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Council hears trade‑offs of raising millage versus nonprofit pilot payments to fill budget gaps
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Summary
Finance and budget staff outlined a roughly $669 million operating budget and the limits of existing revenue; council discussed raising the millage (examples: 10% equates to roughly $17M, 20% roughly $34M in illustrative estimates) and compared that to pursuing voluntary pilot payments from nonprofits with examples from Boston, Baltimore and Providence. Controller urged transparency and cautioned that past pilot receipts were unpredictable.
City finance and budget officials, outside researchers, and councilmembers spent the post‑agenda meeting weighing practical revenue levers available to Pittsburgh.
Pete McDevitt, council budget director, described the budget as the city’s chief policy document and listed core services — public safety, public works, parks and recreation, and municipal operations — that depend on predictable revenue. Finance Director Jen Gula said more than 60% of general fund spending is funded by tax revenue and reviewed the main local tax buckets: property taxes (city millage 8.06 mills) and Act 511‑authorized local taxes, with earned income tax collection now exceeding real estate tax as the largest single source.
Gula and McDevitt ran illustrative millage scenarios for council: a modest 10% increase in millage would raise roughly $17 million for the city (an example the presenters used for illustration), while a 20% increase would bring in roughly $34 million. They emphasized that raising the millage is the principal lever council controls directly during the omnibus budget process, but warned that even modest increases require political and public buy‑in.
Council also explored pursuing voluntary or negotiated payments from large nonprofits (payment‑in‑lieu‑of‑tax, or PILOT, style agreements). Kamalika Das of the Institute on Taxation and Economic Policy summarized pilot models in other cities: Boston’s formulaic, publicly reported requests, Springfield’s pilot requirement development for colleges, Baltimore’s negotiated agreements with anchor institutions and Providence’s long‑term MOUs with universities. Das said such programs can provide predictable revenue when they include formulaic requests, public disclosure and long term commitments, but participation is usually voluntary and actual receipts can fall well short of requests.
Controller Rachel Heisler urged caution and transparency. She reviewed previous Pittsburgh experience with the Pittsburgh Public Service Fund, noting her office’s report that of roughly $121 million that had been discussed under that program, only about $18.2 million was actually received, with a single highest year receipt of about $5.8 million. She recommended publicly reporting who pays, how much they pay and what the funds are used for and suggested dedicating voluntary payments to specific needs such as a frontline fleet trust fund.
Councilmembers asked for concrete figures when comparing options. Staff noted the city’s estimates that if some major nonprofit property were fully taxable the city share could be on the order of tens of millions annually (staff cited illustrative numbers: collective top‑five nonprofit real estate exposure across taxing jurisdictions at about $127.5 million, with a city share for the largest single institution on the order of $34 million if taxed). Members discussed the political and administrative tradeoffs of taxing residents via millage increases versus pursuing voluntary commitments from anchor institutions.
No formal decisions were made. Councilmembers agreed more analysis is needed. The mayor will release a draft budget to council next week and any change to the millage or adoption of new tax types or negotiated agreements would require subsequent ordinance drafting, public comment and administrative planning.
Next step: staff were asked to return with more detailed figures and options for implementation and to continue outreach with anchor institutions and the controller’s office on transparency standards.
