Pittsburgh City Controller Rachael Heisler said Thursday that the city’s finances should be “manageable,” and that “I don’t believe we are headed for a tax increase” in the near future. But beyond that, she said, if present trends continue, “I am very concerned about where things are headed.”
Heisler’s remarks came as she released her office’s annual comprehensive financial report Thursday morning. And while the 200-page fiscal breakdown showed the city finished last year with a slight surplus and a decidedly healthy $200 million balance in its savings account, there were also signs of trouble ahead.
City tax revenues were a mixed picture last year, generally tracking ahead of the previous year but still behind what the city hoped for. A multi-million-dollar drop in real estate tax revenue — driven by COVID-driven changes in the market for office space — was offset by a similar increase in revenue from a wage tax. And licensing and permitting, Heisler said, “have become more profitable as we see development across the city," while revenue from parking and amusement taxes have bounced back to pre-pandemic levels.
On the downside, proceeds from the city’s “jock tax” on out-of-town athletes and other performers were well off pace — and the tax itself is facing a challenge before the state Supreme Court. Meanwhile, federal aid that helped cities reckon with the COVID pandemic has run out. And Heisler said that a preliminary review of the first three months of 2025 raised concerns about the year ahead. Based on the first quarter, she said, “Tax revenues are likely to be down significantly below budget in 2025.”
A local services tax and a payroll preparation tax both were trailing their 2024 performance by double-digits, she said. And since those both reflect local employment, she said the drops could be “indicators of potentially reduced employment within city limits.” Similarly, a drop in revenue from a tax on property sales suggested “a slow housing market that is only growing slower.”
Heisler also warned that expenditures grew faster than revenues did last year, and said an increase in overtime payments early this year was a poor omen for the days ahead.
So too are longer-term factors, like a long-anticipated spike in debt payments that will be a drag on the city for the next few years. The city already expects to spend less than $3 million a year on purchasing ambulances, plow trucks, and other vehicles by 2027. That’s less than a third of what it spent last year — and Heisler said it was “absolutely not” sufficient to the need.
“We need to be serious and honest with city residents,” she said. “We’re gonna see fewer acquisitions of new vehicles [and] less paving. … We’re going to see a contraction in some of the services that people are used to seeing on a daily basis.”
Heisler’s audit, which her office is required to produce this time every year, comes just three weeks before the May 20 primary in which Mayor Ed Gainey faces a challenge from Allegheny County Controller Corey O’Connor. And Gainey’s stewardship of city finances has been a top issue.
Heisler avoided the political fray. Despite more than one invitation from reporters, she largely declined to criticize the Gainey administration’s spending decisions directly, noting that her office is “not a budgeting entity.” But she also didn’t endorse Gainey’s sunny assessment that high ratings given to the city’s debt by rating agencies proved the wisdom of his approach.
Those agencies look at factors other than the balance sheet, and “Regardless of the grade … my concerns still stand,” Heisler said.
O’Connor’s campaign was less restrained. On Thursday afternoon, it issued a statement that said Heisler’s report was “the latest in a long series of bad news about Pittsburgh’s finances,” and that it proved Mayor Gainey’s talk of a financially stable government shows that he is not being honest.”
The campaign noted that budget projections had fallen well short of original projections. And while the city finished modestly in the black, O’Connor said its balance sheet had been propped up with federal funding that has since run out.
Heisler painted a somewhat more nuanced picture: a city that wasn’t in imminent danger of fiscal collapse but one in which the cost of deferred investments would rise.
Heisler also noted that some of the headwinds the city faces are beyond its control — including those blowing in from Washington D.C.
“We cannot rely on a stable economy under this administration,” she said, asserting of President Donald Trump that “stability is not his guiding principle.”
She ticked off a list of potential concerns: Trump’s tariffs, she warned, could drive up prices for everything from lumber to ladder trucks. And while the city had enjoyed healthy investment gains last year — a $28.1 million influx of cash that Heisler called a “bright spot” — she said “it’s unrealistic to see those figures continue into this year” given how Trump has roiled markets.
But the problems outside the city’s control made it all the more important, she said, that officials make good decisions where they can.
“I think what we need to do as a city is be aware of that … and when things are rapidly changing, be as nimble as we possibly can.”
