Act I of Pittsburgh, Pennsylvania’s ”Financial Distress” adventure was a tale of rough-hewn, hard-won partial triumphs of conscience stemming from foresight, courage and cooperation amongst local leadership.
Act II began a tale of heads-down persistence and stagnant complacency. The pensions can was kicked down the road. Folks stewed over resentments:
the unanticipated nature of dual oversight, the closure of the asphalt plant, patterns suggesting ill-faith often later termed “poor communication”. Eventually a pensions stress-test threatened us with forfeiture of our own control and drove us toward trailblazing privatization, before Council withstood it otherwise by cashing out a City debt reserve and making an expensive handshake with concerned state stakeholders, recognizing the need for more.
Now in Act III spanning 2014-2019, a ragtag band of fire-forged friends from the days of Act I, Act II and today’s drama is going to beat the odds, finishing job of making City of Pittsburgh finances and infrastructure comprehensively sustainable – just as many other historic towns continue to drown in obligations, implode beneath the weight of their own legacies and rely on depreciating assets.
That advantage will increase many of our civic prospects dramatically.
What follows are 6 Takeaways from the new Act 47 Coordinators report, followed by eleven Frequently Asked Questions, answered.
FOX
1. Huzzah! The Act 47 Coordinators make clear that they have been directed by the state (Governor) to address our “Pensions Etc.” burdens. No more resting on early laurels, wearing blinders, and tending only the day-to-day cash register and credit card bills until the Pensions Fairy arrives in all her fury. Glad that’s official.
2. For what it’s worth, day-to-day operating costs and credit card bills have been fine. Act I resulted in massive layoffs and an ugly gut punch to the credit rating, but the annual budget has looked good on paper since 2007. The City tried to get out of it that year, but no, and after rebuilding its credit rating it tried to get out of it again in 2013, could have and almost did, but wisely changed its mind at the last minute.
3. Since we’ve last really spoken with Act 47, the City budget took a $7 million hit in an error having to do with calculating in the property reassessment tumult, and it took an $8 million hit by the pensions board making a change in actuarial assumption. So right away we’re $15 million light of the cushion we’ve grown accustomed to. By 2017 AKA in three years, the fund balance drops to “unacceptable” levels, i.e., we begin paying our various bills with really intricate timing, and probably lose things like the Marathon.
4. On top of that, the City Maester Actuary warns that an all-new $20 million chomp must be taken out of the City budget to pay additionally into Pensions Etc. this year, and another $10 million the following year. He has been released from bondage; we are now a people of Science.
5. Capital infrastructure needs have been underfunded by every measure for 15 years; the Act 47 Coordinators confirm that this is bad. These need to be funded to the tune of at least $25 to $30 million extra.
6. Offset minutia, add all that together, and our ship of state scrapes the rocks (and these seas are treacherous) unless we come up with $60-$65 in new annual savings or revenues over the next handful of years. We will accomplish this by being opportunistic, eclectic and judicious.
So say we all!
LIBERAL QUESTION: Are they making most of that story up, to squeeze the size of government down and drown it?
ANSWER: No. They’re doing this to avoid defaulting on things in 3 to 5 years. And, they’re doing it to avoid having the City physically crumble apart at the seams. Either option leads to vicious cycles resulting in increasing further deficits and pensions non-sustainability.
LIBERAL QUESTION: Is this all going on the backs of workers?
ANSWER: No. New contract negotiations are one piece, which can be done surgically and judiciously amongst the parties and their situations. But fixing the Great Property Tax Miscalculation is another pice. Enacting or implementing new or higher taxes or fees (but don’t count on further property or wage tax hikes) will comprise another piece. A fair and condensible agreement on nonprofit PILOTs is another piece. Operating and intergovernmental efficiencies will comprise yet another very large piece. The balance will be spread out.
CONSERVATIVE QUESTION: Wait a minute, that capital and infrastructure element sounds like a slush fund! And it’s being financed partially with new debt!
ANSWER: True, the Coordinators address this concern a lot — so much! They’re going to help plan the expenditures, prioritize them. The entire focus is not to fritter it away on non-capital needs or ill-conceived capital needs. The debt they’re talking about is of sustainable volume, transparently dedicated. Their Coordinatorships are incredibly excited about directing the infrastructure investment based on things like sound facilities management. Both Conservatives and Liberals will want to hold this prioritization process transparent.
GREAT QUESTION: Is this really going to work? If we all sacrifice and/or concede these things and bother closing the $60-$75 million gap, does that put the threat of “coming back to earth” and having things go bankrupt or kaput behind us? Does it usher in a new era of… what?
ANSWER: Yes, that is the suggestion. And what you mean is a stable, sustainable, straightforward budget, together with a City in better dignified repair. A situation in which one can look up and plan for three and four moves down the road, without delivering further chaotic, tumultuous, controversial shocks to civic momentum.
CONSERVATIVE QUESTION: But I want the pension fund to go belly up or the City to crumble eventually, because government employees are paid too lavishly, and unions, Democrats and blacks and corruption, and how about personal responsibility??
ANSWER: We are beyond this. Toms Corbett and Wolf are united in a desire that the City of Pittsburgh succeed on these terms: of everyone near to the local action chipping in only to the level of its propriety and necessity, and of government responsibility being institutionalized.
DUMBFOUNDED QUESTION: No, is this really going to work? You said before the assumptions were all wrong.
ANSWER: Yes, it will. I stand corrected. Passages in this report related to the actuary, the Pensions Takeover Avoidance Mechanism of 2010, and other things negate most of what I wrote last time. Victory is within our grasp.
FRANK QUESTION: How do I kill it?
ANSWER: Ugh. Well, for starters, kill the correction in the property tax millage. Some Council members face reelection battles this spring, reason is not universally popular, and nuance polls worse.
IDLE QUESTION: What’s the deal with the ICA?
ANSWER: Who cares? But they seem to be following a compliant cheerleading and self-preservation protocol.
SUSPICIOUS QUESTION: What about all the unanswered questions? Which new or higher taxes or fees are they planning to reopen for debate? Are they talking about playing the unions off against each other, kicking some when they’re down? What “intergovernmental” efficiencies are you anticipating exactly? And how much “oversight” of future infrastructure investment are we handing over to the state Overseers?
ANSWER: Get hype! Nothing left but Third-Act crunch problems.
PRUDENT QUESTION: Is there anything else I should worry about?
ANSWER: You have to worry. Page 64 warns that the economy is “nearly five years into the expansion phase of the business cycle.” This bit of financial astrology is used to argue for better hitching our wagons to this present economic rocket, before it arcs or disintegrates.
PREMATURE QUESTION: What should we do after Victory?
ANSWER: If interest rates are still very low in 2019 when we emerge vigorously from oversight, we might prioritize any long-term public improvements we will have planned by then, float major bonds to pay for these with confidence, and invest over a billion dollars into diverse projects through vehicles like the Land Bank or Summer Youth Employment, directing local economic stimulus like Rome or the Marshall Plan.
The “property tax miscalculation” is a fraud and all positioned to justify raising taxes. You can’t base the property tax “miscalculation” on one year. There are lots of factors that go into property taxes. For example, when we say we collected six million less than projected is actually less than projected or less than the previous year? If it is less than the projection, what was the projection based on? If less than the previous year, did other things happen the previous year that had property tax collections artificially high? Maybe there were more transfers of high value properties. Maybe there was more building and development. Without digging MUCH deeper it is completely irresponsible to make these assertions. It seems as though Bill just wants to raise taxes to fund all of his promises and new executive positions and social experiments.
When the County doesn’t reassess property values for over 15 years for the attempted purpose of never doing it again, the inevitable Court-mandated reassessments process is bound to be especially unpredictable. The stated and legislatively inscribed intention of the millage cut was revenue neutrality.
The answers to your questions are:
“For example, when we say we collected six million less than projected is actually less than projected or less than the previous year? If it is less than the projection, what was the projection based on?”
The projected target was revenue neutrality as a result of the reassessment, meaning that when the new lower millage was applied to the new higher assessments, it was supposed to generate the same amount of total revenue as if the old higher millage had been applied to the old lower assessments. This target was in fact mandated by the state’s anti-windfall laws.
What happened is basically that assessment appeals lowered the new assessed values enough that the new lower millage as applied to those new assessed values was too low to meet that goal of revenue neutrality by several millions of dollars. So what they now want to do is readjust the new millage back up a bit (although still leaving it much lower than the old millage) such that it meets this target of revenue neutrality.
“If less than the previous year, did other things happen the previous year that had property tax collections artificially high?”
So by now you know the previous year was not in fact the target per se. That said, it doesn’t really make much difference to the math because property tax revenue had been quite stable in recent years. Which makes sense, since both the millage and the assessments have been frozen for years, and things like new developments are generally not going to make a big difference on an annual basis.
Incidentally, it is probably worth noting that as a result of this system, property tax revenues have been steadily going down in inflation-adjusted terms, which will continue to be the case even if the new millage is readjusted upwards a bit to meet the goal of revenue neutrality.
It is also probably worth noting that most of the benefit of this steady erosion of the value of property tax revenues due to inflation accrues to large commercial property owners, who are de facto getting a nice little tax cut every year as a result. To a lesser extent so are residential property owners in neighborhoods with above-average appreciation. The losers are property owners in neighborhoods with significantly below-average appreciation, and everyone else who either has to pay increased taxes, or deal with reduced services and lowered capital investments, in order to pay for the winners’ de facto annual tax cuts.
Bram, may I ask for your prognostication: to what extent does increasing / blossoming real estate values let the city grow out of the problems? (seriously) tia, V.
Due to the irregularity of reassessments and the anti-windfall provisions in property tax law, the increases we see in property values are probably most felt as second-order consequences: greater occupancy and more economic activity.
Economic growth., incl. that of real estate values (one would hope while being pro-active in minimizing detrimental impacts) is absolutely another piece of the financial puzzle. it’s hard to project, though. Anyone?
As Bram is suggesting, under the current system the increasing value of existing properties basically does nothing to increase property tax revenues. And in fact as I pointed out above, it actually creates a gradual decrease of tax revenues if you adjust for inflation. Regular reassessments could help, but not on their own, due to the state’s anti-windfall laws. What the City would have to do is something like commit to re-raising the new millage rates a bit in the non-assessment years, enough to allow revenues to keep pace with inflation. All that would be legal and could even be more or less automatic, but it would take political will and a general recognition that it isn’t really a tax increase if you are just keeping up with inflation.
Of course new developments are a different issue–those can and do increase the tax base, assuming the property in question is not exempt. But I think it is important to recognize that even at a rapid-for-Pittsburgh pace of development, that is only going to have a small annual effect. Specifically, the total assessed value of the property in the City of Pittsburgh is about $31 Billion. After removing exempt properties, you are down to about $18.5 Billion. So, it takes an awful large amount of investment, in non-exempt, properly-assessed properties, to significantly increase the tax base.
By the way, some sense of scale: let’s assume that inflation is eroding the value of the tax base by about 2% a year. That’s currently a loss of about $620 million in value a year, so that is approximately how much new property value you would be needing to add each year just to keep pace (and investment would have to be higher still, since rarely are assessments going to track investments). Even if you just focus on non-exempt properties (and of course a lot of investment today is in exempt properties), you are still talking about needing around $370 million in new value a year.
In other words, this inflation erosion issue is a very, very big problem,
The real estate tax revenue shortfall is not a problem of Mayor Peduto’s creation — at least no more than it was upon the OTHER eight sitting Councilmembers and the former Mayor.
That is to say that the County got it right when they opted not to lower their millage rate the extra .5 mills pending the outcome of the assessment appeals.
The City simply miscalculated the success rate of property owners’ assessment appeals.
Especially considering the County Board of Property Assessment, Appeals and Review’s rather liberal granting of assessment reductions on appeals.
Having said that, I do not personally believe the Mayor or Council much cared for Act 47’s prescription to “adjust” the millage rate.
But I believe the Mayor when he says we need to generate and/or cut our way to $60 million, annually, and fast.
All options appear to be on the table.
We must now wade through them with an open mind.
Going to be a fun month!
“All options on the table”. We’ll see what the sausage factory comes up with. But if Pittsburgh can restore $7 million by correcting an honest overestimation of a massive tax cut (who means to cut taxes by 30% in the midst of a budget crisis? Republicans and…?) that seems like it should be the easiest part. Since we’re going to need everything else on that table eventually, anyway.
I hope the administration is open to testing the temperature for the tax correction with all four Council members not facing reelection next spring, and warming it. Just in case. Our piecemeal solutions negotiated on a deadline and under the spotlight have a marked tendency to get a little kooky and quirky.
Everyone is still ignoring the fact that tax revenue overall INCREASED. This entire miscalculation is purposely being positioned in isolation to justify raising taxes. Bad idea. A previous commenter was correct in stating that council got it right in the calculation, but maybe got it wrong on the success rate of appeals. So long as the City and School District stay vigilant in next couple of years that problem will go away. As we increase values tax revenue goes up. $6 million is not a large hole to fill. Major projects coming online like, eh em, Buncher’s project go a long way to filling that hole. Not to mention the new PNC tower. The bigger property tax problem (besides non-profits) is that there a lots of property owners that skated through and got missed by the reassessment. The taxing bodies need to find them and file appeals.
Anonymous at 9;29,
I’m not sure why you are claiming tax revenues overall increased. Do you mean after you include other taxes besides property taxes? Because property tax revenues in fact decreased as a result of the post-assessment millage reduction. Really, there is no rational excuse for not redoing the math to get it right–if you are going to give property owners a tax cut, it should be the result of a deliberate policy choice, not the result of a miscalculation.
I also think you may be overestimating the impact of new development. At 7.56 mills, you need about $794 million in new assessed value to compensate. And as I pointed out before, inflation is eroding the real value of the property tax revenues in the meantime.
Finally, why shouldn’t new developments actually increase the tax base? New developments mean new people and property for the police and fire to protect, new users of the City’s streets and other infrastructure and services, and so on.
The bottom line is the City needs to be making fair, rational, sustainable decisions about how it collects tax revenues. Setting tax policy by mathematical miscalculation is definitely not a good way to achieve that goal.
Anon 9:29 – Yes, what Brian wrote… “overall” was a big tell, especially without specifying an amount. I’d have to imagine a modest level of growth was already baked into all the projections anyway. Besides, $6 million may not be a large hole to fill, but $60 million is.
In addition to the city reportedly miscalculating the success rate of property owners’ assessment appeals, the most recent county reassessment included significant increases in the assessments of a number of abandoned, low-value properties that have been tax delinquent for years. Just as an example, the long-vacant house that’s barely standing up at 2316 Perrysville Avenue wasn’t generating revenue for any taxing body two years ago when it was assessed at around $40,000, and it still isn’t now when it’s inexplicably assessed at $174,200. That’s a $1,317 annual hole in the city budget. If there are 760 properties like that around the city, and I bet there are, there’s a $1 million shortfall.
Brian – take a look at operating revenue from 2012 to 2013. It increased by more than $10 million. The same thing should happen this year. That is what I mean by taxes increased. So, even with the alleged $6 million property tax decrease, the City increased its overall tax revenue last year.
This is all about framing and the Mayor is doing a good job of framing. And yes, this is the Mayor’s plan, make no mistake about it. A deal was cut to have the Act 47 team introduce the plan (now you know why the Mayor wanted to stay in Act 47). The framing exercise is one where the Mayor and his supporters (some on this blog) are making the entire debate about one line item in a budget, rather than the overall budget. So yes, there absolutely is a rational reason for not correcting the alleged mistake. The previous administration and council (including the existing Mayor) erred on a slight calculation advantage for taxpayers. That was a good thing. And it remains a good thing. It remains a good thing because even with the slight “miscalculation,” tax revenue has increased and the City kept is already heavy tax burden on residents and property owners as low as possible.
If you look at the debate in the context of the overall budget, then you can see that the issue isn’t about revenue, it is about spending. The City didn’t lose money, it gained money. So if we have an operating budget shortfall that is because the Mayor wants the “$6 million” to spend on something. Maybe that something is a good thing or a bad thing, but that is where the debate should be focused. The Mayor ran on an agenda of cutting waste, increasing revenue without raising taxes, efficiency, technology and new ways of doing things. So why is it so urgent to raise $6 million when the overall revenue number is climbing year over year?
The idea of increasing targeted re-assessments is not empty rhetoric, unless you want it to be. It isn’t just an idea, it is the duty and responsibility of the taxing bodies. The entire purpose of the reassessment is about tax fairness, not tax fairness for the taxing body, but among tax payers. If some tax payers slipped through the cracks then the taxing bodies have a DUTY and OBLIGATION to find them and seek to increase their assessment. and despite your attempt to throw around big numbers to scare people, $800,000,000 in new assessed value isn’t hard to come by. The new PNC tower will be done in 2015, adding $450 million in value to the tax roles. If Buncher’s project gets done along the strip that is another $400 million. Bam, just like that we have another $800 million in value. That doesn’t even include lots and lots of other big projects coming on line. All those big projects, i.e., new value and new tax revenue, are the result of “erring on the side of tax payers” and encouraging a dynamic economy. The simple fact is that over the next few years that alleged “missing $6 million” will in fact be filled.
So again the question is why do we need an ADDITIONAL $6 million and why do we need it now? Could it be something else the Mayor and council need money for? Could it be a new program they want to create or spend money on? The entire reason for the anti-windfall provisions is so that taxing bodies don’t take advantage of tax payers. At the very least, very least, I would like to see the Mayor who ran on transparency and bottom up decision making to engage in a long open public process about tax revenue, the budget and spending before any vote on a tax increase. We took 6 months to debate land banking, we can take 6 months to debate a tax increase that would surely be here for decades. In that process experts from all sides should be able to examine the budget and make suggestions on both revenue and spending.
In the end, the tax “correction” is not that at all. It is a tax increase. The entire purpose of the millage adjustment is so that taxpayers don’t pay more the year after the reassessment than they did the year prior. Again, the calculation was correct as to most people. Some well heeled with expensive lawyers got some victories. Over time, those will go away and we know where the big properties are. But if we increase millage the average Pittsburgher will see an increase. They just saw an increase with the library tax, an increase from the County, two adjustment increases from the school district and now one from the City? Where does it end?
Anon at 9;25
So if you are looking at the actual budget tables, then you know there is nothing “alleged” about the property tax reduction from 2012 to 2013. Can we at least agree that is a fact, not a fraud or an allegation or any such thing? That doesn’t answer the question of what to do about it, so you should be willing to drop that highly misleading rhetoric.
Conversely, it is also true that 2013 operating revenues in total were higher than 2012 operating revenues. Again, I assume you already know that the main drivers were increased EIT collections and deed transfer taxes. The big EIT increase is attributable at least in part to the new automatic deduction system, and deed transfer taxes are volatile (e.g., note 2012 was lower than 2011). Nonetheless, if you look at the future budget projections, they have accepted a new, higher baseline for both future EIT growth and also deed transfer tax growth.
OK, those are the facts. What follows is a policy discussion.
I honestly think it is absurd to insist that tax policy set by mistake be kept as it is. If you want to argue that given the City’s overall financial situation, current and projected into the future, one thing the City should be doing today is cutting property taxes, then OK. But any such property tax cut must be a deliberate choice, not something the City just falls into through error.
By the same token, I don’t disagree with you that the entire budget should be subject to continual reexamination and reconsideration–and in fact I am not sure anyone disagrees with that principle. However, I would again note that when looking at these issues from a broader perspective, it is crucially important to take inflation into account. And when you do that, it turns out that under current projections, the City’s overall operating revenues aren’t really projected to grow in inflation-adjusted terms, and in fact didn’t really grow much from 2012-2013 in inflation-adjusted terms.
Even so, if that was the whole picture (operating revenues keeping pace with inflation), the City’s budget situation would be in good shape. But of course that isn’t the whole picture, and in particular, the City is facing increases in its required pension payments due to past underfunding.
Now if you want to call that a “spending problem”, OK, but it is a very peculiar sort of spending problem. It isn’t an obligation the City can avoid (not forever), and yet it doesn’t get anything new in return for those increased expenditures.
So that’s the City’s basic problem, and that is why it can’t just be handing out tax cuts by mistake. It has to find a way to meet those pension obligations while at the same time balancing all its other budgetary interests in a rationale manner. And in an environment like that, every significant move should be very well calculated. Again, I think it is really just absurd to suggest otherwise.
If my Council rep worries so much about reelection that he/she steers clear of participating in this important conversation, then my vote definitely will go against him/her as a result – far more quickly than as a result of actually raising needed revenue. It’s time to suck it up and fix this stuff for good.
Anon 9:29 —
All things being equal, I would normally agree with you wholeheartedly.
Unfortunately, all things are not equal on this one, so although I myself have long advocated for the City to aggressively appeal every underassessed property owner and aggressively appeal on behalf of every overassessed property owner, I don’t see that happening here.
As a matter of recent history, the Allegheny County Board of Property Assessments, Appeals and Review has been handing out assessment decreases like politicians toss out candy to kids at the Bloomfield Citizens Corporation Halloween Parade.
In 2013, Allegheny County Council extended the appeal period twice and basically told property owners, in the words of Bob Barker, to “Come on Down!!!”
Even if the City were to attempt to challenge the underassessed, short of glaring, blatant underassessment, the BPAAR would be unlikely to side with the City in the vast majority of appeals.
Whether that is right or wrong is hardly the issue here. It is what it is, regardless of how we may feel about it.
We are going to need a uniform, statewide solution to the assessment thicket, and only the Governor and the General Assembly have a big enough machete to whack it.
Right. I am all for the City appealing cases where it in practice has a good chance of winning, but that is unlikely to amount to a huge windfall.
What we really need is a system of regular assessments, say every property every three years on a rotating basis (so 1/3 per year). If you want you can add in a phase-in, so the whole increase does not hit in the first post-assessment year.
That sort of regular schedule takes a lot of pressure off the appeals process, since corrections can be made during the reassessment process as well. And in general, because you aren’t trying to reinvent the wheel each time you do an assessment, with the benefit of experience you can build up a more consistent, well-informed, and overall more reliable system. In fact many, many jurisdictions in the United States use a rotating schedule like that (random example: Cook County (Chicago), IL), and strangely enough the sky has not fallen down.
Incidentally, this shouldn’t be something that requires state action: the idea that more fairly and accurately assessing property values in Allegheny County would be to its DISadvantage is completely nuts when you think about it. If other nearby counties want to use archaic systems that tend to benefit long-term incumbents at the expense of newcomers, it will be their loss and Allegheny County’s gain.
Unfortunately, this is the sort of rhetorical insanity which certain local politicians like to use to provide cover for the current system–which, as I pointed out, might as well be designed to protect the interest of the largest commercial and wealthiest residential property owners at the expense of most others in the County.
Brian – i guess the new mode of debate is to just call the other person’s argument “absurd” and then you win. That is mature. I will not concede that the property tax change is not an “allegation.” It has only been one year. There are so many factors that go into the analysis I just don’t believe we can look at one year. I would say give it three years and see what happens. Because despite what you say, the taxing bodies do need to find the properties that slipped through and challenge them. And it does work. Look at Mt. Lebanon. While they are being criticized for the “welcome to the neighborhood” approach of challenging every new home sale, it can be done.
You miss the main point of contention that I take with your argument. You keep calling it a “tax cut.” A tax cut means that tax payers wake up the next day and are paying less taxes. For the vast majority of property owners that is NOT the case. Some are paying more, most are paying the same and some are paying less. That is why I won’t just accept that it is a “mistake” that needs corrected. The issue is much more nuanced than a simple calculation whereby yesterday all tax payers were paying less and by increasing millage tomorrow they will all be paying what they should be. That simply isn’t the case so please stop framing it that way. The increase isn’t about creating tax fairness, it is about raising revenue. We seem to agree that if that is the goal, well then fine, but lets at least have that conversation then.
Suggesting the proper remedy for the shortfall is to try a lot of appeals rather than adjust the millage isn’t actually a denial of the fact of the shortfall. I think it is quite clear at this point that calling the shortfall a “fraud” or mere “allegation” is simply misleading rhetoric.
If you are collecting less in revenues after a reassessment and millage reduction, then it is necessarily the case that SOME property owners got tax cuts. It also true that some owners got tax increases, but that is because their properties were previously underassessed even relative to the average underassessment. In any event, whatever terminology you prefer, it remains the case that if the CIty is going to be reducing its property tax revenues, it should be doing that as a result of a deliberate policy choice, not a mistake.
By the way, you are not necessarily correct it is only a minority of owners who got a tax cut. Chris Briem has done some good work on this subject and shown that due to the distribution of assessment increases, it is likely that the majority of property owners got a tax reduction on net. Now that was under the assumption the City would hit their revenue neutrality target, and without considering appeals, but I think it is more likely than not that analysis will continue to hold.
Anyway, I think we have pretty much exhausted this subject. Neither you nor I is actually taking the stand that policy decisions about tax policy should be made in a thoughtless way, so the real next step, rhetoric aside, is for the City to be taking a hard look at its projected budgetary situation and deciding how best to remedy the looming problems. And in fact that process is ongoing.
Brian, Bram, Anonymous, et. al:
To sum up all of Brian’s rather salient points, I will say this…
1. We deprived ourselves, as a City, of significant revenues because the post-assessment millage rate reduction was turned out NOT to be revenue-neutral. Brian and Bram have made compelling arguments for why we should now correct it.
2. 4 PNC Tower might cost $450M to erect, but it if it is assessed at a penny over half of that, ($225M), I will be as stunned as the Department of Finance and PNC.
3. We should do like Mt. Lebanon and challenge underassessments aggressively. We should also aggressively challenge, on behalf of the taxed, overassessments.
4. We should not count on greater than anticipated EIT revenue or any other revenue sources.
5. We asked to stay in Act 47, we should be prepared to do what the Coordinators laid out in the Second Amended Recovery Plan, and bring the ERP online so that we have access to tye breadth and depth of data it can generate. We should also spring for the extra modules so that the ERP can do for us all of the things which ERP can do for us.
6. We should commit ourselves to doing all of these things, not because they are easy, but, to quote JFK in his speech about going to the moon, “but because they are hard.”
7. Don’t waste time with recriminations or attempting to lay all of this at Mayor Peduto’s feet. It is a pointless waste of time. Give him the support he needs to get our house in order, and if he screws up, then we can look at it from there.
8. Anyone who follows City fiscal policy and City fiscal realities knew this day was coming. We need to own it, bite the bullet and take our medicine, like grown people.
And Anon, I wouldn’t waste the energy arguing with Brian. We may not always like what he has to say, but find me a more learned, well-versed person on the wide range of subjects covered here whose name isn’t Briem.
The only thing I might add is: it helps to think NOT of a need simply to replace $7 million in anticipated property tax revenue (which in an ideal world might be done through challenging all assessments, though as a matter of capacity I’m not sure how we’d do it. It’s like asking the Real Estate Dept. to process all our vacant parcels, but with what staff and budget?) but rather a need to replace what is conservatively a $60 million gap.
Once you consider the big picture, even if we do find a practical way to scrape together an annual $7 million from alternate sources, the response to such a wonderful thing ought to be, “Great! Add that to the rest of what we have to accomplish, don’t replace anything.”