Last summer, the City of Pittsburgh got a $5.2 million water bill for six months of service.
It didn’t pay.
So when Mayor Corey O’Connor took over from Ed Gainey in January, he took on both that debt and the rest of Pittsburgh Water’s 2025 charges. The total owed to the utility: $9.7 million.
O’Connor had $6 million on hand to pay down the debt. But the new mayor’s administration had to scramble to come up with the balance — nearly $4 million — to fully plug the hole.
That’s a problem, according to Pittsburgh’s controller, an independently elected fiscal watchdog.
“That is a liability that should have been paid last year … and I cannot explain what their rationale was,” Controller Rachael Heisler told TribLive, referring to the Gainey administration. “Why they didn’t want to process those payments, we can’t explain.”
On Thursday, O’Connor told Pittsburghers his predecessor left the city in worse financial shape than thought, with a budget shortfall that might hit $40 million.
While the mayor has not provided TribLive with a detailed accounting of the projected budget deficit, officials say the way Gainey’s administration handled its Pittsburgh Water bills illustrates part of the problem.
At the end of the day, Pittsburgh taxpayers are on the hook regardless of who is running the city.
But O’Connor, already inheriting a budget he didn’t help prepare, entered office with a multimillion-dollar handicap, hamstrung by debt that arguably should have been addressed by Gainey’s team.
Pawlak not ‘personally involved’
Gainey’s number crunchers seem to have started with a mistaken assumption: They budgeted only $4.5 million for all of 2025 for the city’s total water consumption from Pittsburgh Water and another utility.
That figure is in line with the Gainey administration’s projections for annual water bills through 2029.
Gainey’s top lieutenant, Jake Pawlak, who ran the city’s budget office, has defended his former boss’s spending plan.
He said what the O’Connor team calls deficits are instead “philosophical differences” between two mayors about how to fund municipal government.
Council, though, was so skeptical of Pawlak’s numbers that it rewrote the budget in late December and approved a 20% tax hike to close the gap between spending and revenue.
Realizing the city was going to need more money to pay last year’s Pittsburgh Water bills, it earmarked $6 million for that expense.
The debt to the utility, though, was closer to $10 million.
On Aug. 11, Pittsburgh Water sent the city its bill for the first six months of the year, Julianne Pelusi, a utility spokeswoman, told TribLive.
When the city didn’t pay, Pittsburgh Water “followed up” on Aug. 26 and Sept. 18 “but did not receive a response,” Pelusi said.
“There was no due date set for the invoice,” Pelusi said. “This was an effort to get a partial-year bill over to the city with hopes they paid it to eliminate the growing account balances and keep as much off of the final annualization payment as possible.”
Only last month did the city clear its unpaid invoices to Pittsburgh Water, the controller’s office said.
On Monday, Pawlak refused to get into specifics about the water bills.
“I don’t have anything to give you on that subject,” he said. “I was not personally involved in the processing of those payments, nor am I able to consult the relevant records any longer.”
Utility payments were among a number of budgetary sore spots officials cited last week.
O’Connor said the city needs an additional $13 million in the next two years to fund employee health care.
About $2.5 million more will be required for emergency bridge maintenance and emergency boiler and roof repairs, the O’Connor camp said.
Pittsburgh last year ran an $8.6 million budget deficit. It pulled $44 million from its reserve fund to make ends meet. The city outspent its budget on overtime alone by more than $20 million.
Landslide lawsuit
Another area of concern flagged by the controller’s office concerns legal expenses incurred under Gainey, who has not responded to requests for comment.
Attorney Joshua Lyons said a court had ordered the city to pay his clients $730,000 after a landslide forced them out of their house, but the Gainey administration appealed the decision three times.
That delay pushed the payment into 2026 — and, like the Pittsburgh Water bill, onto the O’Connor administration.
Lyons’ clients are Brian and Donna Albert, who owned a home in Schenley Farms, a neighborhood that straddles the Hill District and Oakland.
They contacted the city in March 2022 after the roadway started to pull away from the sidewalk and curb on Andover Terrace.
Pittsburgh closed parts of the road. But other work was repeatedly delayed, Lyons said.
For four years, the Alberts paid their $2,200 monthly mortgage for the four-bedroom home — even though they couldn’t access the house.
Ultimately, the city used eminent domain to obtain the Alberts’ property in February 2023, paying them $26,000 initially.
However, when the Alberts went to the Allegheny County Board of Viewers to determine damages they were entitled to, the city objected.
‘Strong-arm tactics’
In September, an Allegheny County Common Pleas Court judge gave the city 30 days to pay the couple $730,000.
Instead of doing so, the city appealed — unsuccessfully — three times to Commonwealth Court, court records show.
In October, the appeals court accused Pittsburgh of “strong-arm tactics” and agreed with the couple that the city’s actions amounted to a “de facto taking” of their property, requiring that they be compensated for their home.
Pittsburgh officials did not pay until mid-February — under O’Connor.
“A lot of our argument was, the City of Pittsburgh, their client is the taxpayers and by dragging this out, it was more a cost for the taxpayers,” Lyons told TribLive.
Lyons is trying to recover an additional $400,000 to $500,000 in costs and fees for the Alberts.
The lawyer said he wasn’t surprised that Pittsburgh officials appealed — but he called the city’s actions an “extreme case.”
“The city knew about this problem, delayed in fixing it and then tried to strong-arm our clients,” Lyons said.
Dan Gilman, O’Connor’s chief of staff, said Friday that having to carve another $730,000 out of the city’s beleaguered budget “eats up” a lot of the money set aside for legal judgments.
The Gainey administration budgeted almost $1.3 million for legal judgments for last year — and spent more than $1.7 million, unaudited records show.
This year, the line item grew to $2 million, of which nearly half has gone to the Alberts.