Coronavirus and 2020 local budgets: Allegheny County
Compared to the City of Pittsburgh, Allegheny County has a larger operating budget of $959.8 million. The county property tax is budgeted to raise $382.4 million (40 percent) of total revenues. Property taxes are deposited into the general fund and debt service fund. The county extended the discount and gross due dates for 2020 property taxes by one month.
The county also levies taxes on sales, hotel and motel room rentals, alcoholic beverages and vehicle rentals but does not retain 100 percent of the revenues for its budget purposes.
The county receives 25 percent of the 1 percent sales tax, budgeted at $52.9 million this year. The Regional Asset District (RAD) receives 50 percent for distribution to regional assets (money from this share goes to the county budget for parks) and municipalities receive 25 percent. RAD’s latest monthly budget report , reflecting February collections, noted “RAD expects revenue to steeply decline in the coming months, due to the COVID-19 shutdown.”
The county receives $1.3 million for collecting the hotel tax. The bulk of the 7 percent tax pays for debt on the convention center, tourism promotion activities and operations at the convention center and is projected to bring in $36.8 billion in 2020, an amount that will certainly decline with the decrease in travel and tourism.
The levies on alcohol and vehicle rentals provide the local match for state revenue for the Port Authority. In 2020 the 7 percent alcohol tax is budgeted to raise $45.1 million and the $2 per day vehicle rental tax $7.8 million. With restaurants and bars closed, and the aforementioned decrease in travel, both will be affected. In recent years this fund ran a surplus, which might have to be utilized this year.
Taxes collected by retailers, hotel and motel operators, bars and vehicle rental establishments in March are due at various points in mid-April. Court enforced actions on delinquent taxes has been suspended.
The most recent year-over-year decline in these taxes occurred in 2017 when hotel and vehicle rental tax collections decreased by $242,000 and $15,000, respectively from the amounts collected in 2016.
The county also receives a 2 percent share of gross terminal revenues at the Rivers Casino which goes to the county’s general fund. The casino is closed which will affect the county’s distribution, budgeted at $5.9 million.
Allegheny County’s home rule charter requires adopted budgets to be balanced and amendments after adoption to maintain balance. The county’s unassigned fund balance (money that has not been restricted or committed to some purpose) was $50.5 million at the end of 2018 and may be called upon to make up for shortfalls.
The county might receive direct dollars from the CARES Act “Coronavirus Relief Fund” since it has a population greater than 500,000. At this week’s meeting of council two additional grants totaling $15 million were accepted under the Community Development Block Grant and the Housing Emergency Solutions Grant.
In 2009 as the economic slowdown began to be felt in the area we wrote “the one thing [local governments] should not do is to make the local problems worse by raising taxes to fill budget gaps. If spending cuts need to be made, they must make them.” The county did not increase property taxes this year. With the exception of the alcoholic beverage tax, other tax rates are at state-prescribed maximums and cannot increase without action by the General Assembly.
As we recommended for the city, the county should evaluate the services it carries out—it has a regular sunset review process that would aid significantly in this effort—to see if privatization and outsourcing may be options to relieving a budget difficulties in 2020.