City controller’s office could be given more budgetary oversight
Amid growing concerns about the future of Pittsburgh’s finances, new legislation could give the controller’s office even more oversight of the city’s budget projections.
As the city code is currently written, the controller only has to certify the revenue projections for the upcoming fiscal year. Legislation introduced Tuesday by City Council, would change that to require a certification for the next five years if approved.
During the budget process, the Department of Finance, the Office of Management and Budget, and City Council’s budget team all convene to discuss the revenue projections. Once they all agree, those figures are sent over to the controller’s office for approval.
The certification of the revenues is the controller’s office deeming those assumptions “reasonable,” former Controller Michael Lamb said during last year’s budget discussions. “We take a look to see if [the mayor’s revenue] assumptions are valid,” he said at the time.
The new legislation would mean the controller’s office has to take that same approach when viewing projections for the next five years.
“It just kind of puts the pressure on the controller to make sure they’re comfortable with it,” council’s budget Director Peter McDevitt said Tuesday.
If the controller saw problems with future projections, the controller would have the ability to send it back to the various departments for further review and adjustments.
Even with a certification though, “it’s hard to predict the future,” Mr. McDevitt said
When Mr. Lamb was controller, his office certified the 2024 projections. But current Controller Rachael Heisler recently raised red flags about the city’s revenue projections in a letter she sent to council members and the mayor. She warned that two revenue sources, the facility usage fees and property taxes, needed to be altered to reflect the new reality.
The city is currently in a legal battle over the facility usage fee, sometimes called a “jock tax” that requires athletes and performers to pay a fee when using publicly funded arenas. The city estimates that it will collect about $4.4 million from it. But there has been a pause on collecting the fee while the appeals process plays out.
Pittsburgh is also facing a drastic decrease in property taxes, as major buildings in
Downtown have had their assessment value slashed.
“The City could see as much as a 20% reduction in the value of this building stock in 2024, which could cost the City $5.32 million in property tax revenue,” Ms. Heisler wrote in her letter.
Experts and internal documents have also shown that the city is headed toward a “fiscal cliff” that could empty the city’s bank accounts in a few years if things aren’t changed soon.
Last week, Mayor Ed Gainey announced the formation of a task force on city finances in an effort “to preserve the city’s strong financial position,” according to the announcement.
In the announcement, the city noted that based on firstquarter collections and financial modeling the Department of Finance is predicting revenues for 2024 will “come in under the expectations” set in the 2024 budget.
“While the administration anticipates that this underperformance can be effectively offset through routine, fiscally prudent management practices throughout the remainder of the fiscal year … the task force will be charged with producing a consensus response and providing clarity and transparency for the public,” the city said in a news release.
Mr. Gainey said he remains “confident” about the city’s overall budget situation.
“I’m glad Mayor Gainey is pursuing this conversation on city finances,” Ms. Heisler posted on X last week. “We need to have an open dialogue about the state of Pittsburgh’s finances. With revenues and expenditures uncertain, we will be facing challenging times in the next several years if we do not act now.”
Other business
During Tuesday morning’s meeting, City Council members decided to wait to approve Mr. Gainey’s nominee for the new director of the City Planning Department. Council members said they wanted to interview Jamil Bey, who was nominated for the position last month.
According to city code, Mr. Gainey doesn’t have the power to appoint that position. Instead, it should have been done by the Planning Commission, a nine-member body appointed by the mayor. Mayors have been appointing directors for this department for at least a decade. The interview has not yet been scheduled, but Councilwoman Theresa KailSmith asked that it not be scheduled for before a council meeting, which is typical, so that members have more than 30 minutes to meet with Mr. Bey.