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Pittsburgh City Comptroller Warns City Is Heading for Major Financial Crisis
PITTSBURGH (KDKA) — Is the city of Pittsburgh heading toward a fiscal cliff?
The fall in property values threatens to put a dent in the city’s finances.
Andy Sheehan of KDKA-TV: “You’re sounding the alarm.”
Pittsburgh City Comptroller Rachael Heisler: “Yes, the time to act is now.”
Heisler is ringing that bell. Warning that with continued spending in the face of drastically reduced tax revenues, the city is headed for a fiscal crisis.
“If we don’t act, we’re going to have very, very difficult choices to make in the coming days. We’re still in a position where we can make changes that will make the next three, four, five years less painful,” Heisler said. “But the longer we wait, the more painful it will be.”
Heisler said the reasons the city is in such a difficult fiscal situation are twofold.
The first is assessment resources from downtown office buildings, which emptied out during the pandemic and never recovered. Downtown makes up 25% of the city’s taxable real estate — about $30 million a year in revenue.
These funds are cutting those assessments and those tax payments in half in some cases. Not only will the city receive half the revenue, but it has already cut $1.8 million in refund checks and will cut more.
“In addition to not generating revenue, we will be writing checks to downtown commercial property owners,” Heisler said.
Then there’s the Sports Facility Usage Fee, also known as the jock tax. Over the past 20 years, the city has raised $70 million by charging a fee to visiting athletes and entertainers who come to Pittsburgh.
The courts have ruled that it is unconstitutional. So not only will the city not receive the $4.4 million in revenue it was expecting this year, it will likely have to repay a large portion of that $70 million.
Sheehan: “This could put a huge dent in the budget.”
Heisler: “The position we are in at the moment is very worrying. We need an economic plan that includes these reductions in revenue.”
Sheehan: “Do you think we’re heading toward a fiscal cliff?”
Pittsburgh CFO Patrick Cornell: “No, I don’t. I don’t think we are. I think the budget is a snapshot here.”
While acknowledging drastic revenue cuts, the Gainey administration says it anticipated and budgeted for much of the reduction.
As those assessment appeals and court decisions come in, Cornell said the city will make adjustments as needed to reduce spending.
“As we move through the year and get a handle on our quarterly spending, I think that’s when we’ll have a better sense,” Cornell said. “At the same time, I think there are a lot of places where we have flexibility worked in.”
But Heisler said the mayor and Pittsburgh City Council should have already started to rein in spending and should consider cutting programs that don’t prioritize keeping people safe or the city clean.
“It would have been smart to do this last year,” Heisler said. “It’s smart to do it today, it’s smart to do it tomorrow. We can’t wait because the longer you wait, the more painful the spending cuts or changes are going to be.”