Pittsburgh reports ‘severe’ decrease in revenue; mayor looks to avoid layoffs

Pittsburgh Mayor Bill Peduto is eyeing “structural” budget changes for a postCOVID-19 economy so layoffs can remain a “last option” for a city already seeing a sharp drop in revenues.

On Wednesday, city budget officials reported revenues between March and May 8 have already dropped 25% compared with the same time last year.

During that time frame, the city pulled in $94,401,623 compared with $126,398,602 in 2019.

The city estimates four of its most impacted revenue streams — taxes on payroll, parking, earned income and property — could see about $97 million in losses.

Overall, budget officials are forecasting a 21% cut in projected revenues in 2020, going from $608 million down to $481 million, for a loss of $127 million. In the coming five years, they expect to see a 7.5% decrease in revenues, or a total of $239 million.

City Controller Michael Lamb agreed during his annual budget review that those figures are likely in the “ballpark” of what the city will face in its coming “fiscal crisis.”

As the city faces these severe budget impacts, Mr. Peduto said he and his team are discussing several options to “lessen the necessity of lowering expenses on the backs of city workers.”

In addition to the hiring freeze the city instituted in early May, Mr. Peduto said the administration is looking to eliminate positions through attrition and to leave unfilled in 2021 the more than 60 positions that remain open this year as a result of the freeze. Department heads have been ordered to find 10% in non-personnel cuts citywide.

The Office of Budget and Management also reports the city has decreased spending by 7% since March with expenditures at $101,542,050, down from $109,253,127 during the same period last year.

Corresponding updated revenue and expenditure reports from the city controller’s office are not yet available.

“We’ve started to see the effects of tightening the belt,” Mr. Peduto said.

Budgeting acrobatics in a post-COVID-19 city budget could include making up revenue by targeting fraud, waste and abuse; restructuring city revenue streams with approval from the state; and seeking help from a possible debt refinancing program via Harrisburg, Mr. Peduto said.

“The last option we want to look at are layoffs,” he said.

Before council enters its summer recess, the administration wants to get before council a request-for-proposal seeking companies to track individuals and companies that haven’t been paying their fair share in taxes. The idea is to include an amnesty option with no penalty in exchange for the city to recoup the unpaid taxes, Mr. Peduto said.

But to get through the immediate future and make payroll for its roughly 3,500 employees, Mr. Peduto said dipping into the emergency fund is likely. The city has built a surplus over the past several years.

“But that’s just a one-year solution, and we have to replenish that reserve fund as well,” Mr. Peduto said.

The mayor is still holding out hope for flexible emergency relief from the federal government. He and mayors from around the nation have been appealing to congressional leaders and the White House since March for funds to support pandemic-related public safety costs and other operational funds to help avoid widening deficits and mass layoffs.

U.S. House Speaker Nancy Pelosi is defending the Democrats’ proposed next round of COVID-19 relief — a massive $3 trillion plan that includes roughly $1 trillion in funding for state and local governments. President Donald Trump on Wednesday described the plan as “DOA.”

“I had the opportunity to talk with [U.S. Reps.] Lamb and Doyle yesterday, and they’ve been doing their part as well,” Mr. Peduto said. “Our goal in Pennsylvania is to convince Sen. [Pat] Toomey that all of Pennsylvania’s cities, whether it’s Pittsburgh, Erie, Harrisburg or Scranton — there’s 53 cities throughout the state — [that] all of us need that level of assistance in order to be able to get by.”

Mr. Peduto is hoping the Republican senator will take notice of his administration’s plans for “creative financing” through hiring freezes, spending cuts, sniffing out tax fraud and partnering with Harrisburg.

“There needs to be structural change within city government as well, and hopefully showing the senator that Pittsburgh is willing to make those tough decisions will help to earn his support for the care package coming through Congress,” he said.