ANALYSIS: A Historic Opportunity to Transform Pittsburgh’s Budget

Nthando Thandiwe |

On Thursday, September 30, Mayor Peduto submitted a proposed $770 million combined operating and capital budget for 2022 with no tax increases. The proposed budget is comprised of a $611,750,775 operating budget and a $158,615,392 capital budget. This is a 1.5% ($11.6 million) increase over the final 2021 operating and capital budgets. The mayor highlighted the investment of his 2022 proposed budget in roads and bridges, affordable housing, public safety, and climate action.[1]

This preliminary analysis of the proposed 2022 Pittsburgh city budget highlights continuing concerns about community engagement and transparency in budget development for 2022, which was also an issue in the budget process for 2021. Our analysis also underscores that at the beginning of next year a new mayor and city council will have the authority to remedy these concerns. They can revisit the 2022 budget and the use of the majority of the in American Rescue Plan (ARP) funds allocated to the City of Pittsburgh in March 2021 by the United States Congress, which remain unspent. City Council and the next mayor-elect should use the transition period from election day to inauguration day to begin to flesh out a fuller and more transparent community engagement process and a substantive review of the 2022 budget and ARP allocation plan based on how adequately they address: (a) the immediate recovery needs of Pittsburghers because of the pandemic and the pandemic recession; and (b) the structural inequities that pre-dated the pandemic.

Agreement in principle on values: Since the passage of the American Rescue Plan (ARP) this past March, the Biden administration, the U.S. Treasury Department, Pittsburgh’s mayor and city council, and many outside advocates have been on the same page regarding the way ARP funds should be utilized—at least in theory. broad agreement that these funds should address the most immediate needs of Pittsburghers hurt by the pandemic and that they should also address longstanding inequities exacerbated by the pandemic, including those based on race and gender. (For evidence of this agreement, see page 4 of the city’s “Recovery Plan Performance Report.”) There is not yet agreement, however, on whether the allocation of these funds meets these objectives.

Disagreement about the process and lack of transparency in budgeting and use of ARP funds: Pittsburgh Budget and Policy Center and community advocates have highlighted the lack of community engagement in the creation of the 2021 budget, including the use of ARP funds, and a broader lack of transparency. Consistent with this critique, an 11-line paragraph titled “Community Engagement” in the city’s “Recovery Plan Performance Report” acknowledges—with only a little lipstick—that the community feedback process on the use of ARP funds consisted of opportunities for citizens to speak for three minutes before City Council (without any back-and-forth with members of the council); and then City Council meetings with communities and community-based organizations after City Council had allocated ARP funds.

On a more positive note, the city recovery plan report states: “This plan will be re-visited each year and has the ability to be amended at any time.” This acknowledgment provides space to implement a fuller and more transparent process of community input in 2022. This would not be a “clean slate” process. Money already spent cannot be reallocated—although in early 2022 this will be only a small part of the ARP funds the city received. In addition, if authorities have already signed cooperative agreements governing their allocation of ARP funds from the city, it may be easier for the city and a new mayor to engage in an accountability process to ensure equitable use of those funds than it would be to take back a portion of the funds from the authorities. That said, taking the city’s recovery plan report to the federal government at its word, the new mayor and city council will have the authority to engage in a responsive review of the use of the funds with extensive community input and the chance to modify the uses of those funds.

Turning back to the proposed budget for 2022, the same lack of transparency and detail that exists with the use of ARP funds makes it difficult to evaluate how well the new budget meets the city’s widely shared equity objectives. As in the past, the mayor’s budget process and its public review are condensed into less than two months. Adopting a longer public review process, between six and nine months, can create a more inclusive budget process allowing equity concerns to be addressed in the budget’s creation.

Allocation of ARP funds: After receiving the first half of $335 million in American Rescue Plan (ARP) funds, City Council passed a final 2021 budget in July that amended the temporary 2021 budget passed in December 2020. The final 2021 budget used 10% ($33 million) of ARP funds to avoid layoffs and restore vacant city positions and allocated 4.8% ($16 million) of ARP funds to the capital budget. In September, City Council approved the transfer of 28% ($94.9 million) of ARP funds: $74.8 million to the Urban Redevelopment Authority (URA); $17.5 million to Pittsburgh Water and Sewer Authority (PWSA); $2.5 million to the nonprofit OnePGH for a guaranteed basic income pilot; and $80,000 to the Parking Authority. In 2022, the ARP spending plan apportions 14% ($48 million) of ARP funds to the operating budget and 6% ($20 million) of the ARP to the capital budget. The mayor, City Council, and Recovery Task Force all agree that, consistent with Treasury guidance, ARP funds should target the communities most in need during the pandemic. However, no public details exist on compliance with this consideration in the distribution of these transferred funds.

Public safety: The 2022 proposed budget notes a proposed investment in the Office of Community Health and Safety (OCHS)—which would be 6% of the police budget—as one component of an effort to reimagine public safety by “redirecting city resources to better address community needs.” Yet the proposed $120-million police budget would be the highest since Mayor Peduto took office and a 4.6% ($5.2 million) increase from the final 2021 budget. In addition, the 2022 proposed budget includes funding to hire two new police officers, implying that a current hiring freeze would end. In our analysis of the original 2021 proposed budget, “Budgeting Our Values,” we noted that in 2018 Pittsburgh employed 31 officers per 10,000 residents, placing the city ninth out of 77 similarly sized cities. To the extent that the 2021 and proposed 2022 budgets take only limited steps towards public safety, the next mayor will have an opportunity to take bigger steps.

Investments in housing: The proposed budget also highlights affordable housing as a priority. The approved transfer of $74 million in ARP funds to the URA in the amended 2021 budget includes $10 million for the city Land Bank charged with transferring vacant land to new owners, $5 million to Community Land Trusts (CLT), $5 million to preserve existing affordable housing, and $21.4 million to OwnPGH for renovating vacant homes to sell to low- and moderate-income residents. The administration’s touting of ARP affordable housing spending is geared toward homeownership with only $5-7 million for renter assistance including the preservation of existing affordable housing likely targeting higher incomes rather than 50% and lower area median Income where the most need is. The 2022 capital budget proposes a significant decrease (-68%) to housing spending compared to the final 2021 budget, primarily due to the receiving and use of $16 million in Treasury funds for rental relief in 2021. Outside of U.S. Treasury funds dedicated for rental relief, the City of Pittsburgh only increases affordable housing funding by 1%. The use of Treasury money to address the housing crisis is positive, but continual investments from the city will be needed because of Pittsburgh’s 20,000-unit shortage of affordable housing units dating from before the pandemic.

Building a better budget: Our substantive concern is that the city’s 2022 budget and its use of ARP funding could miss a historic opportunity—one that everyone in the city, including the next administration and City Council, thinks that Pittsburgh should grab. Seizing that historic opportunity requires addressing pressing immediate needs and historic inequities. The inherent lack of transparency and meaningful community input, as well as the accompanying budget decisions that fail to invest in the people most in need or address pervasive inequities, are concerns that can be remedied in the future. The city can use this opportunity to better invest current revenues in the needs and priorities of residents and raise additional revenues from more affluent residents, nonprofit institutions, and businesses, which would sustain a more inclusive and just Pittsburgh after ARP funds run out.

 

[1] The City of Pittsburgh, “Mayor Peduto Submits Preliminary 2002 City Budgets,” press release,  September 30, 2021. https://pittsburghpa.gov/press-releases/press-releases/5326.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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