Budgeting our Values: An Analysis of Mayor Peduto’s 2021 Budget Proposal

Nthando Thandiwe & Diana Polson |

The Pittsburgh Budget and Policy Center was established earlier this year to conduct periodic analysis of the city of Pittsburgh budget that lawmakers and advocates can use to achieve a budget that promotes equity, prosperity, and sustainability. Research and writing this first Pittsburgh BPC analysis was a learning experience. As noted in the acknowledgments, many local residents and budget experts pitched in to help us get our numbers right and also to understand the programs in place in three priority areas—public safety, affordable housing, and workforce development. We hope the analysis in this report can help the city achieve a budget that reflects our shared values, including by protecting the economically most vulnerable. We look also forward to assimilating the feedback we will receive on this report and providing additional analyses in the future that contributes to achieving shared, and sustainable, prosperity.

Acknowledgements:

The writing of this analysis was truly a team effort. We depended on our internal team and relied heavily on Pittsburgh’s experts in these issue areas to give us the lay of the land, explain the details of the budget and provide us feedback along the way.

Internally, we thank our research team—Stephen Herzenberg, Maisum Murtaza, Claire Kovach, Mary Madsen, and Marc Stier—all of whom contributed significantly to the research used in this report. Stephanie Frank laid out the report, created the cover and the figures. Kirsten Snow oversaw our communications and dissemination planning (and will oversee the implementation of that plan).

We thank all the people we spoke to for sharing their knowledge of the Pittsburgh budget and the needs of its residents, providing constructive feedback, guiding us to other “Sherpas” that could serve as our guides, reading drafts, and providing a sounding board.

EXECUTIVE SUMMARY

Findings

The city budget is a moral document—it shows who we are, what we value and what our priorities are as a community. Today, in the face of coinciding crises—the COVID-19 pandemic, a recession that risks becoming a depression, racial injustice exemplified by police killings of Black citizens, accelerating climate catastrophe, and a looming eviction tsunami—our budget must address our most pressing challenges. This is the time to be creative about raising new sources of revenue from those with the most ability to pay and shifting funding around internally to meet critical community needs while increasing equity and transparency.

We have an opportunity in this crisis to rethink our priorities and budget our values. We can choose community investment in affordable housing, workforce development and social services over policing and criminalization. These investments will help those who need it most during this crisis and will set us on a better path ahead.

  • THE ECONOMY: As in the rest of the United States, the economy in Pittsburgh has been hammered by the need for many businesses to close or scale back operations so that people can social distance and reduce the transmission and death that results from COVID-19.
    • Employment in Pittsburgh pre-COVID was more than 150,000. By April 2020, after the pandemic started, employment fell to 128,000. By October, employment climbed back steadily to 142,000, still 8,000 below the pre-COVID level.
    • The unemployment rate tripled from 4.6% to 15.2% from February 2020 to April, then fell to 7.5% by October.
    • With the virus surging to the highest case rates to date, the economy in the city is likely to be sluggish for an extended period of time.
  • CITY REVENUES: With the COVID-related recession, revenues have declined in the city of Pittsburgh. It is estimated that the City of Pittsburgh will bring in $100 million less than expected by the end of 2020. Projected revenues for 2021 are $570 million. Pittsburgh must get creative about tapping new revenue sources from those most able to pay and rethinking existing spending. This includes:
    • Cutting pension contributions to the “actuarially required contribution”(ARC) level in 2021.
    • Reprograming a portion of the police budget towards critical community needs like affordable housing and workforce development.
    • Making sure UPMC pays its fair share in taxes. UPMC’s nonprofit status allows the medical center to receive millions of dollars in tax breaks each year from the city of Pittsburgh.
    • Seeking authority from Harrisburg to tax the “unearned” income that goes mostly to the wealthy. Currently, the city’s income taxes that fund schools (2%) and the city (1%) tax only “earned income.” Taxing unearned income at the same 3% level would raise roughly $25 million in the city; taxing it at 6% would raise about $50 million.
    • Leading advocacy with other localities and state lawmakers for more federal relief for localities and states.

The Police Budget

  • Pittsburgh is one the most heavily policed of 77 medium-sized U.S. cities, ranking 9th. Violent crime rates—Pittsburgh ranks in the middle—do not explain this police presence.
  • If Pittsburgh ranked in the middle of the pack for the number of police officers per 10,000 residents, it would have about 19 police officers per 10,000 residents, not the current 31.
  • Mayor Peduto is proposing a 2.9% cut to the Police Bureau budget. This cut is lower than the proposed in all but four of the city’s 27 other city departments.
  • Mayor Peduto’s proposed budget for the Police Bureau is 20% of the city’s operating budget, the second-largest allocation, behind only the Department of Finance.
  • Even though the Bureau of Police would be cut by 2.9% under Mayor Peduto’s proposal, the bureau’s share of the operating budget would rise to its highest level in the last six years.
  • Mayor Peduto has proposed no decrease in the number of uniformed police officers in Pittsburgh. This misses an opportunity to reduce police staffing through high rates of retirement. All proposed staffing cuts within the Police Bureau are occurring on the civilian side. Informed by the Task Force on Police Reform, the Mayor has proposed allocating an amount equal to 5% of the police budget to a new Office of Community Health and Safety.

Affordable Housing

  • An assessment of the need for affordable housing in the city conducted for the city Affordable Housing Task Force (AHTF) in 2016 estimated a citywide deficit of 14,896 units affordable to households earning 30% of the median household income or less.
  • Available data indicate some increase in affordability for homeowners since 2014, but little for renters.
  • From 2014 (the year of most of the data used in the 2016 needs assessment) to 2019, city incomes rose, and poverty fell, but median gross rent also rose 16%.
  • The share of renters who are “Cost Burdened”—paying more than 30% of their income for housing—fell slightly but still remained close to 50% in the most recent available pre-pandemic data. In Allegheny County, Black renters and renters of color are cost burdened at much higher percentages than white renters. (We do not have data on cost-burdened renters by race/ethnicity for the city alone.)
  • Before the pandemic, evictions in Pittsburgh averaged 89 per week. Since mid-March, federal and state eviction moratoriums have keep evictions close to zero. The expiration of the Centers for Disease Control (CDC) moratorium on December 31 could precipitate an eviction tsunami in early 2021 in the city—roughly 2,600 if the evictions prevented since March now happen in a short period. That estimate does not take account of additional evictions likely because families have lost jobs and income because of the pandemic and recession.
  • Funding of affordable housing projects accounted for 5% of the total proposed Capital Budget for 2021. The Urban Redevelopment Authority (URA) manages over 80% of these projects. Capital budget expenditures toward affordable housing have increased by 5% from 2020 to the 2021 proposed budget. The largest Capital budget increase of affordable housing spending came with the formation of the Housing Opportunity Fund (HOF) and resulted in a 32% increase from 2017 to 2018.
  • The HOF manages several affordable housing initiatives including a housing stabilization program which supports individuals facing a one-time or short-term (up to 3 months) housing crisis. HOF funds for rental assistance have already been expended for the year and a homeowner assistance program is currently not accepting applications. Increases in funding can help these programs provide support for the full year and to more families in need.

The Workforce Development Budget

  • Workforce development services—training, job-search assistance, wraparound services (e.g., child care, transportation, funds to cover trainee costs—e.g., for tools or boots)—are vital, especially in times like the present with high joblessness and many of the jobless workers unlikely to return to their old job.
  • Most workforce development funding to the city comes from the federal government, with smaller amounts in state grants.
  • The Allegheny countywide workforce development board, Partner4Work (P4W) administers the largest workforce program in the city, the Workforce Investment and Opportunity (WIOA) Act. The city itself administers the workforce program serving recipients of Temporary Assistance for Needy Families (TANF).
  • The city and Partner4Work now collaborate on a summer jobs program run by the city but extended to full year with WIOA funds for opportunity youth (not employed or in school).
  • Given the limited city funding, the city’s—and county’s—most important workforce responsibility is overseeing the programs funded by the federal government and administered by P4W. On this front, the city supported the hiring to head P4W in 2018 of a national workforce development leader, known for implementing industry specific approaches to meeting employers’ skill needs and helping workers access family sustaining jobs. The city and county have also partnered with philanthropy in the region to leverage additional funds and advance strategic workforce initiatives.
  • Under its new leadership, P4W has engaged the leadership of the region’s construction industry in a promising initiative to enable community members to access construction careers, including in the unionized trades. Of the first 106 participants served prior to the pandemic, 47% obtained Registered Apprenticeships and related employment and another 26% gained jobs. Of 77 Black participants, 57% entered apprenticeship and another 20% gained jobs.
  • P4W has also initiated industry-driven workforce initiatives in health care, in the hospitality/janitorial industry—a sector hit hard by the pandemic—and in manufacturing.

Recommendations

Police 

  • Increase the reallocation of funds from the Police Bureau to other community priorities in the pandemic and its aftermath. 
    • If the Police Bureau’s funding level stayed at its 2016 share of the operating budget (18%) instead of its current level (20%), Pittsburgh could redirect nearly $10 million to affordable housing and double the funding available in the Pittsburgh Affordable Housing Trust Fund.

    • If Pittsburgh reduced its number of police officers per 10,000 residents to the average of all medium-sized cities (i.e., from 31 to 19), we would save nearly $24 million from salaries and wages alone. While this type of reduction may not be possible immediately, it does show the potential to significantly reallocate money over time from policing to pressing community needs.

  • Establish timelines and detailed plans for implementing the recommendations of the Community Task Force on Reform Priorities.
  • Shift additional funding to the Office of Community Health and Safety and ensure qualified staff are hired to address issues that the police typically deal with, including mental health, homelessness prevention, domestic abuse support. This will reduce the workload of police officers and contribute to community safety1
  • Increase transparency on the budget regarding police expenditures. The city should provide citizens with a comprehensive breakdown of police spending, including in the Operating Budget, the Capital Budgets and multiple trust funds.

Housing

  • Increase funding to the Housing Opportunity Fund by at least $10 million. Half of this increase could come from allocating all of the revenues from the 1% Realty Transfer Tax—projected to generate $15.1 million in 2021—to the HOF.
  • Fulfill commitment to double affordable housing funding to the URA as stated in the Mayor’s budget address. Start with the approval of the $5 million Capital budget request in URA funding that is directed towards affordable housing development and preservation along with rental assistance to help people stay in their homes.
  • The county and the city should each enact an evictions moratorium through the courts and/or whatever legislative action is needed. The city should do everything in its power to support this in order to provide eviction protections for renters and undocumented workers that face legal and financial challenges following the ending of the CDC’s eviction moratorium at the end of December.
  • Implement the recommendations of the Inclusionary Housing and Incentive Zoning Exploratory Committee, namely a 10%-15% incentivized mandatory inclusionary affordability requirement city-wide.
  • Implement all recommendations from the Affordable Housing Task Force (AHTF), including creation of an affordable housing database to better analyze data and monitor the need for affordable housing stock.

Workforce development

  • Develop a joint city-Partner4Work plan to integrate all the city’s workforce development efforts around the use of sector partnerships and the delivery of workforce services to help populations with barriers obtain family sustaining employment in partnership employers.
  • Going forward—recognizing there may be little near-term hiring—develop an innovative recruitment plan for new city hires that incorporates best industry partnership practices, and that considers expanding innovative apprenticeships to onboard more city employees.
  • Consider incorporating the county and anchor institutions in the city (e.g., in higher education) into collaborative recruitment and placement efforts that enable more city low-income people to access family sustaining careers in the city.
  • Expand and take a holistic approach to supporting minority-owned businesses and entrepreneurs. Start by inventorying best practices among the regional cities collaborating with Mayor Peduto on the Marshall Plan for Middle America. In addition, fund mentoring and technical assistance to enable minority entrepreneurs to expand their own minority and female recruitment.
  • Engage with the Pittsburgh Budget and Policy Center and other interested stakeholders to identify and implement additional data accessibility and transparency tools related to the city budget and to the delivery of services in critical areas, including workforce development.
  • Form a city-union-community task force to mitigate the impact of any layoffs on low-income and other vulnerable families and communities.

Continue reading the report here.

1 This approach would expand partnerships to handle non-serious crime responses by moving many of these responsibilities to others and handling some through expanded hybrid police-social service response models.

 

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