City school district to consider tax increase next week as it faces a $56 million deficit
While a tax increase won’t fix all of the Pittsburgh Public Schools’ fiscal issues, Chief Financial Officer Ron Joseph told the board Wednesday that it must take action now to avoid running out of money in the next couple of years.
Next week, the board will consider a 3 percent property tax increase which would amount to an additional $30 per $100,000 of assessed property value. It would generate another $5 million for the district.
Administrators say that costs outside of their control – retirement, special education and charter schools – are to blame for the growing deficit. As it stands, the district is short about $56 million needed to cover it’s proposed $690 million of budgeted expenses. The district will rely on its reserve fund to cover that shortage, but Joseph told that board that “savings account” will be depleted at some point in 2023 and the district won’t be able to pay its bills in 2024.
Last month’s proposed budget didn’t include a tax increase and Joseph asked board members last week if he should include one in the final budget. He said he wanted to gauge their interest to avoid having to make last-minute calculations as has happened the last two years.
The board voted down a tax increase last year with some members arguing that the district couldn’t solve its financial shortcomings on the backs of taxpayers, especially during a pandemic.
This year, with three new board members, the vote is likely to be closer. Budget and finance chair Kevin Carter, along with former committee member Terry Kennedy, recommended that the board approve a property tax increase. Carter has opposed hiking taxes in the past but said during a recent budget workshop that now is the appropriate time.
As Joseph noted recently during a budget workshop, the district is limited by statute in how it can generate revenue.
“This would provide us with the ability to start generating revenue for the coming year that will be recurring revenue annually and will build into our revenue base and allow us to at least start to address that on the revenue side,” Joseph said. “Not saying that we would need future tax increases, not saying we wouldn’t need those. But this is the start of the process we need to embark on to adequately address our situation.”
Newly sworn-in member Gene Walker said that while he isn’t opposed to a future increase, during a pandemic is the wrong time. He said that the district needs to do more work before asking the public to pay more.
“When we look at the potential of adding $5.4 million dollars to our revenue, it’s like putting a Band-Aid over a torn ACL. We need to go in and do reconstructive surgery to fix this problem,” he said.
Board member Pam Harbin noted that reducing expenses would likely mean reducing staff as it’s the largest expense.
“Either we’re going to close schools and reduce staff or get $5 million dollars from a tax increase. I get it, it’s not right, but that’s the way it’s set up,” she said in reference to how the district can generate revenue.
She said that students have to come first, and that not increasing taxes would ultimately cut programs and resources that benefit students.
New board member Tracey Reed questioned how the district went from adding to its reserve fund a few years ago to being close to depleting it. She also noted that
“What concerns me is a tax hike would have a disproportionately negative impact on those who have the least resources,” she said. “When we look at the inequity within our district it feels to me that we would overburden and then continue with very inequitable school funding decisions we have.”
Board president Sala Udin indicated that the board could discuss the budget again in a separate meeting before it is set to vote next Wednesday Dec. 22. The public has a chance to weigh in Monday night during a virtual public hearing at 6 p.m. Speakers must register by noon that day at pghschools.org.