Pittsburgh’s 2021 budget presentation will be delayed

Pittsburgh’s 2021 budget presentation will be delayed

Pittsburgh city council passed an ordinance last week that would waive the requirement for the preliminary operating and capital budget to be presented by Sept. 30.  This applies only to the 2021 budget year and was precipitated by the coronavirus pandemic.

In April the mayor projected a $127 million revenue shortfall and asked for federal aid for Pittsburgh and other cities.  More recently the city’s treasurer put the shortfall at $100 million.  That’s close to the most recent estimate (at the end of the 2nd quarter) of the Office of Management and Budget (OMB). 

With the exception of property and local service taxes, OMB’s estimate shows collections on taxes coming in at anywhere from 86 to 31 percent of what was budgeted. Parking and amusement taxes and the facilities usage fee are expected to raise the lowest percentages of what was budgeted, which is not too surprising given people working from home, not working and sports and performances canceled, postponed or going on without spectators.

With a projected revenue total of $509.8 million and a projected expenditure total of $592.4 million, the OMB projected net operating balance is a negative $82.6 million.

The Sept. 30 budget requirement comes from a 2017 ordinance which itself came about due to the years Pittsburgh spent in financial distress/oversight.  When the Intergovernmental Cooperation Authority (ICA) was in place, the city had to present budgets and five-year forecasts to the ICA board 100 days before the end of the fiscal year.  The 2017 ordinance stated that when the ICA dissolved, which it did on June 30, 2019, preliminary budgets would go to council by Sept. 30. 

If the mayor signs the ordinance, which is expected, then the city would follow the budget process contained in the city’s home rule charter, which became effective in January 1976.  Under that process, the mayor presents the budgets and delivers the budget address on the “second Monday of the eleventh month of the fiscal year” or Nov. 9 of this year.

In August the mayor’s continued push for a federal relief package for cities that were not included in the CARES Act (local governments had to have a population of more than 500,000 to receive direct funding) seemed to figure into the desire to amend the budget timeline. There has been little movement on that front.  The city, and other municipalities in Allegheny County, have entered into grant agreements with the county for a portion of the county’s direct allocation.  And that money has specific requirements for its use and cannot be used for revenue shortfalls. 

It would be stretch to imagine a new aid bill would allow recipients to have greater latitude than the 171 counties and cities covered by the CARES Act. 

The mayor has stated the city has expended budgetary reserves.  While an action early on in the shutdown allowed the city to pursue lines of credit, that has not been utilized as of yet.  There has been a hiring freeze in place but no layoffs or furloughs have occurred.

Knowing that, perhaps when the city seeks input from residents on what they want to see with the 2021 budgets hopefully the emphasis will be on essential municipal services and looking to alternative methods of delivering non-essential services to garner savings.  It would be a good time to look at privatization to cut costs and employee counts. It should not include tax increases, of which there were two (deed transfer and a voter-approved property tax hike), for 2020 and would not aid in recovery.