Property Tax Hike Receives Preliminary Approval in City Council

Dec 10, 2014

Pittsburgh Finance Director Paul Leger (center) made his case for a millage increase before City Council Wednesday. He was joined by treasurer Margaret Lanier (left) and assistant treasurer Ruth Pompey.
Credit Liz Reid / 90.5 WESA

Pittsburgh City Council on Wednesday gave preliminary approval to a bill that would raise property taxes by one-half mill, which works out to about $40 a year for a home worth $100,000.

City Finance Director Paul Leger says the city is currently operating at “bare bones” and that failure to pass the millage increase would put the city in violation of Act 47.

“We are down at least $7.5 million dollars, and yes, we would have to make adjustments in what we spend,” Leger said. “Whether that is layoffs, whether that is lack of hiring in public safety, whether it’s lack of expenditures in the PayGo section of the capital budget, or whether it’s underfunding our pension plan, all of those are possibilities.”

Leger gave a presentation to City Council showing how the administration arrived at the 0.5 mill figure. He said the total assessed taxable value of real estate in the city of Pittsburgh is $18.6 billion, but after taking bankruptcies, discounts, exemptions, tax abatements and appeals into account, that figure falls to $16.5 billion.

Leger said the city needs to bring in $128.1 million in property taxes in 2015 in order to be in compliance with Act 47, which necessitates an increase in the millage rate from 7.56 to 8.06 mills.

Leger and several members of City Council called the adjustment a “correction” rather than a tax increase, referencing the 2013 millage cut that resulted in a $6.7 million shortfall between projected and actual revenue.

Councilman Dan Gilman followed Leger’s presentation with a PowerPoint presentation of his own, which showed a 46 percent increase in total property values and a 43 percent increase in the median sale price of property over the last five years. In the same time period, according to Gilman’s presentation, property tax revenue decreased by 3.6 percent.

“For us, as a city, to be booming the way we are, (with) so much development, so many good stories, so much increase in land value, so much increase in sale price, and the city to receive so much less in property tax value, something went very wrong,” Gilman said.

Councilwoman Darlene Harris cast the sole no vote, saying that even a modest millage rate increase could have a negative impact on senior citizens and other residents living on a fixed income.

“With more spending this year and more spending next year, I cannot vote for a tax increase for the residents of Pittsburgh. Not just my district, but the residents of Pittsburgh,” Harris said.

Councilwoman Theresa Kail-Smith expressed similar concerns, and ultimately abstained from the vote. She said she was worried about “nickel and diming people to death,” and pointed to increased fees for park shelter rentals and street barricades for community events.

“The majority of folks I’m talking to, they don’t seem to mind paying the extra millage, they understand the need for that,” Kail-Smith said. “What they’re concerned about is all the additional fees and … fines, charging for things we’ve never charged for.”

Councilwoman Natalia Rudiak said she worked with the administration and other members of council over the past few months to identify other revenue-generating mechanisms, but that a millage increase turned out to be the only way to fill the budget gap.

“Our responsibility is to pass a balanced budget by the end of the year, and I have not seen alternative proposals, unfortunately, to make that happen,” Rudiak said.

Councilman Ricky Burgess said he could think of one way to balance the budget while decreasing property taxes, though his suggestion exceeds the limits of city council’s legislative power.

“The elephant in the room is the non-profits,” Burgess said. “They are not paying their fair share. And because they refuse to pay their fair share year after year … we are put in this challenging situation.”