Pittsburgh’s revenue fell 2.5% short of expectations in 2021, and some key revenue streams were far below budget, according to a year-end financial disclosure prepared by the city’s finance department. But expenditures came in under budget too, resulting in a balanced budget with some federal help.
“I wouldn’t say it was surprising,” said Mayor Ed Gainey’s press secretary, Maria Montaño. “Thanks to the American Rescue Plan Act, it really helped us” keep a balanced budget. “We do expect the revenues to recover this year, depending on the course of the pandemic.”
City Controller Michael Lamb said he too was unsurprised by the results, citing the pandemic’s persistent drag on the economy. “We had the continuation of the pandemic and in some places continuations of shutdowns. We were hoping to be back stronger in the fourth quarter than we were.”
Lamb cautioned that the numbers are unaudited and could be adjusted before they are final.
The parking tax was one of the city’s biggest fiscal disappointments of 2021: It brought in 42% less money than it was projected to in the 2021 budget, a shortfall of almost $23 million.
Lamb said he grew skeptical of the former administration’s parking tax revenue projection when the city was far off its target midway through 2021.
“We raised an issue with the reasonableness of the projection they had with regard to parking tax, which we just thought was an unreasonable number,” Lamb said. “They projected a number above $50 million and we knew it would be much closer to $30 million.”
The final number in the report is about $32 million.
The city’s 2022 budget, which was drafted under former Mayor Bill Peduto and passed by city council in December, projects $57 million in parking tax revenue in 2022 — 78% more than that levy brought in 2021.
The city’s total revenue projection for 2022, $658.8 million, is about 8% higher than what the city projected for 2021 — but 11% higher than what the city actually generated in 2021.
Montaño said the mayor’s office is “pretty confident” in projections laid out in the 2022 budget, and has no plans to alter them, though she said the pandemic and other global crises can change things quickly.
Lamb says he expects the city to miss its parking tax target again, though likely by a narrower margin, because workers are still not commuting to Pittsburgh as they did before the pandemic.
He said the city’s budget overall will be buoyed by federal American Rescue Plan Act [ARPA] funds as it was in 2021. The operating budget received some $33 million in ARPA dollars in 2021 and is projected to get at least that in 2022. Without that sum in 2021 the city would have had a budget deficit of more than $10 million, according to the unaudited accounting.
Other revenue streams that finished below projections include:
- The $52 Local Service Tax on people who work in the city (19% short)
- Fines and Forfeitures (58% short)
- Charges for Services provided to residents and to other municipalities (12% short).
Those combined to fall more than $11 million below expectations.
The impact of disappointing revenue streams was blunted somewhat by those that did a bit better than projected: Real Estate Tax revenue came in 2% high, Deed Transfer Tax revenue 22% high (for an added $11 million) and Payroll Preparation Tax revenue 6% high.
The revenue shortfalls were also offset by lower-than-expected expenses.
The city’s expenditures came in at $573 million, about $40 million below the city’s initial projection. The city spent less than expected on nearly every expenditure category, from employee benefits (7% less) to professional and technical services (37%) to supplies (20%).
Lamb said the savings could be attributed to staffing levels being lower than the budget allows, due to the pandemic and other factors. For example, the city did not have a new police recruiting class in 2021.
Montaño said some departments are still scaling back up to previous levels, but this year “we should see a little bit more of a return to previous years.”
Gainey, who took office in January, has not proposed significant changes to the 2022 budget or announced plans to do so. Montaño said the administration may look to amend the budget “later in the spring” after the mayor’s transition committees report back to him with recommendations.
Lamb said he took issue with some of the Peduto administration’s revenue projections going back to the early days of the pandemic but he has yet to talk with Gainey administration officials about it. He said he expects to discuss the projections this summer when the 2023 budget begins to take shape.
Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at email@example.com and on Twitter @chwolfson.
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