Allegheny County Controller Corey O’Connor, in his first Annual Report as Controller, flagged impending fiscal and policy challenges that will shape a new era for Pennsylvania’s second-largest local government.

“As our government approaches changes in leadership and challenging decisions that will help to define its future, only the Controller’s office can provide reliable, unbiased and comprehensive information on our financial standing to our policymakers and residents. This will be crucial in navigating challenges such as the expiration of federal emergency aid, attracting and retaining workers, and approaching the future of the County’s public safety functions compassionately and effectively,” O’Connor wrote in an introduction to the report.

He noted that emergency federal funding approved in response to the COVID-19 pandemic, including nearly $381 million from the American Rescue Plan in 2021-22, had prevented depletion of the County’s General and Debt Service fund balance for the past several years. This combined balance grew to $118.4 million at the close of 2022 from $111.2 million the prior year. O’Connor cautioned that fiscal stability and investments in critical priorities must be maintained and bolstered despite the impending expiration of these funds.

County revenue rebounded to nearly pre-pandemic levels to $851.3 million from $834.7 million in 2021, with some of the largest increases coming in interest income due to increased rates (up $4.8 million), Sales Tax (up $3.8 million), and $6.4 million retained for the County Parks (up $5.5 million) from a resurgent Hotel Tax. Expenditures increased by $16.8 million to $845.1 million, exceeding pre-pandemic levels. The spending increase was primarily due to increased debt service payments. Debt payments are expected to increase another $2.5 million annually moving forward.

An emerging fiscal concern is reduced occupancy and revenue at the County’s Kane Community Living Centers. Average daily occupancy fell to 600 (below 52 percent capacity) from over 900 in 2019, prior to the COVID-19 pandemic. Expenditures outstripped revenues by over $19.5 million in each of the last two years, a deficit that stood at under $4 million as recently as 2018. “To maintain these services, especially for low-income residents and families, a new approach must be taken to promoting and assuring the quality of these facilities,” O’Connor wrote.

The County’s pension fund maintained only one-third of assets to liabilities, which actually marked a slight improvement from 2021 but remains unhealthy. O’Connor wrote that adding more workers to crucial areas such as the Jail and 911 would benefit pension contributions as well as reduce employee overtime and turnover.

O’Connor cited reforming the County Jail, where an alarming string of in-custody deaths has occurred, and considering a replacement for the shuttered Shuman Juvenile Detention Center as impending challenges for the County, writing that “We must approach these decisions both fiscally responsibly and humanely.”

The Annual report is a reader-friendly distillation of information from the Annual Comprehensive Financial Report, the complete audited accounting of the County’s funds and accounts, which will be issued in the coming weeks.

View the Annual Report and interactive charts and graphs at here.