the industry
hemorrhaged more than 75,000 jobs in the Pittsburgh region,
according to the Bureau of Labor Statistics. In the same
period, the city shrank to 334,000 residents, from 520,000,
leaving it with roughly the same population as a century
ago.

Shrinking population has meant a shrinking tax base. Today,
40 percent of the city's real estate is tax exempt, owned
by nonprofit churches, universities and hospitals.
Two-thirds of its 300,000 workers live in the suburbs,
subject to a small $10 annual commuter tax that was set
more than 30 years ago. And half of its corporations are
exempt from the local business tax.

"The city puffed itself up in the 1990's and said, `We're
not a steel town, we're an education town, a health-care
town, a high-tech town,' " said James D. English, the
international secretary-treasurer of the United
Steelworkers of America, which has its headquarters here.
"But from my perspective, the city's problems today are
related to the absence of those good-paying manufacturing
jobs."

Muhammad Hafiz, 34, says he has been hurt by the passing of
those mill jobs. His father worked in steel, and Mr. Hafiz
assumed he would as well. But a union job never
materialized, and today he hawks newspapers on the street.

"We used to call Cleveland the Mistake by the Lake," Mr.
Hafiz said wistfully. "But no more. I'm thinking of going
there myself."

Still, some people are coming back, drawn by the growing
number of high-tech start-up companies and a rich pool of
technological expertise centered on the University of
Pittsburgh and Carnegie Mellon University. Aldo Zini is
one. A Pittsburgh native, Mr. Zini returned from California
three years ago to help create a company, Aethon Inc., that
makes robots that transport supplies from hospital storage
rooms to nursing stations. It has only 16 employees but
expects to expand.

"I was drawn back to this area because of the talent, the
things going on here," Mr. Zini said.

He is emblematic of a generational divide that cuts through
southwestern Pennsylvania, splitting residents who worked
in the mills from those who grew up believing there was no
future in steel.

That divide was underscored in the contrasting reactions to
President Bush's decision this fall to lift tariffs on
imported steel. The tens of thousands of retired
steelworkers in the region who have mortgages, pensions and
health insurance paid for by steel responded with outrage,
vowing political retaliation. But many of the city's newer
industries said they might benefit from the lower cost of
imported steel. And younger people did not seem to care.

Indeed, for younger residents, there have been real
benefits to steel's demise. They worry about the weak job
market, which has contributed to what the Census Bureau
recently called a brain drain of college graduates from the
region. But many prefer the gleaming new Pittsburgh to the
polluted industrial landscape of old. They note that when
the mills closed and the coal-fired haze dissipated, people
began to appreciate Pittsburgh's charms: its San
Francisco-like hills, its necklace of muscularly elegant
bridges and its fine skyline. They point out that the city
produced Andy Warhol..

"Pittsburgh has really suffered under its image as an old
steel town," said Matthew Burger, president of the
Pittsburgh Urban Magnet Project, an organization of young
professionals. "I still find it stunning when I hear people
say: `Pittsburgh is an old community, a mill town, it's all
about steel, pollution and dirty water and skies.' It
couldn't be more false."

http://www.nytimes.com/2004/01/02/national/02LETT.html