Allegheny County finances spell $60M deficit, controller says

The county may have to use some of its rainy-day fund to cover the shortfall.

Allegheny County is on track to face a $60 million deficit by the end of the year if revenue doesn’t pick up, according to a report released Tuesday by the county controller’s office.

County revenues for the first six months of the year are running $20 million below projections, Controller Corey O’Connor said.

The anticipated deficit will be partially covered by leftover federal pandemic aid, but the county probably will have to dip into its rainy-day fund to cover the rest, O’Connor said.

Federal aid covered all of last year’s budget deficit, which was nearly $40 million.

O’Connor said the trend line of an increasing deficit is concerning.

The controller, an inde pendent elected official, expressed concern about the future health of the rainy-day fund.

Last year, the fund stood at about $101 million.

“The rainy-day fund has kept our heads above water, but it’s still coming down,” O’Connor said in a statement. “Combined with the pending expiration of emergency federal aid, the revenue decreases we see are highly concerning. We’ll be monitoring closely moving forward to ensure that the fund balance maintains healthy levels.”

Sales tax revenue is down about 8% for the first six months of the year compared with the same time period in 2023; revenues from taxes on alcoholic beverages are down about 18%.

Interest earnings are up, already at 86% of their projected total of the year, through the first six months of the year.

But those earnings can’t cover increased costs the county is seeing at its senior centers and from property tax refunds, O’Connor said.

Refunds resulting from property tax assessment appeals were $8 million during the first half of the year, O’Connor said. That’s nearly double the amount budgeted for the entire year.

To cover these refunds, money will have to be reassigned from reserves held for other purposes, he said.

“The unprecedented levels of property tax appeals and refunds resulting from court-ordered valuation changes are unlikely to abate soon,” O’Connor said. “Our tax base is eroding, and reassessment alone won’t solve the problem.”

The court-ordered reduction of Allegheny County’s common level ratio has re- sulted in many commercial property owners — in Downtown Pittsburgh and many suburban office centers — winning appeals on their property taxes, resulting in massive drops in property values.

The county and other municipal governments have had to issue property tax refunds as a result.

The Pittsburgh Public School District is suing the county government in an attempt to force through a countywide property reassessment to address the issue.

County Executive Sara Innamorato also has acknowledged the county’s precarious financial future. In June, she said the county was facing some “challenging headwinds” caused by a lack of meaningful revenue increases over the past decade.

Her spokeswoman, Abigail Gardner, said Innamorato doesn’t disagree with O’Connor’s report and the county executive will provide more detail on the matter during a budget address next week to county council.

“The county executive will make her budget address to council next week, where she’ll lay out a vision for a fiscally responsible budget that addresses these issues and invests in the county,” Gardner said.

Allegheny County Council meets at 5 p.m. Tuesday, Oct. 8, in the Gold Room at the Allegheny County Courthouse in Downtown Pittsburgh.