Allegheny County prepares for 'painful reductions' due to federal spending cuts

Allegheny County officials are bracing for gaping holes in the county’s budget as federal spending cuts could impact health care, housing and infrastructure.

County Manager John Fournier said officials are still working to understand the full scope of the cuts and how they’ll impact local programs. But it’s clear, he said, that the county will be unable to scrape together enough money to replace the vanishing federal dollars.

“It’s going to be evident and apparent to members of the community that these programs are being cut,” Fournier told TribLive. “We will feel the impact here.”

The “big, beautiful” spending bill President Donald Trump and his Republican allies pushed through Congress will cut Medicaid by about $1 trillion over the next decade.

Fournier said those reductions will trickle down to local governments and programs, though he could not immediately say precisely how much the county is likely to lose.

Allegheny County’s Department of Human Services — which helps the homeless, offers addiction support and provides resources for elderly and disabled residents, among other programs — relies on federal funding, Fournier said.

The county’s 2025 operating budget — which tops $1 billion — estimated federal dollars would account for more than 20%, or about $48 million, of the $224 million the Department of Human Services gets.

A clearer picture of how much of that money could be stripped away should emerge after Pennsylvania passes its budget, through which Medicaid allocations flow to local governments.

“Medicaid — not just in Allegheny County, but across the whole country — is a critically important part of the funding for mental health services, for homeless services, for substance abuse services, for nursing homes and for senior care services,” Fournier said, explaining officials are worried Medicaid cuts could impact “a slew of critically important” programs in those areas.

Nearly 90% of residents at the Kane Community Living Centers rely on Medicaid funding.

Allegheny County Controller Corey O’Connor pointed out that the Kane Centers operated at a $10 million deficit last year despite using $8 million in federal covid-19 relief funding to cover nursing costs.

The county provides mental health services through Medicaid for about 50,000 residents, Fournier said.

O’Connor said Medicaid cuts could limit the county’s ability to support community organizations that help address homelessness, mental health care and other needs. Officials will need to explore ways to streamline programs to make them as efficient and cost-effective as possible, he said.

“The cuts are too significant to nip and tuck and paper over,” Fournier said. “There will be painful reductions to Medicaid-related services, and the cuts are so large the county will not be able to absorb them.”

Pennsylvania’s Republican U.S. Sen. Dave McCormick has praised the budget bill — which was passed largely along partisan lines that required Vice President JD Vance to cast a tie-breaking vote — for providing continued tax relief and investment in border security, defense, law enforcement and energy.

Housing takes a hit

Fournier and O’Connor said housing is another area likely to be hit hard by proposed spending cuts federal lawmakers are eyeing in the 2026 budget.

Federal officials are considering slashing the U.S. Department of Housing and Urban Development, which could yank funding from the voucher program that helps low-income people secure affordable housing and the tax credits that offer an incentive for developers to build housing affordable to poorer residents.

The Housing Authority of the City of Pittsburgh already pared down its voucher program because of concerns about HUD cuts. Pittsburgh officials have said they’re worried the reduced HUD budget could impact various housing programs.

Such cuts at HUD, Fournier said, could directly impact the county’s housing initiatives and stall even private development, as some developers rely on tax credits and other incentives that trickle down from the federal budget.

Infrastructure gloom

Also on the chopping block is infrastructure funding that the county relies on to maintain its bridges, Fournier said.

The federal government is pulling back funding through the Inflation Reduction Act, including money earmarked for infrastructure.

Already, the county has lost roughly $38 million in federal grants, including money for solar panel projects, Fournier said.

This comes at a time when Allegheny County is in a difficult financial position. The county raised taxes this year to keep its budget afloat.

O’Connor has said the county’s financial situation is “unsustainable,” as property, sales and drink tax revenues declined last year. The federal covid-19 relief money that many municipal and county governments relied on to weather the worst of the pandemic expires at the end of next year.

Even without federal spending cuts, the county is struggling to manage an underfunded pension fund and a shrinking reserve fund, O’Connor’s office said in a financial audit released last month.

The county will not be able to pay for all the programs that are expected to see federal funding slashed.

“This is such a large amount of money that we could potentially be losing that we really don’t have an ability to keep these programs,” Fournier said, though officials cannot yet say exactly how much will be lost for specific programs. “If we lose the federal funding, many of them will simply go away. Our only option here is being clear and consistent in our communication with federal lawmakers that these cuts are going to be painful for local communities not just here in Allegheny County, but across the country.”

O’Connor pointed out that other federal cuts could indirectly impact the county’s bottom line, too. For example, revoking federal money for universities could hurt schools that serve as major economic drivers for the region.

‘Wake-up call’

Because of the uncertainty surrounding federal cuts, local lawmakers will need to be ready to pivot to save the most essential programs if federal spending plans change, O’Connor said.

County Executive Sara Innamorato has formed a task force dedicated to responding to federal job and spending cuts or other rapid changes coming from the federal government under Trump.

“The hard part about these cuts is we’re not sure what’s next or what’s coming or what the total impacts are immediately,” O’Connor said. “Ultimately, we have to provide basic services to our residents.”

O’Connor said this is a “wake-up call” that Allegheny County cannot be so reliant on the federal government.

“We have to start controlling things ourselves,” O’Connor said. “It’s about growth. It’s about economic development. It’s about moving more people into our region, so we don’t have to rely so heavily on the federal government.”