Pittsburgh Mayor Corey O’Connor said Tuesday the city’s budget needs a major overhaul — not next year, but in the coming weeks.
He said his team identified $30 to $40 million in underestimated costs after he took office in January and that he will move to revise the 2026 spending plan starting this month.
“The reality is much worse than we thought,” O’Connor said.
He said former Mayor Ed Gainey’s administration and City Council passed a budget in December that lowballed estimates for employee health care by $9 million, retiree health care by $6 million, bridge upkeep by $2.5 million and fuel by $500,000, among other areas.
The mayor did not name specific places in the budget from which those holes will be plugged. The budget is already short of wiggle room; City Council raised property tax rates 20% in December to avoid potentially devastating losses.
He said his team will examine the city’s books to find places to trim spending and potentially eliminate unfilled jobs. He said he is “not currently considering” a further tax increase, layoffs or cuts to core services. He also said he is not looking to cut outlays for violence prevention or affordable housing.
“But we will need to get back to the basics and focus on core services of city government,” O’Connor said.
The announcement came on the heels of the city’s report that it spent about $8 million more than it brought in last year, falling well short of the modest surplus that Gainey’s administration had forecast.
O’Connor also criticized the practice of drawing deeply from the city’s Parks Tax revenue for employee salaries. The 0.5 mill property tax add-on was approved by voters in 2019, marketed as a means of funding capital improvements for city parks. Critics — including, now, the mayor — have faulted previous administrations for using the money instead to fund the salaries of administrative staff.
“We promised the public that the trust fund would fund our park system … That money should be spent in our neighborhood parks and playgrounds,” O’Connor said.
In the 2026 budget, the parks tax is projected to bring in $9.3 million. Two-thirds of that is allocated for salaries, wages and benefits for several dozen employees in the Public Works and Parks and Recreation departments. Moving the approximately $6 million in employee costs to the operating budget, and freeing up the entire Parks Tax revenue for capital improvements, would require the city to find $6 million more in the already-strained operating budget.
Councilor Erika Strassburger, the chair of the Committee on Finance and Law, attended the press conference and said after that Council last year “made the best decision we could with the information we had … Certainly new information has come to light.”
The city’s financial situation has devolved from healthy revenue and a hefty reserve fund before the COVID-19 pandemic to one in which tax revenue is falling and the reserve fund is projected to decrease significantly over the next five years.
One of the primary reasons for the downturn is the pandemic itself. The rise of telework led many Downtown office towers to successfully appeal their tax assessments, resulting in lower tax bills paid to the city. (A lawsuit over how tax bills are calculated pushed these numbers even lower.)
Meanwhile, aging city assets from bridges to public safety vehicles required more and more money for upkeep after years of deferred maintenance.
“What’s clear to me is that the pandemic was the catalyst for all of this,” Strassburger said.
A windfall of $335 million from a 2021 federal pandemic relief act kept the city afloat during the past few years, but that money has run dry.
Charlie Wolfson is the local government reporter for Pittsburgh’s Public Source. He can be reached at charlie@publicsource.org.
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