Pittsburgh city controller warns that city is headed into major financial crisis
PITTSBURGH (KDKA) — Is the city of Pittsburgh headed for a fiscal cliff?
Falling property values threaten to blow a hole in the city's finances.
KDKA-TV's Andy Sheehan: "You're sounding the alarm."
Pittsburgh City Controller Rachael Heisler: "Yes, the time to act is now."
Heisler is tolling 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 will have very, very difficult choices to make in the days ahead. We're still in a position where we can make changes that 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 dire fiscal straits are two-fold.
The first is those assessment appeals by Downtown office buildings, which emptied during the pandemic and have never recovered. Downtown makes up 25 percent of the city's taxable real estate — about $30 million a year in revenue.
Those appeals are cutting those assessments, and those tax payments, in half in some cases. Not only will the city be getting half the revenue, but it has already cut $1.8 million in refund checks and will be cutting more.
"In addition to not bringing in revenue, we're going to owe checks back to property owners who own commercial buildings Downtown," Heisler said.
Then there's the Sports Facility Usage Fee, the so-called jock tax. For the past 20 years, the city has raked in $70 million levying a fee for visiting athletes and performers who've come to Pittsburgh.
The courts have ruled it unconstitutional. So, not only will the city not be getting an anticipated $4.4 million in revenue this year but will likely be refunding a large part of that $70 million.
Sheehan: "This could blow a huge hole inside the budget."
Heisler: "It's very concerning the position we're in at this moment. We need an economic plan that includes these reductions in revenue."
Sheehan: "Do you think we're headed off a fiscal cliff?"
Chief Financial Officer for Pittsburgh Patrick Cornell: "No, I do not. I don't think we are. I think that the budget is a snapshot here."
While acknowledging steep cuts in revenue, the Gainey administration says it anticipated and budgeted for much of the decrease.
As these assessment appeals and court decisions roll in, Cornell said the city will make the needed adjustments to reduce spending.
"As we get further into the year and we keep tabs on our quarterly spending, I think that's when we'll have a better sense," Cornell said. "At the same time, I think there's plenty of places where we have the flexibility worked in."
But Heisler said the mayor and Pittsburgh City Council should have already started reining in spending and should consider cutting programs that don't prioritize keeping people safe or keeping the city clean.
"It would have been smart to do last year," Heisler said. "It's smart to do today, it's smart to do tomorrow. We cannot wait because the longer you wait, the more painful the cut or modifications in spending is going to be."