VisitPITTSBURGH, the region’s tourism promotion agency, has not adhered to financial management practices that should be expected of an agency relying primarily on public funds, an audit by the Office of Allegheny County Controller Corey O’Connor found.
“When an agency receives over 90 percent of its funding from tax dollars, it needs to be held to a higher standard than other non-profits,” O’Connor said. “Our auditors have issued findings and recommendations that would improve transparency and reporting standards to the public.”
The state law authorizing Allegheny County’s Hotel Tax provides VisitPITTSBURGH 40 percent of revenues from the base tax rate of 5 percent. (An additional 2 percent tax pays debt on construction cost of the David L. Lawrence Convention Center.) This provided the agency over $10 million in three of the past five years. In addition, Allegheny County allocated $1.25 million from the federal CARES Act in 2020 and $5 million from the American Rescue Plan in 2022 to VisitPITTSBURGH. This resulted in over 90 percent of the agency’s revenue coming from public sources in 2022, up from 69 percent in 2019.
Financial management raises concerns
Despite the funds received from the Hotel Tax being restricted by law to certain purposes, VisitPITTSBURGH has not recorded these as restricted funds, and has commingled public and private funds in the same bank account. Consequently, the agency cannot identify which expenditures are made using public or private funds. Some documented expenses during the period of the audit such as lobbying are not permitted to be funded with Hotel Tax dollars.
VisitPITTSBURGH held over $5 million in reserve at the close of 2022, which was much higher than that of comparable tourism promotion agencies surveyed by auditors. And as of December 31, 2021, VisitPITTSBURGH maintained over $6 million in investments, with more than two-thirds of these in stocks rather than more conservative bond funds. The agency experienced over $1 million in losses on investments in 2022.
Over $1.6 million in commitments made by VisitPITTSBURGH to subsidize future events were improperly recorded in accounting records as event subsidy liabilities, creating the perception that VisitPITTSBURGH had fewer liquid assets than it actually had.
Personnel expenses are questionable, lack transparency
Auditors requested detailed salary information of all staff at VisitPITTSBURGH and were denied. Consequently, the only individual-level salary information available to auditors was limited public information from federal tax documents.
Wages and benefits of over $4.4 million made up the agency’s largest expense in 2022 at over 40 percent of expenditures. This proportion was actually higher than in 2019, when the agency had nearly twice as many full-time employees. This suggests the agency retained mostly higher-paid positions.
Limited data provided from a 2022 wage competitiveness study by an outside consultant appears to show that 12 of VisitPITTSBURGH’s employees have been paid in excess of market rates, with three of those 12 employees having been paid more than 25 percent in excess of the market rate, and one of those three having been paid more than 55 percent in excess of the market rate.
VisitPITTSBURGH has not focused on region’s major venues
Auditors found that VisitPITTSBURGH’s primary focus has been on generating leisure tourism. It is possible that this focus has led to assembling a Board with the same objective, possibly leading to opportunities to attract larger events being missed.
No representatives of Pittsburgh’s three major professional sports franchises or the Sports & Exhibition Authority, which owns the David L. Lawrence Convention Center, were members of the VisitPITTSBURGH board as of the close of 2022. A designee of the Convention Center manager was a non-voting board member.
While VisitPITTSBURGH’s leisure tourism and marketing unit had fourteen staffed positions at the close of 2022, only three salespeople were responsible for securing business events and two with sports events. This may have contributed to fewer than 10 percent of events attracted by VisitPittsburgh from 2017 through 2022 being held at the David L. Lawrence Convention Center, as the agency’s records show.