In his last mid-year presentation on city finances, outgoing City Controller Michael Lamb offered an upbeat assessment of Pittsburgh’s fiscal prospects.
After the coronavirus hammered tax revenues for years, he said, “We’re seeing significant recovery” for 2023 tax revenues.
“We’re seeing very positive numbers [and] are outperforming budget in just about every revenue source," he added.
Lamb’s remarks at a mid-morning press conference on Thursday accompanied the release of his Popular Annual Financial Report, a more reader-friendly presentation of city budget data.
The report recapitulates previously released financial information from 2022, but Lamb’s remarks also provided insight into how the current year is shaping up. He noted that parking and amusement tax revenues — which were hit hard by the pandemic’s impact on large gatherings — were “actually performing at the same level or maybe even a little better than we were in the last pre-pandemic year” of 2019.
“That’s a heck of a comeback,” he said.
Lamb said the picture is all the more remarkable because the number of commuters has dropped as employees who once staffed offices Downtown continue to work from home.
“We’re living in an era where fewer people are coming into the office. ... So it’s incumbent on the city and our community to really bring vibrancy to Downtown” through festivals and cultural events, he said.
Lamb said anecdotal evidence confirmed data that suggests Downtown is recovering — despite concerns about safety that have been a staple of talk-radio discourse and political debate.
“I talk to a lot of merchants around town,” he said, and “many of our merchants are having record years.”
Lamb acknowledged that perceptions of danger Downtown need to be addressed.
“People don’t want to go where they don’t feel safe, and I think there is at the very least a perception of a problem Downtown," he said. And he suggested that “some people question the execution” of strategies to enhance the area.
Still, he said, “We also know that a lot of people are coming Downtown. … I think things are a lot better than people realize.”
The picture isn’t all rosy. As he has before, Lamb raised a warning flag about the failure of large institutional nonprofits such as UPMC, Allegheny Health Network and area universities to contribute to the city’s operating fund. He faulted Mayor Ed Gainey, whose administration is reviewing and challenging the tax-exempt status for parcels of land citywide, for not doing more to engage the nonprofits directly.
“There are a lot of things that can be placed on the table, but you can’t put it on the table if you’re not at the table,” he said.
The question could become more pressing as federal COVID-relief funds run out, he said: A sizable payment-in-lieu-of-taxes agreement with nonprofits “can help us get to a point where we won’t see significant cuts” even as the federal aid expires.
Another question in the years ahead concerns property tax revenues: As demand for office spaces dries up, so does revenue for commercial properties, driving down values and tax revenues. Lamb predicted the effect would be modest, in part because of efforts to convert some space to residential use: “I’m optimistic about it or maybe overly optimistic about it,” he said.
But he warned: “The bigger impact is going to be [whether] there is a reassessment next year?”
The county has struggled for years with the politically difficult question of how to assess and update the property values on which property taxes are levied. The matter has become more pressing as courts have overturned previous assessment practices.
“I think that’s probably the bigger financial discussion that we’re going to have over the next few years," he said.
Lamb will step down from the controller’s post at the end of the year, having decided not to seek reelection so he could mount an ultimately unsuccessful bid for county executive. He is all but certain to be replaced by his top deputy, Rachael Heisler. His tenure, which began in 2008, coincided with a painful period in which the city was under state financial oversight but also with the successful effort to recover from that low point while shoring up the city’s anemic pension fund.
His final term witnessed the 2022 collapse of the Fern Hollow Bridge and the subsequent closure of the Charles Anderson Bridge, highlighting the challenge presented by long-neglected infrastructure. Lamb’s report itemizes a number of other infrastructure needs, but he noted that the city had accumulated sufficient cash reserves to begin addressing those needs.
“We are, I think, in a much stronger position to [address] that today than we ever were,” he said, “certainly since I’ve been here.”
