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Mayor Bill Peduto presented his eighth and final budget to Pittsburgh City Council Monday, detailing a vision for 2022 that his successor, Mayor-elect Ed Gainey, will inherit Jan. 3. The fiscal plan shows that the city’s economic recovery from the pandemic will be in progress for the foreseeable future, but the city’s books are well reinforced by federal aid for the next few years.
The budget projects 2022 tax revenue lower than pre-COVID levels when adjusted for inflation, with tax revenues expected to miss pre-COVID projections at least through 2024.
The budget projects $504 million in tax revenue in 2022. This is up almost 2% from the last pre-COVID budget, the 2020 budget enacted in December 2019. But when adjusted for inflation, the projected 2022 revenue is down about 5%.
“We will continue to feel the stresses of the pandemic for the next few years,” Peduto said in his speech to council Monday.
Total revenue, which includes tens of millions from the federal American Rescue Plan, is projected to be up 8% from the last pre-COVID budget, or about 1% adjusted for inflation.
Council will hold public hearings on the budget and must approve it, possibly with amendments, by the end of the year. Peduto also introduced a $159 million capital budget, a higher amount than in recent years, which is mostly used to fund construction and infrastructure projects and also includes American Rescue Plan dollars. Gainey will have a chance to work with council to amend the budgets in January.
Compared to projections for 2021 made last fall, the city projects big rebounds for a few sources of tax revenue in 2022: Adjusting for inflation, the city projects a roughly 19% increase in payroll preparation tax revenue, a 128% jump in amusement tax revenue and a 15% rise in facility usage fees.
But none of the other taxes, including the real estate tax, are expected to rise against inflation in 2022. The city’s income tax, its second largest source of tax revenue, is expected to be about even with last year’s projection when adjusted for inflation.
In December 2019, the city projected that its revenue in 2024 would be about $672 million. Now, it projects its revenue for 2024 to be $681 million. But about $46 million of that comes from the American Rescue Plan, which ends after 2024 — meaning the city could face a budget crunch going forward if other revenue doesn’t increase significantly.
The city departments with the largest increase in expenditures in the 2022 budget compared to 2021 are Parks and Recreation (17%), Public Works Administration (28%) and the new Office of Community Health and Safety, which received its first significant budget ($5.02 million).
The largest decrease is at Public Safety Administration (-32%).
The Bureau of Police budget rose 4.6% from 2021 and 4.9% from the 2020 budget. Peduto’s chief of staff, Dan Gilman, said in an email that the increase in police budget is due to wage increases in the police union contract.
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