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Politics & Government

Debt a Major Issue in Allegheny County, Controller Says

Deanna Garcia

Allegheny County Controller Chelsa Wagner said Thursday one of the most concerning issues facing the county is the amount of money going toward debt services.

In 2012, the county’s debt load increased $90 million, according to the Comprehensive Annual Financial Report (CAFR). Total annual debt service payments have increased to $62.6 million.

“Of this $62.6 million, we are now paying more on the interest than on the principal,” Wagner said.

The debt service for the county poses a challenge to providing services and investments for communities.

“Allegheny County spends more on debt service than it does on transportation, economic development and education combined,” Wagner said. “This is simply not a sustainable model for government.”

Wagner said other concerns in the CAFR include the lack of an adequate reserve fund balance. It was $13.2 million in 2012, whereas ratings agencies recommend $40 million. Another concern is uncertainty over state and federal reimbursement for mandated health and welfare services.

Wagner laid out some recommendations to get the county on stronger footing, including:

  • Ensuring that every dollar is spent efficiently, effectively and transparently while maintaining services
  • Encouraging collaboration and innovation
  • Enacting measures to bolster the county’s fund balance
  • Establishing a trust fund to address the county’s post-employment benefit obligations
  • Lobbying and demanding that the state live up to its funding obligations
  • Establishing an official debt policy and plan to reduce the debt burden

There is some good news in the CAFR. Wagner said Pittsburgh is one of only three metro regions in the U.S. where employment and GDP per capita have returned to pre-recession levels.
“The unemployment here regionally, at the end of 2012, was 6.8 percent,” she said. “That’s lower than the Pennsylvania rate of 7.9 percent and lower than the national average of 7.6 percent. Payroll grew 1.8 percent with 12,000 new jobs in the region.”

Plus, Wagner said, there are signs that indicated stronger long-term growth, including the 7 percent growth in the population of 20- to 34-year-olds over the last five years. That population is expected to grow another 8 percent by 2020. In addition, home sales rose, as did property taxes and revenue from sales, drink and car rental taxes increased.

The 2012 CAFR is a report prepared by the controller and her accounting division. It outlines all facets of Allegheny County’s expenditures, revenue, debt and fiscal conditions.