Pittsburgh reports roughly $9 million 2025 operating shortfall; council presses for reappropriation and premium-pay detail

The City of Pittsburgh closed fiscal 2025 with an unaudited operating deficit of roughly $9 million, the acting director of the Office of Management and Budget said at a March 25 post-agenda briefing, prompting council members to press for more detailed breakouts of reappropriations, premium pay and delayed revenue collections.

Rhea Price, acting director of OMB, opened the presentation with the year-end totals, saying revenue collection totaled about $658,386,076 while expenditures were roughly $667,025,881. "Please note that that number is negative. So, that means that we ended the year in the red," Price said, summarizing the city's unaudited operating result.

Why it matters: the deficit reduces the beginning fund balance for 2026 from the budgeted roughly $168 million to about $159 million, shifting the starting point for the city’s five-year plan and affecting projections through 2030. Price warned the figures are unaudited and could change in the annual comprehensive financial report.

Staff attributed the shortfall to both lower-than-expected revenue and higher expenditures. Ian Fitzgerald, deputy director in the finance department, said some revenue lines beat expectations—real estate tax and parking collections performed well and deed transfer tax came in above budget. "The actuals that came in was actually 47 and a half million dollars," Fitzgerald said of deed transfer tax collections, higher than the $42 million budgeted figure.

At the same time, Fitzgerald and Price flagged weaker collections and timing issues for certain taxes: "earned income tax and payroll expense tax severely underperformed," Fitzgerald said, noting delays in processing large remittances that pushed roughly $9.5 million into 2026 and referencing a larger $19 million timing effect in payroll expense that staff has since worked to resolve.

Expenditures also contributed. Price highlighted four bureaus that exceeded budgets—EMS, fire, DPW operations and DPW environmental services—largely driven by premium pay and overtime. She said professional and technical services also ran over budget by about $5 million, in part because of large reappropriations from prior years that inflated the operating budget. "That increased from $3,000,000 to $41,000,000 in less than 10 years' time," she said of the reappropriations trend, calling it "eyebrow raising." (Quotations reflect remarks during the OMB presentation and council Q&A.)

Price also detailed pension and ARPA status: the comprehensive municipal pension trust was nearly 78% funded at year-end, up about 2 percentage points from 2024, and OMB reported roughly $20 million of American Rescue Plan Act funds remaining but largely allocated. Price said OMB has used ARPA to supplement operating budgets—"between $33,000,000 to almost $50,000,000" in some years—and that over four years those supplements totaled about $178 million.

Council response and follow-ups: council members pressed staff for clarifications and next steps. Councilperson Charlene asked whether the city might meet criteria for Act 47 municipal distress; Price said the unaudited results may represent one of the statutory criteria but cautioned against drawing conclusions before audits and the ACFR. Councilmember Warwick sought clarification about whether a large Pittsburgh Water bill was included in the deficit; Price clarified the $9.6 million water bill was paid in January 2026 and was separate from the 2025 operating result.

Councilwoman Gross and others concentrated on reappropriations and the composition of professional and technical services spending. Gross called for a more detailed breakout and warned that multiyear projects and outsourced technical work can obscure true year-to-year costs: "That has ballooned in 10 years from 3,000,000 to 40,000,000," she said, urging staff to send a breakout of what comprises the reappropriations. Staff agreed to provide additional detail on reappropriations, premium pay, and the salaries/premium-pay split by bureau, and said they would follow up with councilmembers individually.

Systems and process actions: OMB and the controller’s office said they are pursuing process and systems fixes to reduce timing and remittance problems, including a planned ERP procurement and more frequent utility billing with Pittsburgh Water to avoid large end-of-year surprises. Staff said the new ERP RFI/RFP work is underway and that cross-department review aims to improve transparency and reduce future rollovers.

No formal motions or votes were taken at the meeting. Price and finance staff committed to provide detailed follow-up materials requested by council members—breakouts on reappropriations by subclass, explanations of premium-pay drivers, payroll/remittance timing and the ERP timeline—and to meet again in future post-agenda sessions and a scheduled special session on the 2026 operating budget.

The meeting concluded with councilmembers thanking staff for the briefing and noting next steps; the post-agenda meeting was then adjourned.