Is the City Debt Diet Working?

The Controller for the City of Pittsburgh just released audited financial data for 2009. The data shows that the City had a small surplus for the year and that its long term debt fell to $680 million. The last Act 47 report showed a debt of $791 million. Based on the 2000 Census population of 334k, the City’s per capita debt burden fell from $2,667 to $2,035. That latter number is likely closer to $2,200 since the City’s population has fallen from 2000.

There’s two ways to determine if the diet is working. Relative to other U.S. cities, carrying more than $2,000 per person in debt is quite high. Pittsburgh was the only city in the Act 47 comparison that had more than 20% of its general fund spending represented by debt service. It is the City’s second largest expense after salaries and wages.

The other way is to see what it cost the City to try and avoid taking on debt. The Act 47 team noted that Pittsburgh undertook refunding in 2005, 2006, and 2008; the savings from those refinancing actions were then used to fund capital needs on a pay as you go basis, but "these changes came at a tremendous cost" according to the Recovery Plan. From FY12 through FY17 debt service is expected to increase a total of $125 million.

If the City takes on no additional debt everything outstanding as of now will be paid off by FY2024. That’s assuming all capital needs can be covered on a pay as you go basis and the City avoids the temptation to issue bonds for pension costs should the parking garage plan not come to fruition.