The comptroller says Allegheny County’s finances show a $60 million deficit

A report released Tuesday by the Allegheny County Comptroller’s Office shows Allegheny County government is on track to face a multimillion-dollar deficit by the end of the year if revenue projections do not improve.

The district’s revenues decreased in the first half of the year. If the situation does not improve, the county government will likely run a deficit of approximately $60 million by the end of 2024.

That deficit will be covered by remaining federal pandemic aid, but the trend line is concerning, said Allegheny County Controller Corey O’Connor.

Federal aid also covered the 2023 budget deficit, which was nearly $40 million.

O’Connor, a Democrat from Squirrel Hill, said the deficit raises concerns about the county’s rainy day fund. Last year, the rainy day fund was about $101 million.

“The rainy day fund has kept our heads above sea level, but it continues to decline,” O’Connor said in a statement. “Coupled with the expectation that emergency federal aid will expire, the revenue declines we are seeing are very concerning. We will closely monitor further progress to ensure the fund balance remains at a healthy level.”

Sales tax revenues were down about 8% in the first six months of the year compared to the same period in 2023; alcoholic beverage tax revenues dropped by approximately 18%.

Interest earnings increased already in the first half of the year and reached 86% of the expected total for the whole year.

But those earnings don’t cover the increased costs the county is seeing at its senior centers and property tax refunds, O’Connor said.

O’Connor said refunds from property tax assessment appeals totaled $8 million in the first half of the year. This is almost twice the amount planned for the entire year.

To cover those refunds, money will have to be reallocated from reserves earmarked for other purposes, he said.

“The unprecedented number of property tax appeals and refunds due to court-ordered assessment changes are unlikely to abate any time soon,” O’Connor said. “Our tax base is eroding and reassessment alone will not solve the problem.”

The court-ordered reduction in Allegheny County’s common rate resulted in many commercial property owners – in downtown Pittsburgh and many suburban office centers – winning their property tax appeals, resulting in a massive drop in property values.

As a result, county and other municipalities had to refund property taxes.

The Pittsburgh Public School District is currently suing the county government in an attempt to force a countywide reassessment of properties to address the problem.

Allegheny County Executive Sara Innamorato also acknowledged that the county’s financial future is uncertain. In June, she said the county faces “difficult headwinds” caused by a lack of significant revenue growth over the past decade.

Her spokeswoman, Abigail Gardner, said Innamorato does not oppose O’Connor’s report and county officials will provide more details on the matter during the budget speech next week.

“The County Executive will deliver a budget speech to Council next week where she will lay out her vision for a fiscally responsible budget that will address these issues and enable investment in the County,” Gardner said.

The Allegheny County Council meets on October 8 at 5 p.m. in the Gold Room of the Allegheny County Courthouse in downtown Pittsburgh.