Achieving a More Equitable Pittsburgh Budget: Treasury Guidance on How the City Can Use American Rescue Plan Funds

Nthando Thandiwe |

With the recent influx of $335 million in American Rescue Plan (ARP) funds, the City of Pittsburgh has formed the Pittsburgh Recovery Task Force to manage the dispersal of aid to hurting residents of the city. Made up of the Mayor’s Office and Councilmembers Ricky Burgess, Daniel Lavelle, and Theresa Kail-Smith, the group has been charged with helping the communities most impacted by the pandemic and the resulting recession, and with ARP funds providing nearly 60% of the City’s yearly operating and only a 30% budget loss in 2020, the City has a historic opportunity to address not only the immediate effects of the pandemic but also well-known and long-standing inequities.

Charged with developing a proposed allocation plan for ARP funds, the Pittsburgh Recovery Task Force framed its challenge the right way when formed in April of this year.  It said that a plan to spend ARP funds should put equity first. But the reality is quite different.

The City is using part of the ARP funds to prevent lay-offs of more than 600 employees, including police, firefighters, and emergency services workers. Those lay-offs should be prevented. But they were only made because of ongoing revenue shortfalls that reflect the City’s failure to raise adequate revenues from affluent residents and institutional non-profits such as UPMC. In fact, Mayor Peduto withdrew a 2013 city lawsuit against UPMC challenging its charitable status, which exempts the organization from paying Pittsburgh’s property and payroll taxes. Instead, the mayor said that he’d set up an urban wealth fund, OnePGH, that UPMC, Highmark, the University of Pittsburgh, and Carnegie Mellon would contribute to. However, in the subsequent seven years, none of these entities donated to the fund, costing the City hundreds of millions of dollars. If the City had continued that lawsuit, it might not currently feel the need to spend 70% of the ARP funding ($232 million) to compensate for those ongoing revenue shortfalls. And, $174 million of that amount is being “saved” to bolster the city budget through 2024 instead of meeting the needs that Pittsburgh communities need now when the pandemic has done so much damage.

A true plan to address inequity would be developed in a transparent manner. Public hearings on the ARP spending proposal were announced with only 8 days’ notice and a planned vote on the day after conducting the final public hearing. It makes sense that community members challenged their exclusion from the process and raised questions about the use of funds.

The U.S. Treasury has offered guidance on distributing the federal funds, which includes the recommendation for “state, territorial, tribal and local governments to engage their constituents and communities in developing plans to use these payments, given the scale of funding and its potential to catalyze broader economic recovery and rebuilding.” In December, due to the decreases in revenue in 2020, the City passed an unbalanced budget for 2021 that required reopening the operating budget mid-year (in June 2021). With the first tranche of ARP money already deposited in a city trust fund, the City has already released its 4-year ARP spending plan.

The City has conducted community engagement in the form of two public hearings, but this does not involve constituents and communities in the development of a spending plan. Without a thoughtful plan for how residents’ concerns and ideas will be incorporated into making budgeting decisions, the funds won’t go to who needs them most. City Council should immediately pause voting on the spending plan presented by the Pittsburgh Recovery Task Force to create a people-centered strategy that includes constituents in conversations. The typical 3-minute comment format at City Council hearings and meetings is neither sufficient nor accessible for most residents.

If the City is serious about developing an ARP allocation plan consistent with federal guidance and the Recovery Task Force commitment to equity, City Council should embrace a process that allows for genuine public engagement and that should

  • create a plan that follows U.S. Treasury guidance and pause voting on the proposed ARP spending plan until a people-centered public engagement process can be implemented with detailed expenditure descriptions, including accessible hearings; more opportunities for community engagement, feedback, and input; and genuine dialogue with City leaders, not just 3-minute comment slots.
  • not lock in an allocation of ARP funding beyond 2021. That would allow for real community input and recognize that a new city council and mayor in 2021 will finalize these decisions.

We believe a more transparent and inclusive process would lead to a different set of decisions about how ARP funds should be used. The result would be a plan to

  • approve 10% of ARP funding—$35 million—to fund the construction of 1,700 affordable housing units, approximately 10% of the City’s 20,000-unit shortage pre-pandemic.
  • eliminate “lost revenue” allocations used to offset pre-existing revenue shortfalls, the City’s structural deficit. ARP funds should only be used to replace the $50 million revenues lost due to the pandemic.
  • develop a fair taxation plan that raises additional city revenues in 2022-24 from rich city residents and corporations that do not pay their fair share.
  • use ARP funds to help low-income workers, including raising essential worker pay and investing in apprenticeship, apprenticeship readiness, and other training that leads to good jobs. The pandemic has shone a light on the vital work, so many Pittsburgh residents have performed throughout the crisis to benefit us all despite tremendous risk to themselves. This includes health care workers, food systems workers, janitors and sanitation workers, truck drivers and warehouse workers, childcare workers and educators, social and human services staff, and more. Premium pay offers additional support to workers who have faced the greatest health risks because of their service in critical infrastructure sectors. The Department of the Treasury emphasizes the need to prioritize premium pay for lower-income workers; up to $13 per hour in premium pay and up to a total of $25,000 per worker is allowed.
  • provide more funding for childcare and access to healthy food.
  • address inequities that weren’t included in the ARP spending plan, such as
    • $10 million for food systems initiatives and the establishment of a Pittsburgh food justice fund.
    • $4-$8 million for public transit fare relief to Medicaid and SNAP recipients.
    • additional assistance to renters to help reduce evictions and homelessness. More than half (53%) of Pittsburgh households rent—but Pennsylvania shortchanged Pittsburgh when allocating state ARP dollars for emergency rental relief.
  • support public health expenditures, including funds for COVID-19 mitigation efforts and providing public health and safety workers and staff with funds for medical expenses and behavioral and mental healthcare.
  • rebuild the public sector, including rehiring public sector staff and replenishing unemployment insurance trust funds up to pre-pandemic levels.
  • invest in water, sewer, and broadband infrastructure. Funds can be used to make the necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband internet.

The U.S. Treasury encourages equitable spending, centering on those most impacted by the pandemic. Pittsburgh should take advantage of the opportunity the American Rescue Plan provides and the Treasury’s guidance to invest in a future that is more equitable, more transparent, and rebuilds with the intention of emerging from this crisis better than we were before the pandemic. A decision to use the next three years and budgets to enact policies, including fair taxation and reductions in spending on traditional policing, could help create a more inclusive and just Pittsburgh for generations.