Challenges for Allegheny County’s long-term fiscal health loom on the horizon, even as the overall County economy weathered the storm of the Great Recession, according to County Controller Chelsa Wagner.
“While the economic data shows real reasons for optimism in terms of jobs and growth, Allegheny County, and the wider region, still face chronic challenges to aggressively compete in the 21st Century and beyond.” Among these barriers to growth, said Wagner, are “a struggling public transit system, an underutilized airport, infrastructure in need of repairs, and most significantly long-term debt concerns at the County level.”
According to figures set forth in the 2012 Comprehensive Annual Financial Report prepared by the Controller and her office, Allegheny County’s long-term debt increased more than $90 million in 2012, amounting to almost $672 in debt for every County resident. Over the life of the debt, Allegheny County taxpayers are on the hook for over $1.3 billion dollars. “We must invest in our future, and part of that is an obligation to not pass on the bill for our fiscal shortfalls to the next generation of County residents.”
The areas of greatest concern identified by Wagner include:
- A chronically low General Fund Balance
- Increased debt obligations, with the County currently spending more on its interest than on paying down principal.
- Decreased or static state funding to critical areas where the County is mandated to provide services.
The General Fund balance, at $13.2 million as of December 2012, remains a pressing financial issue for the County, Wagner said. Ratings agencies have recommended a balance of at least $40 million, which is approximately 5% of the County’s 2012 operating budget of $784 million. By comparison, Allegheny County had a fund balance of $47.4 million in 2002.
Wagner said that moving forward to solve these issues could impact the County overcoming other critical challenges such as that with the Port Authority and the looming $2 billion worth of improvements to the ALOCSAN system to comply with an EPA Consent Decree.
“Solutions are never easy to come by in challenging economic times,” she said. “However, we as public officials owe it to the taxpayers to begin to have honest discussions about our priorities as a government.” “We cannot continue to wait until emergencies occur to then put a band-aid that masks our deeper structural problems.”
Still, there exist reasons for optimism about the broader health of Allegheny County and the region. Unemployment rates remain below state and national averages, rising personal income levels and home sales and tax revenues are positive indicators for the County. And, the new developments in Marcellus Shale extraction and related fields should bring more high-paying, stable jobs and foster increased opportunities for entrepreneurs.
Yet, Wagner cautions that it is crucial for government to ensure that all citizens be given a chance to share in these broadening economic opportunities. “It is crucial that the many jobs that have been and will be created open doors for women and minorities in the region, to help bridge the wage, race and societal gaps that are remnants of our region’s past.”
A positive development for County government in 2012 was the continuance of the cooperative relationship with the City of Pittsburgh that enables the City to use the County’s financial management system. The City began active use of the system on January 16, 2012, replacing an obsolete and unsupported system. In addition to direct savings and efficiency, the pooling of system costs will hopefully encourage other government entities to collaborate with the County in their financial management, Wagner said. She called on Allegheny County to “take the lead in similar, creative, self-sufficient solutions to the problems facing municipalities in our region.” The importance of such collaboration is especially important for the future “as it has become increasingly apparent that Harrisburg has shown neither interest nor ability to solve the long-term problems of urban municipalities like Allegheny County,” she added.
Controller Wagner noted that her office is dedicated to ensuring effective, efficient and transparent operations across all County departments and functions. “As a government it is of the utmost importance that we conduct our affairs with ethics and integrity.” “We need to ensure the public that the reign of ‘pay to play’ and patronage politics is at an end.” “By shining the light of transparency on all areas of government,” emphasized Wagner, “we can then truly say that the public service is the public trust.”
The Controller’s 2012 Comprehensive Annual Financial Report contains the government-wide financial statements of the County and related authorities. It provides information to County taxpayers, investors, creditors and government officials. The full report and transmittal letter are posted at www.alleghenycontroller.com.