Pittsburgh is Considering a Tax Increase?

Pittsburgh is Considering a Tax Increase?

Say it isn’t so.  The City says it will be $7 million short of the revenue needed for next year’s budget and is being advised by the Act 47 team to look at a tax hike, specifically a property tax boost.  This is the same Act 47 team that last year told the City and the Governor it was time to end their oversight. Too bad the same players are back after blowing that call and recommending more foolishness.

The City will be the beneficiary of a $7.5 million windfall as the result of the end of the Commonwealth Treasury’s interception of RAD dollars (part of the City’s share under Act 77) that were used to pay off the infamous Pittsburgh Development Fund’s bond debt.  Infamous in terms of the projects it was used to fund. Lazarus comes to mind among several failures funded by the bond proceeds. This interception scheme was the brainchild of the then mayor as a way to get the bonds financed at the lowest possible rate. It put the state Treasury in the position of collector of the revenue and payer of the bond service.

Moreover, the City will not be diverting $7 million to cover the cost of retirement enhancement offers that were used to get reduce employment as it was this year. If the City has been wise enough not to replace those employees who took advantage of the enhancement package there should be at least $3 million or so in reduced compensation costs next year compared to 2013.  It would be a shame to learn that all these people have been replaced.  After all, cutting the size of the employment roll is single best way to lower the trajectory of future outlays.

And, in that regard, the City should be looking aggressively at outsourcing more of its work and downsizing its costs.  The Mayor should adopt the advice we gave last December. Institute an absolute hiring freeze in which no one gets hired without the express written consent of the Mayor.

Tax hike? Nonsense.  In a nearly $500 million budget, there have to be plenty of places to cut spending by $7 million without doing harm to service delivery.