Mayor Bill Peduto predicts Pittsburgh heading for deficit in 2020

Pittsburgh will end 2020 with a deficit for the first time in years, and Mayor Bill Peduto said there’s no way to predict when the economic situation might improve.

Peduto, who left self-quarantine Wednesday, spent the day conducting media interviews. He told the Tribune-Review that he expects a significant decline in tax revenue with most businesses shut down because of the coronavirus pandemic and the city can’t count on help from the federal government.

“We recognize that our revenues are going to be down, and our expenditures are going to be up and we will end in a deficit for the first time since I’ve been mayor,” he said. “That’s a stark reality and that’s why we have a reserve fund to help, but we can’t continue to operate that way.”

In January, Pittsburgh’s 2020 operating budget projected a balanced $608 million in expenses and revenues with $85.8 million on reserve.

Peduto and other U.S. mayors have called on Congress for $250 billion in funding to help cities navigate the pandemic, but he said a bailout bill approved by the Senate late Tuesday provides no relief for cities the size of Pittsburgh.

He said the offices of U.S. Sen. Bob Casey, D-Scranton, and Rep. Mike Doyle, D-Forest Hills, have reported that federal funds will go only to cities with populations exceeding 500,000.

“As presently written the bill would only apply to Philadelphia in the state of Pennsylvania,” Peduto said.

Pittsburgh Controller Michael Lamb agreed that the city is likely facing deficit spending for 2020, but cash flow could become an immediate problem as tax revenue dries up.

Lamb noted that Allegheny County extended a discount period for real estate taxes to April 30 and said Pittsburgh might follow suit. Dan Gilman, Peduto’s chief of staff, said the city is “analyzing all tax deadlines, fees, back payments and cash flow projections.”

“I’m saying there’s potentially a cash flow problem, and I would agree with the mayor that we’re also looking at an annual deficit problem,” Lamb said. “That’s assuming we don’t get any help from the federal government.”

He said the city could receive funding from Pennsylvania as part of the federal bailout.

Peduto said officials hope to bring back the local economy as quickly as possible. He described President Trump’s hopes that it could happen by Easter as overly optimistic.

“No, I don’t think from a scientific analysis where there would be the possibility that we could have everyone returning to work by Easter,” he said. “We’re in the early stages of this pandemic in North America, and in Western Pennsylvania we’re about one to two weeks behind New York and the West Coast. We’re still going to be on the upward trend by Easter and not in a position of being able to have stabilization and certainly not a reduction in the number of people being infected.”

He added that nobody knows when the pandemic might subside, but medical experts should have better projections in the next few weeks as more information through testing comes in.

“When I push with medical experts, their advice back to me is common: It’s nobody does know,” Peduto said.