Allegheny County Controller Chelsa Wagner today issued her latest “Taxpayer Alert,” which provides an update on the effects of the COVID-19 pandemic and resulting economic downturn on County revenue and expenditures, including the dispensation of funds provided by the federal CARES Act aid package.
Wagner reports that the County is expected to come close to breaking even for 2020 despite declines in various revenue streams totaling more than $50 million as of June 30. This is due in large part to decreased expenditures of nearly $42 million in the same period. These reductions included about $22 million saved by replacing the local match for Port Authority funding with CARES Act funds; $11 million in grant funding received by the Department of Human Services; and about $4 million through reducing County Jail and alternative sentencing populations.
Additionally, $11 million in savings on debt service due to a bond refinancing at lower rates is expected to be realized before the end of the year.
These savings, combined with a robust fund balance built over the past decade, puts the County on relatively sound financial footing compared to many other municipal governments, Wagner said. The relative stability of property tax revenue, the County’s primary revenue source, has also been crucial. Property tax revenue was down only 1 percent through the first half of the year, likely due to the extension of payment deadlines, and is likely to rebound to near budgeted levels.
The report says, however, that a concern moving forward could be a reduction in property tax revenue due to assessment appeals from commercial properties which have lost tenants and revenue.
Another major concern may be the drastic reduction in Drink and Vehicle Rental Tax revenues, which exclusively fund the Port Authority and other public transit initiatives, and which have declined by approximately half during 2020. Wagner said that state government revenue declines and uncertain revenue mechanisms for public transit under state law are likely to lead to a reckoning on the issue of transit funding.
“A period of reasonable predictability in state funding for public transit looks to be coming to an end, and another funding crisis that seems to come every few years is likely upon us. While robust federal aid and a stable, long-term state funding mechanism are necessities, we also must examine what we can do locally to support public transit service that provides so many with access to jobs, education, and critical services. Our region cannot advance if public transit service is starved of resources and enters a ‘death spiral’ of decreased service and ridership,” Wagner cautioned.
$212 million in federal CARES Act funding received by the County has been dedicated to six “priority areas,” with about $70 million distributed as of mid-September. “Priority area” expenditures in this period include:
- $20.9 million for Vulnerable Populations
- $12.7 million to the Port Authority and Sports & Exhibition Authority
- $12 million for agencies supported by the Regional Asset District
- $8.5 million distributed to municipalities
- $8.3 million for increased operational expenses
- $7.1 million for Medical-Related expenditures in the Health Department and Kane Centers
Wagner said that a concerning omission from the County’s CARES spending plan to date has been public input. While some comparable jurisdictions around the country have initiated public forums and accepted public comment on the most critical areas for spending, that has not occurred here, the report says.
“Ensuring that limited public dollars have the greatest impact and go where they are needed most will be essential moving forward. As we allocate the remainder of these federal funds and any future aid, we must see this as an opportunity to address longstanding inequities and move forward as a more inclusive and equitable County,” Wagner said.