Controller: Pittsburgh finished 2024 with a surplus but faces a multi‑year budget squeeze

City Controller Rachel Heisler told Pittsburgh City Council members on May 15 that the city closed 2024 with a modest operating surplus but cautioned that structural pressures — a scheduled jump in debt service, lower deed‑transfer and real‑estate receipts and reliance on one‑time sources — put the city on an unsustainable path without changes to revenue or spending.

Heisler said, “2024 overall was a decent year. We brought in $7.1 million more than it spent,” and credited exceptional investment earnings and rebounds in amusement and parking taxes for the positive result. She added most operating revenue still comes “directly from city residents in the form of real estate taxes and wage taxes,” a dynamic she said the city should work to diversify.

Why it matters: The controller and council members focused on the five‑year plan adopted with the 2025 budget. Heisler said the plan anticipates drawing down the unassigned fund balance over the next several years — “we're expected to spend more than $120 million to $130 million from the fund balance over the course of the next five years” — while debt service spikes in 2025–26 following pandemic‑era refinancing. Council members said they want clearer, earlier reporting so they can act if revenue or spending diverge from the plan.

Key figures and trends presented

- Cash‑basis operations: Heisler reported the city collected about $703.6 million and spent about $699.7 million on a cash basis in 2024; transfers out (for example to the URA) are excluded from those operating figures.

- Fund balance: The city’s unassigned fund balance stood at about $199 million at year‑end. Heisler and staff described that as healthy today but warned the trajectory — planned use of reserves in the five‑year plan — reduces future flexibility.

- Investment earnings: The city realized roughly $28 million in investment income in 2024; Heisler and others cautioned such returns are unlikely to repeat in 2025.

- Deed‑transfer and real‑estate taxes: Deed‑transfer receipts fell to about $47.9 million in 2024 (roughly $11.2 million below budget and down from a 2022 high of $65.4 million). Real‑estate tax collections were about $143.4 million in 2024, roughly $8.2 million under budget and down $5.6 million from 2023. The controller’s office said continuing downward pressure partly reflects county assessment issues and ongoing changes in downtown valuations.

- Transfers: Heisler noted the annual operating surplus figure typically quoted excludes transfers such as the roughly $10 million moved to the URA for the Housing Opportunity Fund and other PAYGO and one‑time transfers that collectively totaled on the order of tens of millions in 2024.

Council questions focused on quarterly accountability, overtime and storm costs

Councilmembers pressed the controller and Office of Management and Budget staff for more timely detail about 2025 revenue performance and higher‑than‑expected premium pay (overtime) in early 2025.

Jake Pawlak, director of the Office of Management and Budget and deputy mayor, explained seasonal and operational drivers in the first quarter: “EMS conducted some extensive trainings for EMS personnel, particularly those who participate in the dive team in the first quarter. Those trainings happen on overtime, but they don't happen every quarter.” Pawlak also said a contract change allowing “combo units” — one paramedic paired with one EMT instead of two paramedics — was implemented during the first quarter and is expected to reduce future EMS callbacks and overtime costs.

The controller’s office and OMB gave specific Q1 numbers during the exchange: EMS had spent about $2.3 million on overtime by the end of Q1 against an annual overtime budget of roughly $3.5 million (a Q1 overage rate that drew particular attention). OMB flagged that part of the Q1 variance is explained by non‑reimbursed special events (for example the St. Patrick’s Day parade), training timing and a severe spring storm that produced unanticipated overtime in DPW and other operations. Staff said a full accounting will appear in the first quarter report, which was being finalized at the time of the hearing.

Revenue mix and assessment litigation

Both controller staff and OMB highlighted a change in the city’s revenue mix: wage (earned income) tax collections were approaching parity with, or surpassing, real‑estate taxes in the near term because of downward pressure on assessed values downtown and the county’s common‑level‑ratio methodology. Heisler said she wants a countywide reassessment to stabilize real‑estate tax bases but noted that reassessment timing and legal processes are outside the city’s control.

Debt service and five‑year outlook

Controller staff reminded council that 2025–26 will include elevated debt service because of refinancing decisions made during the pandemic. OMB said the five‑year plan intentionally smooths that higher debt service but shows planned draws on reserves; both Heisler and council members urged active monitoring and cost control to avoid depleting the city’s cushion.

What was not decided

No formal council votes or budget actions took place at the hearing. Staff and council agreed to rely on the soon‑to‑be‑released first quarter report for more granular figures and pledged follow‑up briefings. Council members said they may hold additional hearings focused on departmental management, overtime drivers and capital‑project bidding and costs.

Ending

Heisler and OMB staff said they would continue to produce quarterly reports and that those reports are the mechanism the administration and council rely on to monitor revenue and expenditure trends. Several council members said they want more frequent, department‑level conversations about cost containment and revenue strategies as the city moves through the 2025 budget year.