Top Agenda Items
- With ARPA aid gone, 2025 closed with a $44.6 million deficit
- A projected $24 million shortfall in 2026 could leave one year before state financial control
- A $1 million Mellon grant could turn Learn and Earn into a year-round program
- After running Glen Hazel’s youth programs for free, volunteers say they can’t continue
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SUBSCRIBEWith ARPA aid gone, 2025 closed with a $44.6 million deficit
As Pittsburgh spends the last of its American Rescue Plan Act (ARPA) dollars, the reckoning of the effect of inflation on the city’s financial health — and spending priorities — is now.
During a 2.5-hour post agenda meeting on June 24, Controller Rachael Heisler and Acting Director of the Office of Management and Budget (OMB) Rea Price presented the city’s finances for 2025 and the first quarter of 2026.
Heisler discussed the 2025 Annual Comprehensive Financial Report, which shows the actual cost of running the city as opposed to the budget, which is only a plan. The report showed an operating deficit in 2025 of $44.6 million. It was the first year since 2020, without ARPA funds to transfer. In comparison, the city used $46.5 million in ARPA funds and had a $7.1 million gain for the year in 2024.
“We have cautioned repeatedly that ARPA dollars mask the city spending problems, and the mask is off,” Heisler said. The problem, she added, is nation-wide. “[ARPA] allowed us to ignore inflation for four years, and now this is the outcome.”
Heisler said they withdrew $33.8 million from the city’s rainy-day savings to cover the difference.
Deputy Controller Pete McDevitt said the account balance will likely drop below best practice guidelines by the end of this year. Price estimated it could reach the lowest to meet city code as soon as the end of 2027.
The city was hit with high costs of fleet maintenance, its first full water bill and public safety overtime pay. The Department of Public Safety accounted for 44.6% of the city’s 2025 expenditures.
“The city did quite well with revenue generally last year and outperformed budget on most major taxes,” she said. Real estate and earned income taxes made up the largest share of revenue.
Because of state law, the city has limited options for increasing revenue. For instance, it is beholden to the county for property tax reassessments, which were last done in 2012. (Allegheny County is the largest county in the country without regular reassessments.)
Heisler said voluntary payments from tax-exempt nonprofits such as the University of Pittsburgh Medical Center and Highmark will likely be the most significant revenue increase for 2026 and 2027.
Which approach should the city take to balance its budget?
| reducing the cost of some services |
| raising fees and taxes where state law allows |
| seeking more voluntary payments from large tax-exempt nonprofits |
| drawing further from the city's savings |
| Other |
A projected $24 million shortfall in 2026 could leave one year before state financial control
Acting Director of the Office of Management and Budget (OMB) Rea Price’s assessment of 2026 thus far — and projections for its remainder — fared only marginally better.
While OMB budgeted for $721 million in revenue, first quarter analysis shows the city potentially ending the year with only $707 million in income. The city is already falling short on income from permits, licenses and interest from investments.
At the same time expenditures are projected to be $10 million over budget. The result, Price said, could be more than a $24 million deficit for 2026. If that happens, then the city would only have one more year to turn things around before falling under state financial control.
One pitfall for this year is $36 million of expenses rolled over from 2025, which included the $7 million remaining on the water bill and $1.4 million in unexpected fleet maintenance costs. “[Rollover] essentially gives the departments the ability to overspend their adopted budget,” she said.
The city also has to balance $4.5 million in overtime and other expenses for the January snowstorm, increased Teamster wages, a potential increase in police salaries (the matter is still in arbitration) and high fuel costs. Price said the city has spent $30 million more in the first quarter of 2026 than in the first quarter of 2025.
All hope for the year, though, Price said, is not lost. “We tend to be much more conservative at the beginning of the year, because we don’t want people to be too confident,” she said. “We’ll have a better picture in about a month.”
Which one decisive action would most increase your confidence that the city can avoid state control of its budget?
A $1 million Mellon grant could turn Learn and Earn into a year-round program 🔗
Come fall, teens and young adults will be able to take part in the Learn and Earn program year-round.
The Richard King Mellon Foundation awarded a $1 million grant to Partner4Work, which manages the city’s Learn and Earn Summer Youth Employment program. The money will go toward a pilot to continue the program through the other nine months.
Matt Singer, Mayor Corey O’Connor’s Deputy Chief of Staff, said the pilot will have two tracks. One provides initial work exposure and soft skills training to 16- and 17-year-olds and the other provides job-specific, hands-on experience and training to 18- to 23-year-olds.
“We believe this expansion will go a long way…so they’re better able to enter the job market or figure out what they ultimately want to do for a career later on in life,” he said at the June 24 committee meeting.
The award requires a $1 million match, which council voted to move forward by using the Stop the Violence (STV) trust fund, which currently has a $10 million unencumbered balance.
What do you most hope young people gain from a year-round work program? Select up to three.
After running Glen Hazel’s youth programs for free, volunteers say they can’t continue 🔗
Discussion about supporting children and youth through the Stop the Violence (STV) fund continued as council members considered issuing a request for proposals for programming at the Burgwin Recreation Center in Glen Hazel.
Council Member Barb Warwick of Greenfield, whose district includes Glen Hazel, said a three-year renovation of the former pool building is almost complete. Until recently, community members, primarily Saundra and James Cole, ran afterschool and summer programming there, which is no longer sustainable. “There comes a point where you can’t work for free anymore,” said Warwick.
“For too long the city has grown accustomed to relying on the kindness of community members, often in our most underserved, poorest communities to provide the services that we provide in communities where we have a rec center,” she continued. “That is not equitable.”
The city’s 11 recreation centers provide services to children and youth for free or for nominal costs.
Some council members felt uncomfortable with potentially paying for programming — capped at $200,000 for one year — out of the STV fund without following its legislative guidelines.
During the discussion Saundra Cole asked if she could speak but was not permitted to. When council agreed to a two-week hold on the request, she said as she left the room, “If it was a white community, it would be okay. It’s not a white community. It’s a black community, and we need every bit of help that we can get.”
How should the city's Stop the Violence fund be used?
| Only for programs that directly aim to reduce violence |
| For a broader range of youth programs, including job training and recreation |
| It depends on the specific program |
| Not sure |
| Other |