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County warned of fiscal straits

| Wednesday, April 14, 2010, 12:00 p.m.

Allegheny County relied on one-time cash infusions to fill a $35.2 million budget deficit last year and could be forced to dip into diminutive reserves this year, county Controller Mark Patrick Flaherty said Tuesday.

Disappointing gaming revenue of $1.6 million last year and falling contributions from state and federal governments stretched the county's $1.5 billion budget, which hasn't imposed a property tax increase in nine years on Allegheny County's shrinking population base.

"We do have short-term problems we need to correct," Flaherty said. "If we don't, it could lead to dire financial straits in the long term."

Flaherty, a Democrat, praised County Council and the administration of County Executive Dan Onorato, a fellow Democrat, for avoiding a property tax increase in 2009.

Property taxes generated $261.1 million in 2009, up slightly from $255 million in 2008.

"I don't agree with raising taxes in an economic downturn environment; it just doesn't do anybody any good," Flaherty said. "We have to continually look -- especially at our operating side -- how are we going to make revenues equal expenditures?"

Onorato said the financial report, showing a 19.6 percent increase in the county's unreserved fund balance since he took office in January 2004, illustrates the success of his fiscal policies.

"Even in a challenging economy, my administration has improved the county's fund balance to a level higher than when I took office, without once increasing property taxes in six years," Onorato said in a prepared statement. "We're also investing in our bridges, roads and parks to improve our infrastructure and create jobs."

Onorato said he proposed a plan to reduce reliance on one-time revenue, beginning next year.

County Councilman Vince Gastgeb, R-Bethel Park, said Onorato must deliver on those promises, including one he made during his October budget address to find $4 million in additional nonprofit contributions to the county in lieu of taxes.

"(Flaherty) never pushes it far enough with Dan. I don't know if he expects someone else to shepherd it or what," Gastgeb said.

He and other council members are negotiating mutually beneficial arrangements with nonprofits. For example, a university might contribute to the Community College of Allegheny County through a student-exchange program or a private university could sponsor an athletic field at one of the county's parks. Both would lower the county's costs.

Other revenue sources under consideration are drilling royalties paid by natural gas providers searching for the resource beneath Pittsburgh International Airport.

The one-time cash infusions Flaherty cited include: $11.4 million from the sale of the county's office building at 1 Smithfield St., Downtown; $10.2 million in the final state reimbursement for building Pittsburgh International Airport; and $9.9 million from the county's drink tax before it dropped from 10 percent to 7 percent.

The remaining $3.7 million came mainly from PennDOT road construction reimbursements.

All of it was used to prop up the county's $740.8 million operating budget, Flaherty said.

The county spent $9 million more than it took in last year, according to Flaherty's analysis in the Comprehensive Annual Financial Report, an accounting of county finances that he is required to produce.

Reserve funds increased about $700,000 last year to nearly $20 million. The ideal level would be $30 million to $35 million in reserves, which Flaherty described as the county's "last line of defense."

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