Mayor Ravenstahl is quickly coming up against the end of the fiscal year and needs to solidify Pittsburgh’s budget for next year. The Intergovernmental Cooperation Authority (ICA) rejected the first budget draft because it relied on revenues from a tuition tax for which legislation had not yet been approved. The second draft reduces his revenue projections from $453.8 million to $446.5 million. And by some accounts this is carving out an aggressive budget. If he were truly being aggressive in putting together his budget, he would work on reducing expenditures rather than using stop-gap measures to shore up revenues.
Without the projected $16.2 million from students attending colleges and universities in the City, he has had to rely on a time-worn tradition of Pittsburgh mayors-one-time revenue sources to balance his spending. For example, the new budget relies on the sale of City owned buildings which are expected to bring in $500,000 as well as a transfer from the City’s debt escrow account of $4.1 million. The new budget also anticipates increases to other revenue streams such as the earned income tax, the deed transfer tax, and the payroll preparation tax. Considering that the recession has shown no signs of abating anytime soon in the Pittsburgh area, these estimated increases may be a bit of wishful thinking. Furthermore, these one-time revenue generators will not solve the City’s spending problems-especially the crippling legacy and debt costs.
If the Mayor truly wants to be aggressive in setting the budget, he needs to address the expenditure side. He can start with mandating that each department shave five percent from its budget. This across the board cut could save the City a substantial amount-$22 million on a $450 million budget. At a time when most companies and individuals have seen freezes or cuts to income, the City should do the same. The Mayor needs to tackle the high legacy costs by lobbying for defined contribution plans to replace the defined benefits plans currently in place. Any City property that is sold should have those proceeds used for debt reduction and should not be put into the general fund.
Throughout the years we have made many suggestions on how the City can improve its finances. If the Mayor wants to be aggressive he should start implementing some of these long-term solutions to finally get the City back on track.
