Pittsburgh Mayor Ed Gainey on Tuesday will formally present a budget proposal that curbs spending without reducing services or hiking taxes, even as the city’s revenues dip.
While Gainey will likely use his annual budget address as an opportunity to paint a rosy picture of a budget that funds core city functions without laying anyone off, some city officials worry that the spending plan includes no new capital projects, meager funding for the city’s aging vehicle fleet and shrinking amounts for public safety overtime pay.
Gainey’s pitch comes amid heightened pressure on the city’s finances.
A post-pandemic shift to remote work has caused Downtown property values to plummet, meaning Pittsburgh is collecting less in real estate tax.
Federal funds that helped prop up municipal budgets during the covid-19 pandemic are drying up.
And a controversial tax the city levies against out-of-town performers and athletes is facing legal challenges and could be eliminated completely.
In response to the city’s bleak revenue forecasts, the city is poised to cut spending by about 4.2% next year — but revenues are falling even faster, with a 5.5% dip predicted in 2025.
While officials seem to agree spending needs to slow as revenues decline, some are raising alarms about whether it’s sustainable to continue pausing large-scale capital projects or realistic to assume the city will be able to cut costs in areas like public safety overtime and legal judgments, as proposed by Gainey.
Starting this week, city officials will scrutinize proposed spending in each city department in an effort to ensure Pittsburgh’s finite resources are used responsibly.
The process also includes chances for the public to provide feedback. Council will be able to tweak the mayor’s proposed budget before it has to vote on it by the end of the year.
Public safety cuts
Gainey’s budget proposes only 800 police officers, down from the 850 budgeted for this year and lower than the 900 most officials agree is the force’s ideal size.
The decrease is based on the reality that the city can’t even boost staffing levels to the level the mayor is proposing.
The Bureau of Police has about 750 officers.
“We can’t really cut in public safety,” said Councilman Anthony Coghill, D-Beechview, who chairs council’s public safety committee.
The budget proposes to slash on paper not just the number of officers, but also the budget for overtime pay for police and fire personnel.
The police bureau last year spent over $19.5 million in overtime. Olga George, a spokeswoman for Gainey, said officials expect to spend $1 or $2 million more than the $17 million budgeted for police overtime this year.
Yet Gainey’s preliminary budget proposes to reduce funding for police overtime to $15 million next year.
George said that’s because officials expect that new recruits will reduce the need for officers to work so much overtime.
Coghill, however, said he’s not convinced that the city will recruit enough new officers to make up for those that are leaving. He noted that the bureau is already understaffed.
“We’re still going to be burdened with lots of overtime,” Coghill said. “I don’t see that ending any time soon.”
City Councilwoman Erika Strassburger, council’s finance chair, said she was unsure how the city would cover its public safety needs without paying the overtime typically required.
That applies also to the city’s fire bureau, which spent almost $18 million in overtime pay in 2023.
This year, George said, the bureau is expected to go over its $17 million overtime budget, though she didn’t say by how much.
Next year, the fire bureau is expected to see its overtime budget drop to about under $15 million.
“It’s not unreasonable to at least hope for a reduction in the premium pay,” City Council Budget Director Peter McDevitt said. “I don’t know that it’s realistic.”
City fleet woes
Councilman Khari Mosley of Point Breeze, along with Coghill and McDevitt, raised concerns that the city is underinvesting in its aging vehicle fleet.
To maintain the fleet properly, McDevitt said, the city would need to invest about $20 million annually.
The mayor’s budget proposal for 2025 would invest just over $6 million for the fleet, with about a quarter of that going to fire truck leases rather than longer-term investments in purchasing vehicles.
Featured Local Businesses
The Department of Public Safety — which has pushed for new vehicles for police, fire and EMS — is set to receive under $1.4 million for vehicles next year, less than half of its budget for vehicles this year.
But paying for vehicles is increasingly challenging, as the cost of some, like fire trucks, have doubled since the covid-19 pandemic, Mosley said.
Legal judgments
Another area where some officials worry more money may be needed is legal judgments, or the amount the city sets aside to settle lawsuits or to pay out after losing legal battles.
Gainey’s preliminary budget slashes that line item to barely over $1 million next year from more than $6.8 million this year.
Director of the Office of Management and Budget Jake Pawlak said that’s because the city doesn’t have any major legal fights currently underway.
The city bumped up its budget for judgments in recent years, he said, because of costly lawsuits over the death of Jim Rogers, a homeless man who died after police used a Taser on him, and the Fern Hollow Bridge collapse.
Cutting costs
Pawlak has talked up areas in the budget where officials are cutting costs without impacting services.
For example, the city next year will save $3.6 million from its operating budget on property services because officials had gotten ahead on doing some projects by using federal covid-19 relief money.
Additional maintenance on city-owned properties will be covered by money in a trust fund that collects revenues from properties the city sells, he said.
Because the city has made strong investments in its pension fund in prior years, and because interest rates have been favorable, the city next year will pay about $8.7 million less in pension contributions than it did last year.
The amount the city pays to the pension fund is determined by the commonwealth and outside actuaries, Pawlak said.
Pawlak said officials have also found areas where they can cut costs by working more efficiently or by eliminating job positions that are already empty.
While officials seem to agree spending needs to be reined in as the city’s financial margins grow slim, Strassburger said she wants to ensure important expenses don’t have a lower priority.
She also cautioned against taking on too much debt, particularly as new capital projects have been stalled in 2024 and 2025 in response to dwindling revenues.
The capital budget includes $20 million for paving, $2 million for bridge preservation and restoration and $700,000 for general bridge upgrades.
But several bridge projects originally scheduled for next year have been delayed for cost-related reasons, Strassburger said.
“We rightfully focused on providing adequate support for bridge improvement in the aftermath of the Fern Hollow Bridge collapse, and I don’t want that to be deprioritized even as our finances grow tighter,” Strassburger wrote in a letter to council last month.
Despite some concerns, Strassburger said she feels comfortable that the city in 2025 will be able to keep up on basic city services.
“That said, we don’t know when the next 17 landslides might hit,” she said.
“We don’t know when a bridge surprises us and we thought it was fair and now it’s closed. In my mind, it’s less about having the basic services covered and more about having the buffer to deal with the unexpected. We’re getting pretty darn close to not having the buffer we need” in future years.
Growing revenue
To get the city on truly stable financial footing, Strassburger said, officials have to find ways to grow revenue.
She advocated for payments in lieu of taxes from nonprofits, a revitalization plan to help increase property values and efforts to bring in new residents and businesses to grow the city’s tax base.
She also called for more teamwork with other government entities, pointing to the $1 million the city will receive next year to buoy its parks and recreation budget from the Allegheny County Department of Human Services as an example of how other government bodies could support the city’s coffers.
McDevitt estimated the city would need to bring in an additional $75 to $100 million in revenues each year to reduce its reliance on debt and fully fund all its needs.
That estimate is based on the amount of money the city takes out in bond financing annually, as well as the amount of money needed to pay for key expenditures that are now underfunded, like the city’s vehicle fleet and the police bureau, which would cost millions more to operate if it were fully funded.
Featured Local Businesses
McDevitt acknowledged it’s normal for the city to take on debt by floating bonds. But he said the city should be relying less on bond financing and more on money it has on hand. The city can’t use bond financing to cover its operating budget or buying new vehicles.
The city’s capital budget calls for issuing $388.4 million in debt.
Future outlook
Officials said Pittsburgh city will need to watch its spending closely over the coming years.
“We need to save where we can, be prepared for the possibility of revenue shortfalls, and make sure that we have the flexibility to spend what we need to on essential services, especially public safety,” Controller Rachael Heisler said.
Despite concerns, McDevitt said, “It’s not all doom and gloom.”
“It’s going to be tight,” he said. “We’re treading water.”
But Pawlak said the important thing is that taxes aren’t going up and residents won’t feel direct impacts.
“We’re not slashing anything,” he said.