Pittsburgh Public Schools (PPS) is projecting a $28.1 million budget deficit in 2025. That’s up $7.3 million from a prior projection. PPS likely will draw down its reserve fund balance to get the budget back in the black.
But the Post-Gazette reminds that a large portion of that projected deficit could be erased if the state Legislature would act.
For the past two decades, state legislation has allowed the City of Pittsburgh to capture a portion of the school district’s earned-income tax (EIT). That happened when the city came under state financial supervision.
And the diversion, never sunsetted, never ended. That means hundreds of millions of dollars in earned-income tax receipts have gone into city tax coffers instead of those of the district, the P-G says.
The city has repeatedly balked at ending the diversion. And given its current financial struggles, don’t expect it to voluntarily agree to give up the funding stream.
Indeed, PPS must get its financial house in order. And delaying its plan to right-size its brick-and-mortar excess has been shortsighted. But it’s past time for the Legislature to act responsibly and end this EIT raid.
Speaking of budgets, the P-G also reports the city’s budget is “on the brink” for 2025.
“In an effort to balance the budget, Mayor Ed Gainey is proposing cuts to an overtime budget that is already falling far short of funding some of the city’s most pressing emergency services.
“For police alone, the mayor’s budget slashes overtime pay to $15 million for all of 2025 — the same amount the city spent in the first nine months of this year,” the P-G says.
“In a department facing crucial staff shortages and daily work shifts that have to be filled to meet basic public safety needs, the move underscores the severity of Pittsburgh’s money woes and raises questions about whether the mayor can make those cuts a reality.”
But lost in such reportage is this simple fact: Compared to peer cities, Pittsburgh’s costs remain out of whack.
From the conclusion of Allegheny Institute Policy Brief Vol. 24, No. 29, in August:
“Pittsburgh’s lethargic emergence from the COVID-19 pandemic … stood in stark contrast to the impressive recovery and improvement of the [composite] benchmark city,” wrote Eric Montarti, the think tank’s research director, and Alex Sodini, a research assistant.
“The latest comparison of financial and employment data on a per capita basis demonstrates in detail Pittsburgh’s very poor performance against the benchmark city on nearly every metric.”
To wit, Montarti and Sodini found that “the City of Pittsburgh spent far more on a per capita basis and took in much more in taxes on a per capita basis than the benchmark city. Likewise, debt per capita was far higher for the City of Pittsburgh compared to the benchmark city.”
“Pittsburgh’s very high spending, excessive taxation and embrace of unions have all contributed to an overbearing public sector which has impeded growth and gives the city a reputation as being unfriendly to business,” they noted.
“For Pittsburgh to become a solid economically performing city, the solution is clearly not greater levels of public spending which landed Pittsburgh in its current situation, as some local policymakers have advocated, but instead by making Pittsburgh an attractive destination for businesses and residents by curbing public spending, reducing burdensome taxation, trimming excess public employment, encouraging the state to adopt Right-to-Work and embracing free-market policies,” the think tank scholars concluded.
The discussion about Pittsburgh’s finances being “on the brink” can ill afford to ignore such stark facts.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
