Controller cites ‘unsustainable’ financial challenges

Pittsburgh mayoral candidate Corey O’Connor warns that the county is spending a lot more money than it takes in.

Allegheny County’s financial position is unsustainable, according to Controller Corey O’Connor, who said leaders must prioritize economic growth.

O’Connor, who also is the Democratic candidate for Pittsburgh mayor, released financial reports Monday that show the county’s property, sales and drink tax revenue declined last year.

The county spent $45.5 million more than it brought in last year, the reports showed. Spending in 2023 outpaced revenues by $23.1 million.

The county this year enacted a 36% property tax hike, the first in more than a decade. That was a compromise County Council members negotiated after some officials balked at Allegheny County Executive Sara Innamorato’s initial pitch to raise taxes by 46.5%.

“While the first millage increase in over a decade may prevent immediate cuts in the coming year, our situation remains unsustainable,” O’Connor wrote in his Popular Annual Financial Report.

O’Connor told TribLive Monday that the 2025 tax increase — which is estimated to generate an additional $130 million for the county’s coffers — will help to stabilize the county’s budget this year.

However, if spending continues to increase and revenues struggle to keep pace, he said, the county will still see a budget gap.

Additional tax increases or a countywide property reassessment would not effectively counter rising costs, the end of federal covid-19 relief money and the declining property values of large commercial buildings that are worth less now than they were before the pandemic spurred a widespread shift to remote work, according to O’Connor’s report.

“Revenues continue to go down while expenditures continue to go up,” O’Connor said. “We have to look at some long-term solutions here.”

Allegheny County Manager John Fournier said the administration largely agrees “with the assessment that county finances have long-term challenges, despite the tax increases last year.”

“The County Executive has consistently said that while the 1.7 mill increase was vital to sustain operations, the organization’s financial needs would continue to outpace our tax revenue at this level,” Fournier said, adding that officials are “very closely managing the budget” and hoping to slowly replenish the county’s reserves in the coming years.

The county’s property tax revenue dropped by about $5 million last year. Over 40% of Allegheny County’s revenue comes from property taxes.

Assessment appeals reduced the overall taxable value of properties throughout the county by more than $1.2 billion in 2023 and 2024.

The controller’s office in a statement said those steep declines should begin to level off as many properties — particularly large Downtown buildings — have already received property tax reductions.

The county’s share of the sales tax dropped by $2.6 million in 2024, while the seven-percent drink tax fell by about $2.8 million, declines O’Connor’s office said were nearly unprecedented, except for during the pandemic.

“Ultimately, maintaining essential services and supporting our residents and communities will require increased resources generated by economic growth,” O’Connor said. “We must focus on fostering development, especially in areas which have suffered from disinvestment. New housing can increase affordability and support underinvested business districts. Population growth that alleviates a shortage of working-age adults can open the door to new industries.”

O’Connor’s audit highlighted a $10 million deficit at the Kane Centers, despite using $8 million in federal aid money to cover contracted nursing costs.

In an effort to curb costs there, Fournier said, the county is looking to recruit more nurses to work directly for the county, reducing the need for expensive agency nurses. But it will take time to realize such cost savings, he said.

The jail would’ve shown a $15 million cost increase in 2024 if not for nearly $24 million in federal aid that funded personnel costs.

That federal money that has kept Allegheny County — and municipalities across the country — afloat since the covid-19 pandemic expires at the end of 2026.

O’Connor’s audit flagged the “chronic concern” of the county’s underfunded pension. The pension was 31% funded at the end of 2024, down from 36% in 2020, despite a slight increase in employee and employer contributions last year.

The rainy day fund decreased by more than $30 million last year, even as the county used $50 million in federal relief money to fill the gaps.

O’Connor’s office in a statement said economic trends for Allegheny County are generally favorable and holding steady.

O’Connor said officials need to use opportunities like the 2026 NFL Draft, which Pittsburgh will host, to encourage more businesses and residents to move to the area.

“If we have more people living here and starting businesses, our tax base goes up,” he said.

Fournier said Innamorato has invested in economic development “at a higher rate than previous administrations,” but he acknowledged that the federal government “attacking some of the sectors that are the biggest employers in our region” has made it challenging to convince some businesses to expand.

But, the controller said, the declining sales and drink tax revenues “show troubling economic indicators.” O’Connor said he anticipates those revenue streams will perform better next year when the draft is expected to bring hundreds of thousands of visitors and boost business for hotels, restaurants and stores.

Fournier said the 2023 sales tax revenues were inflated because of a “large one-time payment by a local company that had failed to properly remit taxes,” and the 2025 sales tax numbers already are outpacing 2024. The U.S. Open, hosted in Oakmont last month, should improve those figures this year, he said.

Another area of concern is Pittsburgh Regional Transit, which is bracing for drastic cuts.

O’Connor acknowledged also the fear of federal funding cuts that could impact programs like homelessness prevention.

Allegheny County at one point was placed on a list — which was quickly taken down — of jurisdictions the U.S. Department of Homeland Security accused of “defying federal immigration law.” Federal officials threatened to yank federal funding from jurisdictions that were listed.