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Unused federal pandemic aid could help Pittsburgh address financial uncertainty

Cars drive by the City County building on Tuesday, July 25, 2023.
Kiley Koscinski
90.5 WESA

Whether the city is careening toward a fiscal cliff or scraping by in challenging times depends on who you ask. But there's one thing most people at city hall agree on: The city has one last chance to make the most of a once-in-a-generation windfall from the federal government. And there could be as much as $15 million available to help patch holes in the budget — or to spend on something else.

The city received $335 million from the federal American Rescue Plan Act, which President Joe Biden and Congress passed to help cushion the blow from the coronavirus pandemic. Any money that isn't spent or allocated must be given back at the end of the year. But officials aren’t worried about whether the city will be able to spend what’s left before the Dec. 31 deadline.

“I have no reason to believe that the City of Pittsburgh will leave any ARPA money on the table,” said City Controller Rachael Heisler.

In fact, Office of Management and Budget Director Jake Pawlak said every ARPA dollar has already been spoken for — but some projects have taken longer than others to move forward. His office estimates that up to $15 million may need to be redirected to be spent in time.

“We are keeping a close eye on those funds that aren't yet under contract to understand why that is,” Pawlak said.

Pawlak did not disclose what specific projects or investments were tied to the $15 million figure. He stressed that it’s unclear how much of that will actually be in play in the coming months. Some agreements will be finalized in the next few weeks, he said, while a “relatively small amount of money, will need to be reallocated so that it can be under contract by the deadline.”

The city has already reworked its pandemic aid spending plan several times since the federal aid became available in 2021. And Mayor Ed Gainey’s administration has set an internal deadline for the end of June for those lagging contracts to get finalized.

After that, officials will determine exactly how much money needs to be moved. Pawlak said the city would likely spend any leftover funds on “quick spending” capital projects, like paving streets and demolishing condemned buildings.

But any reallocation would require approval by city council, and priorities for the money vary among elected officials.

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Heisler has been outspoken about gaps in the city budget. She, and other city officials, have expressed anxiety about the fiscal picture in 2025 and 2026, in part because of a scheduled increase in debt payments, and because of potential shortfalls in property tax and other revenue.

ARPA's goals included shoring up local revenues so officials didn't have to make massive budget cuts, and while the worst of the coronavirus appears over, the lasting impact on work arrangements has damaged the market for city office space. As of May, property tax revenues have dropped $3 million due to reassessments that reduced the value of property downtown.

“The problems with our downtown tax base and declining real estate revenue are a direct result of the pandemic, and we can move quickly to [use] any remaining funds to help fill that gap,” Heisler said.

Pawlak had a more optimistic assessment, noting that the city already budgeted for a $10 million drop in property taxes this year compared to last year.

“The performance of the property tax relative to our projections is good,” he said. “But that could easily change in the latter part of the year.”

Heisler and Pawlak have been at odds over the city’s financial outlook since the spring. Both have been meeting with other city officials as part of a financial task force that Gainey convened, seeking to get a broad consensus about the city's finances as the 2025 budget cycle begins.

City Councilor Erika Strassburger, who chairs council’s finance and law committee, has taken part in those discussions. She said the meetings have so far been about “level setting” among the various estimates of the city’s financial picture. But she said she expects the group to turn its attention toward the use of leftover federal aid.

A key conversation, she said, would concern whether the city needs to use the money toward services, operating expenses or capital projects.

“We have to take a big look at that,” Strassburger said. “Ideally we put them into projects, but we have to do what’s fiscally responsible.”

Strassburger said she’d like to see the money go toward expanding services at rec centers and expanding affordable housing. She said the city should prioritize investments that keep people in town.

“If everything from our roads to our bridges to our steps [are] accessible for people, in all neighborhoods and [Pittsburgh] is a place where people want to be, then that's money well spent,” Strassburger said. “Because that's money that we lost out on in the form of taxes … during the pandemic.”

Kiley Koscinski covers city government, policy and how Pittsburghers engage with city services. She also works as a fill-in host for All Things Considered. Kiley has previously served as a producer on The Confluence and Morning Edition.