Pittsburgh City Council on Sunday approved a 2026 budget with a 20% property tax increase, the first tax hike the city has implemented in more than a decade.
Council members and Pittsburgh residents were starkly divided over the tax increase. No tax hike was included in Mayor Ed Gainey’s initial budget proposal, which officials lambasted for what many believed to be unrealistically low allocations for key expenses, like utility bills and public safety overtime.
Council members on Sunday approved a $693 million operating budget and a $110 million capital spending plan.
Here are five things to know about Pittsburgh’s budget:
What does the tax increase mean for residents?
City Council voted to increase the city’s property tax rate from 8.06 mills to 9.67 mills. A mill is one dollar of tax for every thousand dollars of a property’s assessed value.
For an average residential property, taxes will increase by about $164 per year, according to figures compiled by City Council Budget Director Peter McDevitt.
The tax hike will net the city an additional $28 million each year, McDevitt’s numbers show.
Other taxes — including earned income tax — were not changed.
Why did officials raise taxes?
Gainey’s initial budget proposal included no tax increase — but council members, their budget director and the city controller raised concerns that his spending plan did not adequately budget for upgrades to an aging vehicle fleet, public safety overtime and other costs.
Some council members wanted to cut spending to balance the budget. But a majority of members felt they could not make enough cuts to cover all the city’s expenses without impacting core services.
“This budget is not perfect and the last-minute amendment process is not ideal, but it is a more honest document than what we started with,” Controller Rachael Heisler — who had been among the most vocal critics of Gainey’s original budget — said in a written statement Sunday.
Council members on Sunday allocated an additional $10 million to the vehicle fleet budget, an extra $6.5 million for utilities and $8 million more for fire and EMS overtime.
The budget avoids layoffs but trims spending in some areas, including cutting funding for computers and conferences.
Why is the city struggling to fund its services?
Revenues have dropped in recent years, leaving the city little wiggle room in its budget.
Real estate tax revenue — which had long been the city’s biggest revenue stream but is now eclipsed by earned income tax — was driven down by the lack of a countywide reassessment and plummeting values in Downtown commercial properties, which have seen demand dwindle as the pandemic popularized remote work.
Federal covid-19 relief money is drying up at the same time.
And the Pennsylvania Supreme Court in September ruled Pittsburgh can no longer collect a tax on out-of-town performers and athletes, a decision that cost the city about $4 million each year.
Pittsburgh had not increased taxes in more than a decade, even as inflation has soared in recent years.
What did the city decide to do with the Housing Opportunity and Stop the Violence funds?
The budget approved Sunday earmarks the full $10 million annual allocation to the Housing Opportunity Fund, which is used to provide rent help to low-income residents, pay for legal assistance for renters facing eviction and help build and preserve affordable housing.
Council had previously paused approving the program’s spending plan until the city’s budget was hashed out, though council members reiterated they did not want to yank funding from its initiatives.
The Stop the Violence fund also typically receives $10 million each year. In 2026, it will get only $5 million.
Council President R. Daniel Lavelle, one of the trust fund’s architects, proposed a one-year decrease in the Stop the Violence allocation. His plan is to spend down the money already in that fund to cover the difference. According to Lavelle, there will be enough money to avoid cuts to the Stop the Violence initiative, which funds the city’s Office of Community Health and Safety and provides grants to nonprofits that aim to reduce violent crime.
But Jake Pawlak, who heads the Office of Management and Budget, said he was concerned the fund would struggle to “squeak by” without the full allocation.
What happens next?
Now the budget is passed to Gainey, who has 10 days to either sign or veto.
If he does nothing, the budget becomes law after 10 days.
If he vetoes it, City Council will need to vote to override his rejection. That would require six council members’ votes — which should be easy, since six members voted for the spending plan Sunday.
City Council scheduled a meeting for 11 p.m. on New Year’s Eve to override a veto, if needed.
Pawlak told TribLive it was too soon to say whether Gainey would sign the bill.
“We’re going to review that with the mayor in the next couple of days before the holiday,” Pawlak said. “I can’t tell you yet.”
