Allegheny Institute questions plan to increase property taxes in Pittsburgh

The Allegheny Institute for Public Policy recently criticized a plan to increase property taxes in Pittsburgh - a move advocated by some lawmakers as a means to address the city's financial woes.

According to a 2013 report from the institute, Pittsburgh lags behind other comparably sized regional hub cities across the nation in terms of financial performance. Debt service remains high relative to general spending, and the number of city employees per resident is 30 percent higher than the average.

In 2012, Governor Tom Corbett (R-Penn.) and the Pennsylvania Department of Community and Economic Development, despite the financial problems facing the city, requested that the city be removed from "distressed" status.

The city, however, was kept in distressed status, and a recovery plan drafted in May said the city faces a substantial budget deficit - approximately $9 million -for 2015 and after, though a February forecast predicted balanced budgets through 2018.

City officials have recommended two changes: increasing property taxes, parking rates and service charges to add $8.3 million in new revenue and lowering employee costs by approximately $5 million.

"In sum, the savings and higher taxes are projected to generate surpluses for several years even after additional borrowing costs," the Allegheny Institute said in a policy brief. "If enough savings can be achieved along with expected higher revenues from existing sources without raising property taxes that would be sufficient to cover the expected deficit, why is it necessary to raise the property tax?"

The institute said city officials' plans do not consider outsourcing or privatization, adding that the "virtual ignoring" of employee pay premiums and compensation spending levels is "a continuation of the unwillingness to deal aggressively with the city's fundamental problems.

"The forecasts of property tax revenue foresee minimal growth in the city's taxable property values through new construction and rehabilitation of existing property or city challenges to assessments for properties that are grossly under assessed. That would appear to be very shortsighted"