Pittsburgh braces for COVID-19 body blow to its finances

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PITTSBURGH — The COVID-19 pandemic has dealt a blow to Pittsburgh’s bottom line, with the city’s tax revenues taking a 25 percent hit compared to last year, city officials said Wednesday.

Payroll, parking, earned income and property taxes took the biggest hits, as officials warned that those four levies alone could suffer losses of $97 million this year. 

Pittsburgh’s Office of Management and Budget reports that between March and May 8, city revenues dipped from $126.4 million a year ago to $94.4 million. Expenses for the same period were down about 7 percent to $101.5 million, compared to $109.3 million in the year-ago period.

“The city is holding its own through frugal spending but the gaps between our revenues and expenditures are likely to widen further,” Mayor Bill Peduto said in a statement. “With the help of City Council and the leaders of all city departments we will have to keep a hard watch on spending until the financial impacts of the COVID-19 pandemic become clearer.”

The city estimated last month it would see a 21 percent decline in 2020 projected revenues, for a total loss of $127 million. Over the next five years, the city expects a loss of $239 million. 

Hiring for city departments has been frozen, which would save an estimated $3 million this year.

Pa. faces $2B budget deficit as COVID-19 delays taxes, throttles business

The Pittsburgh Public Schools also are preparing for a significant budget deficit. The district released its mid-year budget update Tuesday, with a projected loss of up to $82 million in local revenue. The report presented several different possible budget scenarios, ranging from “optimistic” to “worst case.” 

The district’s 2020 general fund budget of $665.6 million included a $25.1 million operating deficit. PPS says it has spent more than $2.6 million on remote learning for its students, including 5,000 laptops. 

“As we do not know the effect COVID-19 will have on state and federal budgets, it is too soon to tell the full fiscal impact on the district,” Superintendent Anthony Hamlet said in a statement announcing the budget update. 

Peduto plans to provide regular updates on the impact of the pandemic on city finances, a spokesperson said. 

The mayor wrote a letter to President Donald Trump last month urging the president to include $250 billion in flexible funding for local governments in a future relief package. 

“With the pandemic ongoing, we are unsure of the full financial impact of this crisis,” Peduto wrote in the letter. “However, expected declines in revenue from payroll tax, earned income tax, and property tax paint a bleak outlook. Despite years of sound fiscal management, the scale of this crisis has simply been overwhelming – it is only a matter of time before we will face cash flow issues affecting our ability to pay first responders and essential workers.”

Correspondent Kim Lyons covers Pittsburgh and western Pennsylvania for the Capital-Star. Follow her on Twitter @SocialKimLy