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Hello and welcome to the Pittsburgh City Council budget hearings.

I am Councilwoman Erica Strasberger and I chair the committee on finance and law.

For this hearing, we will hear from the Office of Management and Budget, including the Operating Budget Division, the Capital Budget Division, the C D BG Division, and the Procurement Division.

And while we are awaiting other council members to joining us, I'll ask our budget director, Pete McDevitt to give a brief overview of the department.

Thank you, Councilperson.

The mission of the Office of Management and Budget is to ensure the effective and efficient use of available resources in order to sustain the delivery of quality services to the residents of the City of Pittsburgh.

OMB is organized into the following core teams to strengthen citywide financial and grant management.

There is the management division, capital and asset management, community development, operating, and special revenue and procurement.

Most of that is moving uh three one one from the mayor's office to OMB.

And a quick summary of non-personnel changes.

Overall, there is a 281,578 decrease in non-personnel operating budget.

Uh that includes a hundred and eleven thousand dollar decrease in professional and technical services.

There's a three hundred and six thousand dollar increase in property services, uh and that's for the first vehicle target cost and increased land and building um due to the increases for deposits into the building improvement fund, BIF operating and capital accounts and increased two hundred ROS property maintenance, um a ninety-seven thousand dollar increase in other uh services for insurance premiums and a five hundred and seventy-five thousand dollar decrease in supplies.

Uh and in the capital budget, uh OMB has a handful of capital projects.

Those pretty much all flow through the community development team for C D B G uh dollars and ESG program, Hopla.

And that's it for that.

And uh for trust funds, OMB has the community development trust funds for for those C D B G dollars.

Um and the bridge asset management program trust fund flows through OMB as felt as well as the facilities trust fund and the lead safety trust fund.

That's all I have.

Thank you.

Pardon.

Uh from members and directors of the department, can you please introduce yourselves and then proceed with your presentation?

Jake Pollack, Deputy Mayor of the City of Pittsburgh and Director of the Office of Management and Budget.

Patrick Cornell, Chief Financial Officer.

David Hutchinson, Assistant Director for Capital and Asset Management.

Kelly Russell, Assistant Director for Community Development.

Thank you very much.

And very quickly, we've been joined by Councilmember Barb Warwick.

Thank you.

Great.

Thank you.

Um thank you, Madam Chair and Council members, for um the opportunity to present.

We're going to begin by uh providing an overall summary of the proposed uh 2026 uh operating and capital budgets as a whole, as you uh you know are aware the Office of Management and Budget um coordinates the process by which that budget is prepared and address some high-level topics and then uh from there flow into discussions of individual items that fall within the actual uh uh unit of OMB.

Um and I would like to begin there by acknowledging the will of council that was adopted yesterday uh to uh call for further conversation between uh the administration and uh council as we work to conclude this year's budget process.

Um the uh we we are happy to engage in a conversation with members and and council leadership uh around outstanding concerns that have been raised across council's budget hearings with individual departments over the last month uh in the hopes of reaching uh conclusion um that everyone finds satisfactory.

Uh much of my presentation on the overall budget today will focus on areas that we believe are central areas of concern um based on the discussion at previous budget hearings and to address why uh it's the perspective of OMB that the uh issue that that the existing budget proposal um is balanced and meets the the needs of the city in 2026, understanding that there are concerns from council, just to provide that as a starting point for those discussions around the continuing areas of concern.

Um so I'll start with looking at the five-year financial forecast.

Um the uh first slide here presents the five-year revenue forecast.

Um we are expecting a 680 million five hundred and twenty-seven thousand uh eight hundred and thirty-seven dollars in revenue in twenty twenty-six.

That number is um uh very close to what we projected it would be a year ago, so we believe that um over the long haul our financial projections um in the forecast are are holding true.

Uh the major trend to look at, and I think this is called out on a later slide is that uh year over year real estate tax revenue is declining, which is a unique uh situation for the city to be in, and um you know we'll be discussing how that factors into the proposal that we assembled.

Looking at expenditures, we've uh proposed a 678 million 33,68, excuse me, dollar um expenditure for the year producing a surplus in 2026 of uh just under 2.5 million dollars.

This slide also shows that um the three main criteria for uh a uh compliant budget, which is a positive operating result, a fund balance as a percent of expenditures of greater than 10 percent, and I'm sorry, of uh yes, of greater than 10 percent and debt service as a percent of expenditures at less than 12 percent is adhered to.

We get very close to that debt service line in 2026.

This is a known issue that we've been talking about for a number of years.

2026 is the year in which we pay off uh significant debt that was refinanced during the height of the COVID shutdown.

So we've been anticipating high debt service in 2026 for uh you know nearly six years at this point as a city, and you'll see that number drops off dramatically beginning in 2027.

So while we move close to that line, we we think that that is uh under those circumstances a comfortable position to be in.

Um to do a comparison of growth, and and this is the main driving issue that um you know the city is confronting financially.

If we look at revenue growth projections over the course of the five-year plan, um we see revenue growth at uh just over one percent in each year from 2027 through 2030.

I'll reiterate something I mentioned a moment earlier.

The reason for the driving factor for that for the city of Pittsburgh, which is uh, you know, there are other municipalities where this is also an issue, and then also other factors that contribute to that.

But the driving reason that our forecast shows revenue growth that is that modest is the uh way in which our forecast takes into account the common level ratio and the a court order that shows the starting point by which property tax appeals are calculated going to a lower and lower value every year.

That is so that is a uh a factor that is imposed from from the outside, in this case by a court order based on a dispute between a taxpayer and Allegheny County and how that level is calculated.

Um a fundamental premise to the budget that we have proposed, and this is the reason that I'm getting into this, is that uh condition is unsustainable not only for the city of Pittsburgh, but for every municipality in Allegheny County.

And as a result, we anticipate that while what be while there is not a date known yet by which that will be resolved, we don't expect it to remain the case through the course of the entire five-year plan.

We are showing it here because we don't have another data point to offer, but we believe that we will see at some point, either through reassessment or further litigation a change in that condition that will uh allow property tax revenue to stabilize and begin increasing again.

And so for that reason, um, while the budget we are proposing has a narrow margin for error, uh, we believe that over the course of the five-year plan that there is time for council and the future administration and the city as a whole to incrementally adjust to these challenges as new information becomes available.

For further point of comparison there, the 2026 to 2030 growth comparison, we are seeing expenses grow uh by more than 2% and between 2 and 3 percent, depending on the category for a total of uh 2%, 2.2% in 2027 and 3.4% in 2028.

So one fundamental structural condition here that must be addressed will be for how long is the current um state of play around the common level ratio, creating that disconnect between property tax revenue growth and um uh expense growth because the the growth rate of expenses here are uh not unprecedented for the city.

They are, I think we would say fairly in line with or better than regional and national trends, right?

We're not seeing uh explosive expense growth.

We are seeing is artificially depressed revenue growth.

And once again, we we are proposing a 2026 budget and five-year plan that while the margin for error is narrow, we can show we'll hold long enough for further information to surface about the long-term implications of that disparity.

Having said that, I would just again some more members have joined.

I'm presenting this simply to explain the thinking that went into the proposal we've offered as a um starting point for discussion of some of the particular areas where there are concerns.

Pat, do you want to talk about the these um the revenue forecast and assumptions further?

Um I'll just touch on it briefly.

All this information is in the budget document itself.

Um, you know, on the revenue side, um, almost four-fifths of our um projected revenue is tax revenue, you know, uh 78.8%, non-tax revenue comprising 21.2 percent, and of those major tax revenues, um, the largest uh is now earned income.

It traditionally has been real estate, given the challenges that the director just talked about.

Um those two categories have have kind of shifted shifted places over the past few years.

Um, and then payroll preparation and parking tax.

Um and then through the the discussion of revenue assumptions, I know Director Goul uh, you know, is really the driver of the revenue forecast, and and the Department of Finance was already up here.

Um, but I would just hone in again on um the assumptions that real estate is projected to go down.

Uh and when you think about it and compare it to prior year budgets, the numbers we are at, which we'll get to um in the next slide, are are very far below what we had projected before COVID for the five-year plan, even before some of the reassessment and the common level ratio discussion started.

Um, other than that, there is expected modest growth for our major tax drivers as we move into the 2026 to 2030 five year forecast.

Um, and I'll just remind council that what you are going to be considering is legal appropriations for 2026 as a budget year, and then the remaining four years are the forecast and the plan, um, but those are not legally appropriated uh until those years come up.

Um, like I mentioned, if you look at uh actual real estate tax collections um as of this morning uh posted in the system is just under 145 million dollars.

We do not have any um revenues posted yet for December.

The November books have not yet closed.

Um, but knowing the real estate cycle, we typically do not see a lot of revenue in in December just because of the nature of how the tax is paid.

Um and this is comparable with with taxes from 2019.

So we've had this upward trend, and then in COVID, you know, COVID happened, and then with the reassessments, it's just dropped.

So we're starting to grow back again.

With the common level ratio adjustments, not sorry, yeah.

You're right.

With the common level ratio adjustments, we're we're starting to see growth, um, but it is still significantly down from from where we were six and seven years ago.

Um on the expenditure side, um, you know, this is the culmination of everything that you have discussed at all of your other budget hearings, um, $678 million.

The majority of that um is personnel costs, um, salaries and benefits uh and things like pension and health care, uh, those really are the drivers of the city's um operations every year.

Uh, and then the third largest category would be debt service.

Um, like the director said, we do have uh major payoff.

Well, it's not a payoff, we have balloon payments in 26 and then a major decrease in 27 and beyond.

Uh the next two slides show um we've been talking about these lien years for several years now.

This is a snapshot of our our budget engagement presentation from 2023 when we were talking about the 24 budget.

We knew that American Rescue Plan operating support would drop off after 2024, and we knew about this debt cliff that was also related to COVID.

From there, we just want to turn to a discussion of three areas where we know there has been a great deal of discussion in previous budget hearings as areas of concern and address why while we acknowledge the concern and are happy to work together to address it.

We want to point out from our perspective why perhaps the scale of the concern is different than what has been part of the discussion to this point.

So looking at salaries and wages, much discussion during these budget hearings and preceding it has focused around the question of premium pay or what is more commonly referred to as overtime.

And how the estimates for or the projections for 2025 were much lower than the actual costs, which is true.

The point that we want to make is that the lion's share of that overage is uh offset by savings in actual wages, which produces a net swing in that category that is much smaller than the 20 million dollar that is commonly referenced.

So very briefly, the way in which we think about pay salaries, including overtime, is to look at the actual amount budgeted for wages.

Um there is a factor that is included in the budget that is part of that calculation that is called the vacancy allowance, which you know we budget for every position that is included in the budget to be filled all year.

We assume that there will be periods of time during the year in which any number of positions will be vacant.

Um we typically take a conservative assumption about how much time that will cover that is often less than what is actually the case because it takes time to hire, go through interviews, things of that nature.

And so the actual wages less the, I'm sorry, the budgeted wages less the vacancy allowance is what we anticipate actually spending.

That vacancy allowance and then any other savings that go above and beyond the vacancy allowance in actual wages come from the same pot of funds as premium pay.

And so as a result, um we would expect that the amount that we spend on premium pay will often be higher than the budgeted amount because some portion essentially of what goes out the door as overtime is coming from the budgeted amount for overtime, but some portion of it is also coming from the savings when a position is vacant for longer than conservatively anticipated.

And so what you'll see here is if we look at beginning in 2021, regular wages budgeted, um, the vacancy allowance and then actual um uh regular wages.

We are uh producing savings uh in regular wages in the millions of dollars a year every year, and uh this year those savings reached 16 million 175,682 dollars.

Set it against a uh overtime overage of 20 million 950,932 that produce a net uh deficit on salaries and wages, but it is of $3.2 million, not the much larger $20 million number that has often been reported.

And so I bring that up to say, again, we believe that we have accounted for this in the 2026 proposal where we increased uh the budget for regular wages, the vacancy allowance, and the premium pay uh budget because we see the actual amount that this year's spending varied from the budget as much smaller than the raw 20 million dollar figure.

And so I'm bringing this up to just to help council understand our thinking, right?

We're we're not reacting to a 20 million dollar difference.

We are reacting to a smaller difference when we assembled this budget and when we're talking about this issue.

I can point to specific examples that we believe contribute to that variance, right?

We we made aggressive assumptions about the ways in which some recently negotiated collective bargaining agreements would produce savings in overtime.

Those assumptions were overly aggressive.

However, we have seen the corresponding savings in wages to which which means that that the longer time that it is taking for us to see the impact of those changes is not having the extreme net impact on the overall bottom line that you might be led to believe when looking at media coverage that that suggests that the challenge is in the ballpark of 21 million dollars.

There are then also some unend uh changes to the demand for overtime that were not able to be anticipated at the uh end of last year when this budget was adopted.

Um I've referenced this example with council members before, but um when we had to move to close the uh Panther Hollow Bridge for urgent repair, the fire station that service there was a fire station, the district of which served both sides of the bridge, and their ability to meet their response time uh uh standards um required them to cross the bridge, they could no longer do that.

So for almost the entire year, we've had a fully staffed extra fire crew on the further side of the bridge from the um from the station in order to ensure we're able to secure um adequate response times.

And so that would have produced a variance um uh no matter what.

Uh in any event, when you consider the uh savings from regular wages against actual premium pay paid, we are um we think in a much closer range.

Uh another area of frequent discussion is uh utilities um where there's concern about um whether the current year budget or the the 2026 proposed budget adequately prepares for the costs we expect to incur.

We wanted to point out um some longer term trends in those two areas.

First, looking at electricity, you will see um what has been budgeted for the general fund since 2021 and what actual general fund expenditures have been.

And if you were to look only at those two items, you would rightly see a um you know an ongoing deficit, right?

We are routinely budgeting less in the general fund than we are paying for utilities, and I can understand how that would give rise to concern.

What is not captured in that analysis is the fact that every year a portion of our utility payments are coming from special revenue funds that correspond to the facilities that are receiving that um electric service.

In particular, um the money we spend on electricity for our street lights is paid out of the liquid fuels trust fund.

So again, if you look only at the general fund figures, you would you would see an ongoing deficit.

When you look at the uh totality of the budget's allocations for these services, the numbers then do net out in balance.

Uh of note, this year those special revenue accounts have not yet been charged for our uh electric uh costs.

So you will see as of today, 2025, um, the uh expenses exceeding budget, but that is because that reconciliation with the trust funds has not yet occurred.

With that in mind, we view the $800,000 increase from 25 to 26 coupled with an anti anticipated contributions from the special revenue funds as adequate.

Um again, I'll keep returning to this phrase.

I'm I'm not denying a thin margin for error, but adequate as it relates to electric expenses.

The same picture is true in water for um a different reason, but the the net impact is the same.

So we have as relates to our payments for water, the city has historically um since we began paying for water, um, we've budgeted funds for those water payments at a level consistent with what anticipated usage would be, and then for many years that was there was a we were only paying a percentage of our bill, but um, but the actual payment of of those expenses was um ultimately done through a true up process where we combined um our water bill with other fees we may owe Pittsburgh Water against Pittsburgh Waters liabilities to the city, which include permit fees and things of that nature, and then the amount that we paid was the net of those two um uh numbers.

That is then reflected as the total true up number at the bottom of this table.

Um that again will be occurring in 2020 uh uh five.

So um you can see here how with the general fund budget combined with the the true up uh number is um uh results in balance.

We are also, and Patrick can talk about this for a moment.

We have been gradually working to shift um to a uh uh situation where we are paying the full value of those water bills and not including those in the true up, or we would move the true up to only being, you know, you owe us for this permit, we owe you for that permit, we'll true those up, but but move the bills out of that.

That's been an incremental process we've been building towards, and that process will continue.

You want to talk about sure.

So where you see that in the budget is in public works in their water line.

Um what we had in the proposed budget was $8.5 million, and that is meant to explicitly cover our water usage costs, our sewage costs, or things like the the normal cost that Pittsburgh Water would charge us.

Um in the past, like Jake said, it had been offset by things like um pension payments that Pittsburgh Water owes the city or permits or things like that, where we have moved is we want the expenses to be the expense, and we want to process the revenues as the revenues.

So there's corresponding revenue lines uh in the certified forecast that factor in what we expect Pittsburgh Water to pay the city for its contributions for pensions, uh, and then you know, we expect permits to process through uh the appropriate departments as as they actually come in.

Um, a topic of of discussion that we just wanted to address at this stage is funding for the city fleet.

Uh the uh in the past year we've benefited greatly from the expertise of Firma Maurice, the city's new fleet manager who brings a wealth of experience in capital asset planning for fleets like the the cities, and that has resulted in uh much greater and more detailed information around what the projected actual cost of keeping the fleet in a state of good repair would be.

Of course, as council members know that um ideal target number the uh for spending annually would be 20 million dollars, which I will admit the uh proposed our proposed 2026 budget package does not reach.

However, it represents further incremental progress towards that goal in 20 in the 2025 budget, the uh allocation for fleet across multiple categories of expense of general fund, pay-go, um, and special revenue accounts was $7.425 million dollars.

Our current proposal is 10.161 million or one 10.162 million dollars.

So uh and neither of those figures include grants.

So I it were there additional resources available.

We certainly think that fleet is an area that is worthy of targeting for greater expenditure.

Um we believed for the all the reasons I just uh described that we were able to produce a budget proposal that met the standards and criteria for balance with a thin margin for air that allowed for uh an adequate and improving level of funding for fleet, though less than what our target would be without having to pursue uh deeper cuts than those we've proposed or a tax increase.

And so that's where we went as a beginning to the conversation.

Um that covers a brief summary of the overall um uh thinking of the administration and the office of management and budget that went into the calc, the the uh composing of the this proposed budget.

Um I'm gonna briefly allow Patrick and the assistant directors here to talk about the budget proposals for their individual teams within the office itself, and then um we'll be happy to take your questions about the entire budget package.

Thanks.

On the management side, um, I want to note you know, my specific role in ARPA compliance that will continue.

Um, you know, the city is responsible for submitting quarterly reporting to the federal government.

Uh there will be one annual performance report that will be due next July.

Um, you know, a lot of the time that I spend at the end of each quarter uh working through departments with our partners with the URA with um Pittsburgh Water with the county is really to check in on the projects, uh, make sure things are going well.

You know, I've spent a lot of time um have to give major shout-outs to Anthony Violin and Law and before him, Kristen Ericsson, who helped get all these contracts through.

You know, we had a a known period where we had to do everything between 21 and get contracts done at the end of 24.

Um, we are in our kind of spend out period for 25, and there's one year left.

Um, but we've been working really closely with our partners to make sure that things are moving uh and are on track to finish out successfully.

I do expect to have some reallocations in the future, specifically to capture funds for projects that are fully complete.

Otherwise, those funds would not be able to be spent per our treasury guidelines.

We have to incorporate those into contracts or projects that were already in place at the end of 2024.

So we can't add new projects.

But what we can do is kind of capture funds that are no longer needed in project A and help offset costs in project B if that is coming up.

So we're working through that as projects finish up and there will be more to come.

I always send those emails out to the task force and the group letting you know that our reporting is there.

We've been working with um controller Heisler to finish up the audit for fiscal years 2023 and 2024.

It's been um a pleasure working with the audit team on that front.

Uh, and then they will jump right into 2025.

And we know that there will also be an audit for 2026.

Um we have not had any major outreach from the federal government uh with respect to monitoring.

Um at the end of uh President Biden's administration, I was in touch with their um you know, the fiscal recovery funds uh manager, and they were they were impressed with what we were doing with our plan, um, and we're continuing down that same path.

Is there anything you want to say about the mandate management Larcy?

Um on the operating and special revenue side, assistant director Liz Sir Cone is not here because she had a baby two weeks ago.

Um so she's on parental leave.

I hope she's not watching right now.

Um, but the operating team and the grants team have been continuing their work.

Of course, this uh work product is the biggest thing uh for them for the entire year, but we continue down with the budget document itself, quarterly reporting um and digging into special projects as they come up.

Um on the grants side, um, we have 21 major state and federal grants that were awarded this year, over 15 million dollars.

Um it's been a good journey to figure out how to improve the grants process.

I know working with Council Member Warwick, I hope some of the the things that we've implemented and kept you abreast of have helped.

Um, but we are always working with departments to really balance the pros and cons of going after awards um for the city of Pittsburgh.

And then just to jump back to what Council Budget Director McDevitt was saying earlier, on the operating side, some of the changes that you see in the budget for OMB proper known contract changes, right?

We've known and council has approved and it's part of the agreement what the transdev first vehicle services amounts steadily increase each year of the plan.

Um thing that is different for 26 and 25 is Pittsburgh Water will be working with Transdev directly.

Um what we had done in the past is budgeted for their costs and then offset with a reimbursement.

Uh like we alluded to for utilities, we want monies in to just be monies in and expenditures out to be for the city on expenditures out.

Um we did increase um building maintenance for 412.

Uh we have worked through again, Director Gula represents the city on the joint management committee for 402 Pl the Allies.

Um they are slowly and iteratively working on a better budgeting process for that building.

Um that's you know, the city, um, the housing authority and the URA between the September and November budgets, they approved their budget uh and we were able to react accordingly.

We are hoping to get them to do their budget in advance of the September budget as we move forward.

Um, but the increase for 412 represents the city's portion for all known and planned capital projects uh for the next year.

And then we do still have 200 ROS, um, so we had to add back in monies to um maintain uh just maintain the shell of that building in in safe conditions.

Um we have been anxiously looking forward to removing this amount from the budget, and we've it just pushes a little bit, but we are feeling good about it.

Um we'll see what happens in 2026.

Um I'll let Dave talk about capital sending.

Yeah, for capital, we've kind of been in the same holding pattern we've been in for the last three or four years where we're continuing the existing projects we've already committed to.

We're still finding that any project delays not only delay service deliverability to residents but also increases the cost of the projects.

So we try to be as much of a resource as we can on the capital side.

Thank you to Eric and Brendan on our our team for working so closely with departments to try to problem solve around things, like when the bids come back two or three times the amount budgeted to Patrick's point.

We try to scramble and find funds with the departments to try to backfill those.

But we're kind of left with this with the same shell game at the end of the day that eats up into our outer years.

So our six-year capital improvement plan uh right now is mostly built out of projects that are already in flight.

Um we'd like to add more projects in the future.

We'd obviously love to have more pay-go as well for vehicles, but I will say the capital program facilitation committee, which also includes um Pete and Kristen or Kearson, excuse me, from um the council budget office and also somebody from the controller's office.

Our scores for fleet really aligned closely with what um Furman was recommending anyway.

Firman gave us this really great detailed list of full kind of replacement cycle with the top 50 priorities are, and our scores aligned with that really easily.

So it was good to see that alignment and to be able to get kind of the highest need um knocked out first with the PAGO dollars that are available, but we hope to continue to work with Firm in the future to get through the lease the fleet needs.

Um, other key things on the capital side, you know, we have our metrics for bond.

Uh, our general fund expenditures cannot be over 12% of debt, excuse me.

Director Gula uh also works very closely with the capital team as we go out from bond issuances.

Um, we did a review of the debt policy, and that will be up at council for discussion in the next few weeks.

Um, no major changes.

Uh, of course, this was the first year we went out for a competitive bond sale, um, and we're looking forward to kind of debriefing that with council as part of this debt ordinance change recommendations.

Um, but it has been a good partnership uh with finance.

Um, I alluded to it before.

We do have outstanding general obligation debt uh going back to 2014.

Um we will be paying off 2014 and 2027, uh, and then after that, things move out in our regular you know 20-year cycle.

Um this 2020 Series A and B is the refinancing that happened after uh, well, during the pandemic, before the American Rescue Plan was announced, and those are the big balloon payments that have increased our debt service uh in 25 and 26.

Anticipated debt issuances.

Um, you know, this has been discussed at length during these budget hearings, uh, and like Dave said, a lot of it is projects that are already in flight and on uh the course for the six-year budget cycle.

Um a few years ago we worked very closely with departments to move um to budget things in the appropriate phase, you know, planning, design, and construction as opposed to just here is 15 million dollars for construction, because what we were finding is we weren't going to need 15 million dollars for construction all at once.

Why would we take out the debt when it was going to be used three, four years later?

So we've gotten into a cycle of of planning out the layers uh with departments, and that that has worked well.

Um and then, you know, one thing that we always like to highlight our crediting ratings have gone up.

Um every time debt is issued, uh, the rating agencies have to review the city's outlook.

Um, and we are always keeping tabs on on not just the city but also the regional economy uh is another contributing factor there.

And I will let Kelly talk about community development.

Give me one more.

There we go.

Good afternoon.

So OMBCD is a little bit different.

Where we're we manage and we're completely funded by the U.S.

Department of HUD, or excuse the US Department of HUD, excuse me, the US Department of Housing, better known as HUD.

Uh, we are responsible for four different programs.

There's the home investment partnership program, deals with affordable housing, that's managed by the URA.

The housing opportunity housing opportunities for persons with AIDS, hopper funding, that's managed by the Jewish Healthcare Foundation, the emergency solutions grant that deals with those who are at home, those who are homeless or at risk of being homeless.

That is a program we cooperate with Allegheny County's Department of Human Services, and of course CDBG, which benefits low to moderate income city residents.

So our funding works a little bit different.

In this presentation, I'm going to talk about what we received in 25.

Our 26 funding is dependent upon Congress uh approving the budget, which hasn't happened yet.

We're hopeful that the amounts we receive in 26 will be comparable to what we received in 25.

So, with that being said, for 25 for home, we received a little under $2 million.

Uh, funds are used to improve housing options for low-income individuals and families.

Those funds are help subsidize developers who are looking to create affordable housing options.

As I mentioned, that program is run by the URA, and they use that for their rental gap program in their for sale development program.

An example of the home partnership at work is if you're familiar with Mellon Orchard out in the East Liberty area, that was funded by home dollars.

Let's talk about housing opportunities for persons with AIDS.

As you can see, we received a little over 4.4 million dollars in 2025.

That program addresses individuals who have HIV or AIDS and how their uh its system with financial assistance for rent, mortgages, utilities, helps with permanent housing facilities and referrals to essential services like case management and mental health services.

And as mentioned before in a couple weeks ago when that legislation came up, that program is operated by the Jewish Health Care Foundation.

And as I just talked about the Jewish Health Care Foundation, the next slide just talks about how they use that funding to help those who have AIDS in HIV find housing options.

Emergency solutions grant.

You can see in 25, we received a little over 1.1 million dollars.

I talked about uh how that program is co-operated with the Allegheny Department of Human Services, and we use that program to help with certain shelters and also rapid rehousing programs.

An example of a program that we funded with ESG funds is Bethlehem Haven.

They use that program for the ESG funds.

I should say they use the ESD funds to help women in crisis and provide them with supportive services.

And of course, everybody's favorite the CDBG dollars.

As you can see, we received a little over 12.8 million dollars.

Those funds benefit low to moderate income city residents, and we use the CD funds for a variety of ways for capital projects through nonprofits with the public service grant and the neck the excuse me, neighborhood economic development program, and of course, for city improvements, they must benefit an eligible census track or a population.

So as we look, once again, I'm focusing our stuff from 25.

You can see through the pie graph that the biggest chunk went to affordable housing, then we had demolition, admin and personnel, senior programs, the neighborhood economic development development program, uh, public services, workforce development, housing counseling, and fair housing promotion.

And then this next slide will show the breakdown of how the funding went.

We had $5 million for the Bedford Dwelling Choice Project that went through the URA, a little over $2 million to PLI for demolition, $1.1 million for our department's personnel, uh $1 million to the URA for housing development, $800,000 for the senior community program through Parks and Rec, $720, $720, excuse me, $720,000 for the neighborhood economic development program, uh $650,000.

That includes the public service grant program for city council and $200,000 for the Greater Pittsburgh Food Bank.

Uh $300,000, $330,000, excuse me, for the Pittsburgh Employment Program through HR and civil service, uh $220,000 for our department's administration, uh $210,000 for the neighborhood employment centers through HR and civil service, $175,000 for personnel for the URA, $100,000 for the Urban Leagues Housing Counseling Program, another $100,000 for the public service grant program through the mayor's office, and then $30,000 for fair housing that goes to community commission on human relations.

And lastly, really want to talk about the opportunity.

While everybody's excited about the NFL draft coming here next year, our department is more excited about the National Community Development Association's annual conference coming to Pittsburgh next year.

The NCDA.

It is a nonprofit, uh nonpartisan nonprofit organization composed of 500 local government agencies across the United States.

It will be held at the Wyndham Grand June 8th through the 12th, and we're expecting 300 to 350 individuals from across the country to come and learn about Pittsburgh.

As the host city will responsible for Wednesday evening reception and a Thursday afternoon bus tour of community development provides slow down community.

I'm excited about this, you can't tell.

Community development and housing programs.

So it's our opportunity to bring people to Pittsburgh and show them what we have to offer here.

Thank you, Pat.

Thanks, Clark.

The last thing I'll say about the community development allocations that you see in the 2026 budget.

Because of the federal funding cycle, those are just proposals.

So we are just getting started now with our fiscal federal year 2025.

The federal government shutdown did delay that.

So we are just now getting approval from the federal government to tap into those reimbursable dollars.

Um, and until we get a signed agreement from HUD, um the things that are in the budget right now will remain proposals.

Uh the process to move through the budget proposal to the actual HUD approved allocation involves um an annual action plan that is approved both um via public comment by the city.

We always use chambers, so we thank you for that, and HUD itself.

Uh and then we also have the last thing on that front, there are still COVID-related HUD dollars and treasury dollars that Kelly's team is working with.

Um, the one that will continue on the longest is home ARP, um, which we've been at the table discussing many times now.

Um I I won't spend time dwelling on these.

The Office of Management Budget also includes the city procurement team and the fleet team, both of which are under the supervision of Chief Procurement Officer uh Jen Olzinger, who is unfortunately not able to join us here today as she is ill, but I'm happy to address questions related to their work as we go.

Um but I've I've uh covered uh the highlights as it relates to fleet in the budget proposal earlier in my presentation.

So with that, we're happy to take questions, madam chair.

Thank you.

Thank you.

I'll also note for the record, we've been joined by Councilwoman Gross, Councilperson Charland, Councilman Coghill, and Councilman Wilson and Council President Laval, who's joining us online.

So with that, um, I think we'll start at the far end with questions and work our way, work our way back.

If you're ready to go, or I can start with someone else, either either way, it's fine.

Thank you.

I was actually just kind of like starting with the last thing first, which is um I keep trying to look up that conference, and it all I'm getting is like the National Career Development Association.

You send that to council members.

Um that is exciting.

We like to show off our neighborhoods.

Um so please 12 council offices.

Um, because it's it's great, I think, to be able to partner with visitors from other cities to show off our local projects.

Um so I have some various notes.

Um, and they are all fairly in the weeds, but I think that's the nature of this budget.

Absolutely.

So one of the uh comments I'll make is that we have had much distress, um, and this is for the public as well over the PWSA water bills, right?

We know that 2025 isn't fully paid.

Um I think it's 13 million outstanding, and that there's 10 million projected for next year as well.

One of the things we've asked, and what we're working on, but we can't really say, and I think I I'm not sure if it came up in the DPW budget hearing, or it was one of the hearings recently.

I was like, what's the water bill for?

You know, what you know, what is it paying for?

Is it you know how much of it is buildings like this building versus swimming pools, which are really important to our constituents?

And the answer is something like, well, we get 500 separate paper bills, and they all come as just a giant giant mountain, like it's like literally a stack of bills, and so it's hard to analyze.

And so, literally on my way out here, I passed a rolling cart full of PWC bills that council staff is beginning to approach.

Um, so does anyone have a guess?

You just mentioned that it is not a good idea.

On the lower special revenue accounts, we were simply trying to provide a I we were bringing that up from a I think it's implicit no ballooning and for the citizens you can look right?

So you can go of expenditures out of pace with other regionalities across the country, right?

We have you know things have doubled and tripled in price over the last ten, fifteen years, supply chains, we've all experienced it.

Um just to reiterate, and then I'll I'll finish out.

I think when we're talking about why the revenue projections are lower than we projected three or four years ago.

So we've had several court cases that were against us that I think were really unfortunate.

Um the tell me the correct name for the the facility usage fee.

Thank you.

Facility usage fee, which most of the media and citizens refer to as the jock tax.

Like it's on athletic, you know, facilities.

Um tell us again, how much how much are we not getting that we should have been getting we had projected that we're getting?

It was about six million dollars.

So boom, six million right there.

Right.

And so, you know, we've talked a lot, we know we're all kind of like it's in the ballpark of like thirty million that we are feel like we need to make up to to bring increased revenue or decrease expenditures.

We need to bring these a little closer.

So that one's that.

And then you mentioned, I think, in your presentation that another thing is that there's of the real estate taxes, which is what we're talking about when we talk about your millage.

That you know, the current budget proposal is looking about at about a hundred and forty-three million in revenue from those just from property taxes.

Not all taxes, but just the real estate tax.

But that had been projected to be higher, and you mentioned the common level ratio court case, which was one aspect.

And so recap that one.

If I could actually put together two issues here.

Okay.

Just one at a time.

Okay.

The common level ratio court case was uh litigation, the brought by a taxpayer against Allegheny County.

Um in 20, I think it was started in 2020.

Um, but the in which uh a judge ultimately ruled that the calculation that is used to determine the starting point, the starting discount in a property appeal case was too high.

The county had set that in the 80% range.

A judge immediately lowered it into the 60% range.

And crucially and frankly devastatingly for municipal finances in general, has it set to go down every single year?

That means that when new appeals are started each year, they start with a lower and lower presumed tax burden.

And so we are seeing as uh appeal cases start every year, the amount of those appeals and the tax relief being provided in those appeals becoming larger and larger.

And that is counteracting other market growth in what would be real estate.

So a court, a judge, right, um, in one ruling lowered um our real estate income, our real estate tax income.

And it's that's especially bad, which is not true of every municipality in Allegheny County.

But if you have $30 million buildings, right, one property that's a $30 million building.

And then that one goes from 80% of the $30 million assessment to 60% of the $30 million.

So it really is a big lump.

So do we know in the ballpark of in the appeals so far since that ruling, what um real estate tax income has been lost?

I I would say it's got to be 20 million.

Last year was um, I believe it was over $10 million that we refunded back.

I I can I can answer that question by um those were refunds.

Correct.

But then how does it impact the forecast?

So I I can answer that question in a slightly different way, but I think it it gets to the same point.

Um before we incorporated the uh impact of the common level ratio ruling into our financial forecasts, we would have targeted real estate taxes for next year at 160 milli roughly 160 million dollars.

I I I looked back at our last forecast before we started projecting them downward, which the first time we did that was in uh 2023.

So the the previous the uh the forecast before that.

On that basis, it's 20 million dollars a year and growing um while that ruling is in effect.

So yeah, about 20 million and growing.

And then so then the so those two hits.

And then I'll point out that another thing that is happening again, because we're in the post-pandemic world.

And especially us and other mid-sized cities where you've got a central business district with all those buildings for offices.

Any place where you have like employment hubs where people would literally used to go to work every day.

And in the state of Pennsylvania, downtown Pittsburgh was the second biggest employment hub, and Oakland was the third, both in the city.

You know, people are literally appealing those assessments immediately, right?

And so God, and and you know, even some of them were in forfeiture.

So it's not just the common level ratio, but we're really, really seeing substantially low.

I mean, uh to me, that's the problem.

It it is not just the common level ratio, but the common level ratio exacerbates it.

People would appeal for a variety of reasons, but because the common level ratio means that the second they file an appeal, they start at 48% rather than 100% of their assessed value.

It means that the rulings are ha are producing much larger swings.

So yeah.

Downward swings.

Yeah, much larger, downward swings.

Um the the common level ratio would be reset to 100% by a reassessment, and that would just change the landscape of those cases.

That's the theory.

Which is the landscape of the cases, but would also incorporate you know every building in the county, including every building in the city, every property in the city, so that we would see a less inconsistent valuation of especially residential properties.

It would also absolutely do that.

Right, right, right.

Okay, so I think those were my main points.

We got some really wonky questions about utilities, um, and we really have a budget that's having a problem because of like some a series of unfortunate events with especially real estate income revenue.

So all right, thank you.

Thank you very much.

Well, we're gonna move down the line.

So Councilmember Warwick.

Thank you.

And actually, I wanted to check does anyone or council president online have um I stretched time cut off.

Okay.

Councilmember Warwick.

Um I mean, just in terms of the budget, I don't, you know, this is I feel like we're sort of in uh a confusing moment, right?

Because we had and I mean I'll let Director McDevitt also speak to this.

I mean you know, we're hearing from your side that you know the numbers line up that we should be fine, but it's tight.

But then we're hearing, you know, that we are 13.5 million in the whole for overtime.

You know, like that, you know, that we're gonna see 13.5 million more in overtime likely, six point five million more likely for utilities.

Um and then of course the fleet, I feel like everyone is on the same page about the fleet, right?

And I am a um you know Furman and and the ELA team has been abundantly clear that we need to be putting 20 million dollars a year into fleet.

Right now we have 10, and I believe we should put in another 10 and then have the funds in outgoing years to continue to put in 10 every at minimum, right?

Every year moving forward.

So I don't I mean, I don't really know, you know, it's sort of you're here at the table, or I you know, for for myself, um at any rate, I uh it's uh it's a difficult situation to be in, right?

Um so I don't know.

I'll I'll let I I I guess I'd ask Director McDevitt if you have anything to add.

Because again, you know, it's hard.

Like on the one hand, we're being told by yourself and by the controller that this this budget doesn't add up, and there's also issues with um uh um estimates for um labor agreements and such.

And I know it's awkward for everybody to sit together at the table and kind of hash this out, but I at least for me I would appreciate hearing you know your your take on it as our budget advisor.

Yeah, no.

Um just some self-reflecting on my own.

I should have been sitting down with these guys more over the past month.

But uh what Director Pollack has uh outlined specifically for the overtime costs, like that that is accurate that they can build in vacancy allowances, and that's actually one of the things that we showed you to cover the police payroll costs that we know that we're not gonna be fully staffed at 800 officers.

So our suggestion to you was to actually build in the vacancy allowance that reflects that to cover those overtime costs.

For everything else, if if we're expecting to just not hire people and cover the overages, because we're gonna pay 24 million dollars this year for fire for premium pay.

I have no reason to expect, I don't think anybody has any reason to expect that we're gonna pay less than that next year.

So what I would have done would to actually reflect that and then show elsewhere we're not gonna hire any of these positions.

That's just not what they did.

They can do that within the budget as it goes, but then you're just not hiring people.

So that's also what we showed you as a solution.

Like these are vacant positions that you can cut from the budget that you can then put towards putting honest figures for what we're gonna do for overtime.

But then it also shows honestly what we're not budgeting in other departments and where operations will then be diminished there.

So those those are solutions that you can do.

Like you can make this budget work as is.

It's just gonna you're gonna have a lot of diminished operations that are not foreseen in how it looks, um, in my opinion.

Uh as far as a lot of the utility stuff goes, um we we used to uh last year we did pay streetlight bills to the tune of around a million dollars out of the uh straight out of the liquid fuels trust fund.

Um we haven't done that at all this year.

I guess that's why it's so far over budget.

Um but uh according to DPW, they need that money for salt.

Um they they don't intend to actually pay slight bills out of that.

Uh that sounds like a conversation between DPW and OMB to figure that out.

Um but we also want to make sure that we're the rates are going up for everything.

And there's very as uh Dr.

Pollock said, like there's very little wiggle worm.

So um if something goes awry, as the bestly plans of mice men often do, um we are up a creek without a paddle.

May I spawn council person?

I mean I I I I don't think that we are um by we I mean myself and Director McDevitt in our comments that that far off in basic said.

Yeah, I I acknowledge that the proposal that we put on the table um I've said pr has a small margin for error, which I think is consistent with where he just ended his remarks.

Um and we have been working with DPW is as recently as today on addressing some of those questions about the um utilization of special revenue accounts to cover some of the costs of utilities.

I think we are gonna find a workable solution for everyone that more closely reflects past practice than what the actuals are showing today without depriving them of the resources that they need.

Um I understand um council's desire as expressed through the will of council you all adopted yesterday, uh discomfort perhaps with how tight that margin for error is on our proposal and a desire um to uh provide a greater margin.

I think we are happy to discuss the changes that could be necessary to achieve that.

Um I am you know in it is our presentation at this point to say we think that the scale of difference that we are looking to solve for is smaller than some of the numbers that have been publicly stated, and and I'm not pointing necessarily to you all, but in general, right?

What has been stated by um other participants in the conversation and then ultimately recorded in the media.

I I don't I I don't believe it is a uh a $30 million difference.

I understand why um that has been a number that has been part of this conversation based on what you've seen, and some of what we're presenting here is simply to show why we think um that there is a smaller variance to be discussed over the next week um to reach consensus.

So I I I overtime is a good example, right?

Um the um I I I don't maybe share uh Director McDivitt's concerns about the impact on operations in a relative sense, right?

Because if you look at the history here, um what is in fact has been the case for some time, right?

Is that the basically positions stay vacant for longer than we account for in the vacancy allowance.

We we and and I'd like to change that condition.

Um that is a long that that is something that both we've been working towards over time and will take a long time to address.

So um we're not gonna see a drastic shift, is what I'm saying.

We we we are in less efficient than we could be in that regard, and likely will remain so to a degree.

But I think we could also at the same time build a stronger cushion.

Um I'm simply suggesting that the gulf that we're trying to address is perhaps smaller than has been discussed to this point.

I mean, but then if you become better at turning over those open positions, then you have less money for to pay for overtime.

We would say we would also utilize less because the overtime that is being utilized is in part to cover a lack of people, correct.

Um what about the um labor agreements?

What about the money that's been that's been budgeted for future labor agreements?

So we have police teamsters asked me 2719, right?

Correct.

There are three um bargaining groups that remain open um who have one one twenty-six expiration or twelve thirty-one twenty twenty-five expiration dates.

Um with FOP, we have moved through arbitration proceedings that will move into a rebuttal day next week, and then it'll go into January with Teamsters and ask me 2719.

There are still bargaining days scheduled for the remainder of this year.

Um does work in expectations and dollar amounts from what we think um might be the final resolution uh as our kind of guidelines and guardrails.

And why do we what Director McDevitt, why do you feel that those I mean I'm just uh apologies, folks, but I'm just like repeating what we were told yesterday.

So there's why those are not realistic.

There's two and three quarter million dollars um set aside in human resources uh as an allowance that is is meant to go towards those.

Um just historically, I think we looked it up, it was a little over two million dollars in 2019 that it increased for just police, so that was six years ago.

That number is probably gonna be higher.

Um, and that's just for one of them.

So again, very little wiggle room.

It's also not the only place where there is money set aside for bargaining.

Um within the salaries and wages lines of each of those departments, there's also money worked into uh the numbers.

Yeah, and police in the outer years, it definitely shows it right right there.

Okay.

Um so I guess just general question.

Obviously, I've you know obviously proposed uh uh a fairly significant tax increase, which we have not had a tax increase in 11 years, a real estate tax increase.

Um what I've proposed would generate approximately 41 million dollars in additional revenue.

Um it is again, I will say it again.

I feel like we need to put 10 million dollars more into fleet.

I feel like we need to listen to our directors, right, in DPW and public safety, and we need to fully well, we can't fully fund their fleet, which is 20 million, that's what they're saying, but at the very least, give them half of what they say they need, right?

And then in ongoing, I I personally think that we should create a trust fund, much like our other trust funds where they have a known 10 million a year at base, right, so that they can plan.

Um with that can I just take that a step further?

That like you we just need a much larger paygo trunk contribution to our capital budget.

Um it like it's it's normal for cities of our size to use a sizable chunk of of debt to to fund our long-term capital projects, but we're doing it at more than a ten to one ratio of of bond dollars to pay-go dollars, and that is not healthy.

Okay.

Like we don't need to just spend it on fleet and like we can use it for other stuff that you could use bond dollars on, and then you're in a much better shape because you're not taking out so much debt every year.

So that's so that's sort of what so you know, already let's just say we were I mean where we are without additional with the budget that we have without additional revenue, would we be able to put 10 million dollars in additional funding into the fleet?

I just want to make sure I'm understanding the question.

The propos the budget as proposed as proposed.

Includes ten million dollars for the fleet across all sources of funding.

We would not be in a position to double that to twenty million.

Okay.

So we would not be able to so and I feel that we should.

We've been told very clearly by Yeah, right?

I yeah, I I I understand your your your point.

And I think that that is a valid perspective.

You know, we took the position in preparing our proposal that we would continue the incremental progress towards that number that we were not in a position to do so in 2026.

Um but but yours is also at an equally valid position, right?

And and um but it would require a tax increase to do that as you've proposed.

So I I'm not arguing with your point.

I'm simply saying we took a different course in what we put on the table.

Um can I ask, and if if you recall, what did PLI request this year for demolitions?

About nine million.

About nine million.

And what did they get for demolitions?

Less than that.

I can pull it up.

Um it's the combination as Kelly um mentioned, there's some CDBG dollars that will come online next October and then also pay-go money.

Um the PLI plan hasn't pointed up, was really it was thoughtful.

It was this is how we address issues right now that in such a way that over time we won't need that amount every single year, right?

It was catching up on on what hadn't been done, what hadn't been demolished or deconstructed, uh, and moving it into kind of that level.

Uh and now I'm just gonna look up the number, unless you have it.

3.1 million in pay-go.

No.

Total.

Yeah.

A little over 1 million in paygo through.

Yeah, sorry.

I'm sorry.

So they got 3.1 and they requested nine.

They got three point that's uh say it again, David.

Yeah, they got a little over two million in CDBG and a little over a million in paygo.

Okay.

So they asked it for nine million in paygo.

Yeah.

So just because our vacant and abandoned property issue is severe, right?

In some areas more than others, right?

Would we able in the budget as it is now, would we be able to give let's bring it up to ten, seven million additional dollars to PLI.

No.

Um I'm happy to continue to to answer these in sequence.

And please do, but um the the budget proposal that we put on the table included um cuts in operating expenditures uh in order to achieve balance.

There's uh the operating result is slightly under 2.5 million dollars.

So there's there's very I can't think of a category where we didn't give someone their full request where we could make that hole.

Right.

Um we've also talked a lot about um improving our litter management and our clean and lean and you know um you know just boosting capacity, uh even potentially hiring a team that is dedicated to litter management, including the litter management coordinator at DPW so that we can I mean you know these are just in post agenda conversations that we've had.

Would we have any funding to do that without in cr increasing revenue?

We wouldn't have so for example there was a nine like w what one thing that was proposed by um our Clean Pittsburgh Commission was to provide to pass an ordinance uh requiring clamshell closed lid garbage cans and then providing those can, or at least one, which we got a nine million dollar estimate from DPW to do something like that.

Uh something like what you've just described, no.

Um there is uh funding in the existing budget, it's not new positions.

That's what I was just looking over to see.

But we we we have um the budget in uh uh contemplates DPW continuing to grow its work in um both the enforcement of litter through anti-litter inspectors and in um uh taking on weeds and debris enforcement from PLI as well as um continuing the work we've seen in in dramatically increasing the number of clean and lean cases we're taking on.

So the resources necessary to continue the current uh improvements we're seeing there remain.

We did not cut those, but the additional uh types of expenditures you've just described, we would not be able to do.

Okay.

So, you know, even if we said nine for the CANS.

Um and I know that the incoming mayor has expressed great interest in um enhancing our out of school time services at the city, right?

At least well, I mean, I'm just basing that based on on his campaign.

Uh that's also a priority for me.

Um is there capacity in this budget to you know, not to not to grow our activities in that space, no?

Right.

Okay.

Right, right.

Um, which again are like part-time, you know, those are for the most part part-time positions, right?

Like after school positions.

That's and there's also summer camp positions, those can be.

The majority of the expense ultimately is in wages and benefits for part-time staff, yes.

Yeah, yeah.

Um so I mean, is it safe to say that um an additional 41 million dollars in revenue would set Mayor elect O'Connor up to sort of, you know, take the reins and and you know continue the I will say this continue the good work that I I believe that this administration has done.

I appreciate that question uh and the and the way you've put it.

The presentation that we gave at the beginning here was uh uh primarily aimed at addressing what have been repeatedly discussed as areas of concern or deficiency within the proposal and it's it's solvency itself.

And and so that's where we have been today talking about why we think that the gap between council's um concerns and what is actually in the budget is smaller than has previously been thought.

To do to provide additional quality services to residents like what you're describing, um, yes, I it would it is without question it would be necessary to raise additional revenue, right?

And so um those if the city, if if council were to decide to raise taxes, I think that the it it is the types of proposals you're describing there that would be my I would my recommendation for how to spend those dollars, right?

If we're asking folks to contribute more, there's more that we can do for them in those ways.

I think that the extent to which new revenue is needed to addressing expenditures within the current proposal is a lot smaller than has been previously discussed.

But yes, if you wanted to do all of the wonderful things that you just described, councilwoman, um it would require additional revenue of the size that you're describing.

I there is no way to expand our offerings in that way within the existing framework we've proposed.

We simply believe that we can achieve what we have proposed to achieve within the ri resources that currently exist.

And I also want to ask too, and you know, I'm gonna ask you to speak for the departments, but but in your conversations with DOME and PLI specifically around our permitting processes, right?

Which we could get a lot of, you know, we always hear about how it's too slow.

Is is that a is that a um is that a uh a personnel issue, right?

Is each is each inspector have so many permits that they need to review or I think the driving challenge to addressing the concerns we hear most often are process issues, not personnel issues and issues that we have endeavored to tackle and I believe have made significant progress on.

I won't won't claim that that we've achieved everything that could be achieved, but we've made significant progress on in the last four years in reorganizing the way in which they are reviewed.

More personnel would help in um clearing some remaining bottlenecks.

Um and directors have for rightfully for that reason made requests, not just this year, but but every year, they've made more ambitious requests than what we've ultimately funded, even as we have invested in more staff in those places to make that improvement.

It's a combination of personnel and um and process improvement.

I believe the process improvement work is primed to continue in the um in the budget that we proposed.

We we did not advance a proposal for more personnel.

Um if we had the funding for more personnel at PLI and maybe DOME, I'm not sure, you know, um, would that make it easier for us to provide the type of concierge service that we are hearing from from large-scale developers that they really would like to have that like one-on-one contact in the department to get their projects done?

It's it's not frankly, that kind of one-on-one concierge concierge service is not the model that we've been pursuing in the process improvement.

That is what many folks have asked for.

Um, but it's been our our finding that that is relatively inefficient, right?

That that the best way to actually meet the public interest in making this process better is to make it smoother and faster and more consistent rather than a bunch of one-off individual connections.

So I would I would not advise if there were more resources available for personnel in those departments, I would not advise that they be put towards that kind of concierge service except in specific circumstances.

We did a pilot around that with um affordable housing development in the Department of U Planning.

I think there are examples where it could be helpful.

Um but to answer your question directly, if council or an incoming administration does see the one-on-one concierge approach as the a way to move forward just a factual statement, yes, that would require more personnel.

Okay.

Um I'm just trying to think.

So, yeah, I mean, I I just you know, I've I've been on this council for three years and I can't count the number of times that I have heard members talk about how we need to increase revenue.

And I recognize that we need to increase our revenue base, right?

Like our real estate, right, by with our downtown properties, et cetera.

But the reality is, and and I know that that's a top priority for the incoming administration, right?

Oh, I had another question.

Uh would we be able to put um let's say another two million a year into the land bank with the budget as it is currently the projected surplus at the end of next year is $2.4 million.

So there would be two and and it's higher than that in every other year in the five-year plan.

So from just an actual cash basis, would it still be balanced?

Yes, I imagine without we would need to run some calculations to say whether that would affect any of the other fund balance or debt service calculations.

So um maybe maybe not.

That would be something like that would be at the absolute margin of what we can do and leave essentially zero margin for error at that point.

So I mean, in that sense, we would have to choose, right?

Either work on, you know, doing like a trash can pilot or doing the land bank.

Yeah, is that what you mean?

I'm just trying to clear it.

As a practical and as a practical answer to the overall point you're making, Councilwoman, I I think it's well made that that um you know could we do could we do two in a literal technical sense perhaps, but we couldn't do 2.5.

So I think your point stands.

I just wanted to give an accurate answer.

What about another thing that I know is a big priority for the incoming administration is small business support, right?

That's something we have heard over and over and over from the incoming administration.

Um I believe we have a hundred thousand dollars allocated now to the URA for small business support.

I believe that's correct.

We're double checking the figure, but I believe that's correct.

That's maybe one project, maybe, or like three quarters of a project in a coffee house somewhere in the city.

It's not a lot.

So I just want to, you know, the reason that I'm asking is is you know, taking a step back, and I am frustrated at the, you know, and you know, are we are we falling off the cliff?

Are we not?

Is it balanced, is it not, right?

It's it's um regardless, right?

Additional revenue is what as much as the taxpayers do not want to hear it, and as angry as it may make our constituents, the reality is that we have, you know, we have not increased our taxes in 11 years, and this additional revenue is what we need to do all of the things that every member, every member at this table is passionate about different things, right?

Whether it's whether it's projects within their district, whether it's citywide things, whether it's future economic development, right?

Every member at this table, and that I will say at the end of the day, I believe is what our constituents remember is the stuff that we get done.

It's the work that we get done.

It's not the arguments that we have.

It is the stuff it's a it's that you know, when when when our cycle comes around, it's the list that we are able to show that says, look, this is all the stuff that that got done on my watch or on our watch, right?

And so anyway, that's I I'm gonna leave my comments at that.

I think it's clear again.

What I've proposed on the table would be an additional 41 million.

And I think that it would um I think that that would be a good thing for the city of Pittsburgh.

I think that that would put us in a in a much better place.

And this is not an issue of one administration versus the other, right?

This is just about being able to do good work for all the residents, right?

Yeah, I I I'll maybe just to summarize w what I've been saying in response to your questions.

Our argument is that the amount of additional flexibility needed to meet the expenditure proposal that we have made it is is minimal.

Right.

Um, you know, we believe it's it's balanced.

We acknowledge that it's a tight margin for error.

If council desires greater uh cushion, then there are changes around the edges that are necessary to achieve that that we're happy to discuss.

But we also acknowledge that we did not include new expenditures to improve services in any of the categories you've just described.

And in fact, in a few areas, um trimmed spending by eliminating positions or uh non-uh personnel spending to create space for a resolution to the uh common level ratio conversation that councilwoman gross I are having to work out.

So there are there are paths forward, and I'm not taking a position, I'm just describing them.

One path forward that we see is um to adopt a budget.

Again, we're happy to entertain a discussion around modifications, but it is relatively similar to the one we've proposed, which does not include new spending, which includes some reductions, um, and which provide space and time for the larger uh macro trends on our revenue to work themselves out.

The course to pursue if you want to add new spending to the budget is to pursue new revenue.

And and that's the decision I think you all um are contemplating right now.

Yeah.

So in any just to just to summarize the Ganey administration feels that it's tight but doable, that we can eke by with this budget, that it works.

The controller and perhaps our budget director and speak for you does not feel that it that it were feels that it's too tight and it's too right that that and and I feel as a council member that we um that uh for what at the end of the day is I'm not gonna say it's it's modest, right?

It's it it it looks like sticker shock, right?

For for the voters and the concept is upsetting, but what we know at this table is that an additional 40 million dollars of revenue could mean that we can actually do all the things that we talk about doing all the time at this table and amongst each and you know, and and amongst ourselves and and sort of you know, so that we don't have to fight each other on the thing that we want, right?

Like this, you know, helping our various committee, you know, our various directors in our committee do the work that they want to do.

Anyway, I'll leave it at that.

Thank you.

Thank you.

Councilperson Charland.

Uh yes.

Uh thank you, Madam Chair.

Um thank you for your leadership during this time.

Um thank you guys for being here.

I want to start off with um the will of counsel that we sent you yesterday, um, asking for your assistance in helping with modifications to the budget in areas that we think are um uh deficient.

Will you be able to help us solve those problems before the end of the year?

We're happy to discuss what your uh desired changes are yet.

We're happy to engage in that conversation.

Whether we'll be able to help you do it depends on more specifically what you're looking to achieve.

Will you be able to submit a revised budget to us with the the knowledge that you have through this whole process, or are you going to you know kind of wait for us to move here?

It's our both it was our reading of the wording of the will of council and our intent to um either through direct discussion or review of proposed amendments, uh, you know, work with council on changes.

We don't intend and don't I didn't read the will of council to request a new submission.

That's not our that's not our intention now.

Okay, so that's not something you'd be willing to do.

No.

Okay.

Um so I also want to ask uh I want to move strict directly to talking about the bond or uh our bond rating, which is something that I know you guys have have cared a lot about here.

Do you believe with the budget that we submitted now when we heard so much about why our bond rating has improved because of our um our ability to maneuver when we face a crisis, the way we're being able to move things around, we've been able to to budget effectively.

Do you believe that with this budget that our bond rating will drop in future years?

No.

Oh, sorry.

The answer I think for both of us are.

Uh so uh the factors that um have led to our improved rating um have been a combination of underlying market conditions.

There was uh record permitted building activity in the city of Pittsburgh in 2024, 1.6 billion dollars in new construction, which is the highest that it's ever been.

That's a uh a significant factor that is reviewed um by the ratings agencies and has been a big part of all of our conversations with them.

Um the uh uh reserve uh the growth in our reserves um since COVID and their relative high water point, um, even as they in this plan are are shown to be reduced, um, has been a factor.

And I think in the way in which the the ratings agencies do and have looked at them, I think that I don't I don't see it going down in the immediate term.

Um and um in general, as you yourself, councilman have pointed out, much of the uh the way in which those ratings are um determined is based on the ability to raise taxes uh and whether council decides to do so or not, based in this conversation, that legal ability remains, and that's a also a critical factor.

Patrick, you probably have things to add.

No, I was gonna say the same thing about the ability to raise taxes.

We know we have um and we have walked through the list with the agencies in our most recent go-rounds of of what can the city actually um adjust in terms of of tax rates.

It's not a very long list.

A lot of it is set at the state level.

We don't have the power, you know, through our own um design to adjust a lot.

One of the things we do is real estate millage.

Um and they they you know noted that uh it exists, right?

We have capacity still, we are not at the top millage.

We are nowhere near the top millage, so that ability exists.

And I'm sorry, there is one more fact.

Uh one more factor I wanted to add is that the continued improvement in the health of the pension fund is also a factor in those conversations and that assessment, which um this budget preserves the uh you know the um maximum payment basically, the the minimum obligation plus the actually recommended amount um you know, the parking asset, and then we make whole any difference.

So I for those reasons genuinely, councilman.

No, I don't anticipate it that this would have a direct downward impact on the rating uh next year.

So I mean, regardless of whether what year we're in, we always have the ability to raise taxes.

I mean, short of uh getting getting out of the Act 47 ICA situation.

That's right.

I've always had the ability to do that.

So you know, if you're saying that the rating agencies are giving us a high rating because we have the ability to raise taxes this year, and we will have the ability to raise taxes next year, we will kind of always have that ability.

That's right.

I don't think that that is a thing that changes the rating annually.

I think it is uh maybe a uh foundational factor in their assessment.

The things that have changed their assessment recently have been uh has been the uh robust activity uh as reflected in in those construction numbers, the continual annual improvement of the um health of the pension asset, and um you know the ways in which taking a you know decade, decades long view, the ways in which the reserve balance has improved.

Right.

Those those are the those are the factors that we believe are central to their changes in perspective, and they would remain consistent is my my in in this in the next round that we're gonna be looked at.

We did burn through a good bit of our reserve fund last year.

We're anticipating to burn through more of it in this year.

In years to come, we will continue to burn through it.

If that's an important factor going into these, you know, into these bond ratings, I can't see how that isn't something that you know that is not trending in a good direction for the the agency there.

Uh I it it could it could in the long run be an issue, wouldn't be an issue next year is that maybe the answer I'm answering the the way in which I'm answering your question.

Um that uh in that I return to an earlier point, which I believe I may have made before you came to the room.

So I just to uh it is our part of our overall contention here is that um some of the areas in which we've heard the most concern, namely uh overtime and utilities are based the the that concern is based in on part of the information, and that therefore this budget is as proposed is balanced.

That means that there and that plus the way in which our five-year forecast shows that we can sustain that level of activity, provides time and space for future developments in the um disposition of the common level ratio case and the uh potential reassessment to inform future decisions.

So for us in assembling this budget, there were two pain points.

One was 2026 because of the debt retirement that's happening there and the need to uh you know thread a bit of a needle on operating, knowing we had a very high debt service payment.

If you see in the presentation, um, you know, the the operating result is only 2.49 million dollars next year, but in 2027 it increases to 26.7, right?

So we had a th we had a thread and needle there, and then it gets very tight again in 2030, uh progressively over time, presuming that real estate tax revenue continues to tick down on the pace that we're showing it, which is the only thing we responsibly can do until there is a date known for a resolution to the wider um property tax challenge in Allegheny County.

I don't believe that that issue will go to 2030 unresolved.

And this forecast would look very different, and our overall financial picture would look very different if, for example, a reassessment is complete in 2028.

At that point, the downward trend would stop.

We would see a 5% bump, and the end years of the five-year forecast would look very different.

Additional adjustments may be needed annually up to that point, but a year from now, council could be f facing a very different five-year forecast if a resolution to that question is reached in that time.

We believe we are coming to you say with those two arguments as to why the proposal we have provided is compliant with the requirements and sound that it it we can we believe we can provide satisfactory answers to some of the areas you all have rightfully questioned.

And that there it provides an opportunity for other factors to influence the overall scale of decisions you'll make in the future.

Um that to solve for all of those problems today without that information could lead to much bigger adjustments than maybe necessary.

However, uh just going back to Council Person Warwick's considerate question.

If there are other things to pay for, that's a very different question.

I'll say could I add real fast?

Um so we started 2024 with 208.5 million in the fund balance.

We started 2025 with 203.2.

So it it was not a massive difference.

Um we've projected starting 2026 lower, but we won't know really until February, March, April as we finish the ACFER.

And if I recall um I could look it up as we're talking here, but it's it we go down about 30 million every year.

Correct.

Thirty, thirty-five.

Correct, that for projections, and then those get reassessed every time we actually know what the actuals look like.

Yeah.

So with that, I guess, you know, again, I I think that there's a lot of you know assumptions that I I don't think would pass you know the rigor of uh you know outside agency here.

One of the things you kind of mentioned here was this this idea that we have these this vacancy allowance, and when we subtract that from the overtime overages, that it's actually not that bad.

It's uh it actually ends up being you you by your math there, I think you were saying about three million was the was the problem.

I think that might have just been one department there, but no, that's that's citywide.

And uh and it's uh vacancy allowance is the accounting tool we use to do that.

I understand what vacancy allowances.

No, I'm I'm uh I was saying that for further clarification.

That's the accounting tool we use.

What we're actually comparing there is actual savings.

So how much we are coming in under budget on regular wages and and setting that against what we're coming in over budget on overtime.

So if you take the uh 20 million over budget on overtime, subtract the 16 million that we are 16 and change that we are under budget on actual wages, it works out to $3 million in change citywide projected end of this projected for the end of this year.

Why don't we budget precisely?

We can't budget precisely for either of those things because uh the only way to budget precisely would be to know exactly to know that we would have every single position filled every moment of of the year, right?

So we have a big I understand why we have a vacancy allowance.

I get that.

Okay, so what I don't understand is that why why we can say this is not a problem when we have a uh you know we have an overage and we should say, well the vacancy allowance takes takes care of it.

No, okay, it's still it we're we're lying on it on paper, we're lying to the public.

Okay, I I do understand I uh I misunderstood your question initially.

Um I think that uh we could it would be perfectly acceptable to reflect these numbers with an increased vacancy allowance and an increased budgeted amount for overtime.

We have uh historically the way that we have historically done that is we start with baseline as in the previous year and make adjustments.

You might be able to speak to that more precisely.

It it is um we could do that.

The net effect would be the same, but we could do that.

If the net effect is the same, that's but again, it's it's shoddy record keeping if that's what we're doing.

The actual record that we look at and what our external auditors look at is what is happening with the audited financials.

The budget sets up the legal framework.

Um people will not miss a paycheck because the budget isn't there, right?

There is there is not going to be a scenario where someone who's doing work is not getting paid for their work.

Um, and what we are trying to balance is this legal framework and this guide.

We know that the budget has to be a snapshot.

We know that it is that there has to be variance with the way it moves and how it comes to fruition.

So if we had to follow the budget line by line every single day, the city world would have been.

But what a huge variance.

You know, what like what like what that's a councilman?

That's not like uh, you know, Councilman.

I'm I I don't I don't I we would happily um work with you with the council budget office to uh reflect a different distribution across regular wages vacancy allowance and overtime uh including in the 2026 budget.

I that we have no objection to doing that.

We've had some preliminary discussions about that.

But actually, but what why didn't you do it?

You I I'm not concerned about like what you would be interested in doing.

Why do you haven't you done that yet?

Why haven't you why wasn't that the document you provided us?

The document that was accurate.

Historic practice and the way that we've calculated those things.

Um the the ultimately to your question about auditing, the these this approach has been audited in each of the prior years that are listed here, and it has not been a finding, right?

So it is not an auditing issue, it is not uh an accounting issue.

Um so it has not been a priority to uh make the calculation conform exactly to the way you've laid it out, but it is something we're happy to to address because it doesn't have a net impact on the actual outcome.

I I guess yeah, I just I think that what's the purpose of show of showing a budget if we're not you know if we're not gonna show the public a budget that we want to stick to.

What what's the purpose of this whole exercise then?

It all it all washes out, right?

That's kind of what you're doing.

No, it's all washes out, doesn't really matter.

I wouldn't I wouldn't agree with that as a general rule.

I would say that when we think about these things, we think about them within the um categories of expense, right?

For for us, the uh category of wages and benefits, which includes premium pay, is one air is one category of expense.

We would not want to have that category of expense be widely inaccurate within that category, some of these individual allocations, we the variance is part of how we experience them every single day.

And so we're we're less attenuated than then you have been in asking this question to to whether it shows up in savings on salaries versus premium pay.

The the net the net impact is not um frankly isn't is not an auditing finding, and so the our attention is is on other issues.

You know, we we would we pay very close attention to this category expen of expense at a slightly higher level of of the way it fits into the budget.

But again, happy to adjust it.

I mean I think again, I think if we're working to restore trust in our government, trust in this body, trust in the budget.

I think providing numbers that are realistic that are precise, you know, should be our first goal there.

And maybe, you know, if it's something that hasn't shown up in the audit yet, then you know, I encourage that to to be something that's looked at.

Uh when is the when our our bond council, when uh we go out to bid for that.

When is the next time that they come up or that that we go out for bid on that again?

It would be it would be this spring.

Um so after this year after we issue debt in January or bond council was just renewed.

Just renew it.

I'm sorry, I'm sorry, councilman.

Are you asking about the contract for when council?

Oh, I apologize.

I misunderstood you.

Uh that was just renewed.

Um City Council approved it in October.

In October, okay.

How long did we approve that for?

Three year period.

Three years.

Okay, thank you.

Um where can I find in the budget what we've allocated to uh to pay back in the the job tax?

Where what department has that understanding?

There's no allocation in the proposed budget for refunds associated with the facilities usage fee.

Is that is subject to litigation uh the extent to which individuals are entitled to a refund.

Refunds would hit um any refunds that that are awarded based on the continued um uh resolution of that question for the actual litigants would hit as a negative revenue in uh the department of finance.

But uh we we have discussed this question at length with the law department, including the team that litigated the case as as well as the finance department.

Um and uh the payment of further refunds is is still a uh uh very much an open question.

No, so it's just something we didn't budget for.

We just we're hoping and praying on that one.

What um so we have 2.75 allocated for AFSME, police, teamsters.

That's not correct.

2.75 is the amount that I believe that Director McDevitt um uh acknowledged and briefed you all on in the HR budget.

Um the we have also given the number of contracts that are in motion at this point, we included um cushion for those contracts in the salaries and benefits line items for the individual departments where those folk folks work as well.

So the actual number is much greater than that number.

What is the actual number?

I don't feel comfortable saying as they're ongoing negotiations.

So we we have it listed in the salaries, but we it is incorporated into the overall salary number in those departments.

Yeah.

But because we're actively negotiating with those unions, um that's not a number we prepare to say out.

Okay.

I I don't want to look it up now, but I guess I could figure that out from what the you know what the numbers last year to the numbers this year.

I'm the draft is this year.

Uh what have we budgeted for additional you know, additional costs?

Uh we believe you know, we've we've already paid out a million dollars, you know, kind of in an unprecedented way that you know, uh to visit Pittsburgh.

What have we budgeted in addition in terms of what we will be on on the hook for um with Medics uh via EMS or some individual departments made specific requests associated with the draft?

Um I believe the vast majority of which we we honored in the proposal.

Um I mean I I we prioritized honoring individual requests that were associated with the draft.

I can't recall if there were um you know one or two that didn't fully make it in.

Um as relates to the biggest category of expense, which should likely be overtime, uh 300,000 uh 300,000 increase was included in the DPW budget at their request.

On the question of public safety overtime, um the we had hoped to reflect the conversations around state reimbursement uh into the budget when it was published, but due to the delay in the passage of the state budget, we were not able to incorporate those figures.

Um the state budget has since passed.

Um the allocation from the state for the draft was actually greater than had originally been uh proposed, 10 million dollars.

We have already asked um that 1.5 million dollars of that be reserved for public safety overtime reimbursement, um, which is the estimate produced by the Department of Public Safety is what they would need to be reimbursed for in overtime.

So what whereas if the state budget had passed on time, we probably would be able to have that under contract at this point and reflected in the budget.

Unfortunately, that was not possible because of the state budget delay.

But I'm confident that there's 1.5 million dollars in that allocation that will be available to us that can be expended to reimburse for draft specific overtime costs.

So that would lead to that being a net neutral impact.

To clarify, the state directed those funds to visit Pittsburgh as the tourism agency, not to the city.

So that would be the contract.

That's right.

We'd have a contract with them, which is the discussion we began this week now that they had confirmation of that from the state.

Okay.

So we gave visit Pittsburgh money, the state gave visit Pittsburgh money, and then somehow they're gonna try to find a way to make us whole here.

It's in it's in the working uh it's it's it's in the working budget for the draft um for reimbursement to us.

And they will make us whole.

That's what we've asked them to do and what they have placed in that budget, yes.

Okay.

I'm I'm I'm saying this in the particular way I'm doing because again, I would have liked and I believe we would have been able to achieve a signed contract to that effect if the state budget had passed sooner.

Yeah.

Um, you know, and maybe if you were going to take another um run at this budget, that's something that you could include there.

Uh does the controllers office have access to your budgeting software?

No.

Um.

Why is that?

The controller's office does not have a role in as as again the controller herself is uh routinely stated or repeatedly stated in discussions at this table in managing expenditures.

Uh they have the accounts payable function, which is reconciled through JD Edwards, and they of course have a role in certifying revenues, which for which there's an established process.

The non-executive agency that has oversight role in expenditure management is council and the council budget office does have access to that information.

I mean, I again I think in this kind of trying time it would be helpful to have her have more of an insight here.

We kind of all should be should be pitching in here.

Um you know, I guess the other last question I want to end with is uh, you know, as we're talking about such such trying times here and such uh close budget with uh again, I what I believe to be relatively shoddy accounting here.

Why is it that the administration did not propose a tax increase or uh you know uh staff reduction on the the way out?

Why is it that you were so committed to not raising taxes when you know kind of everyone else is saying that this is something we we need to do?

Why what is it that you're seeing that we're not seeing and that that's why you didn't raise taxes?

That's what I've addressed throughout the balance of this hearing, Councilman.

We uh that's why we've taken pains to answer why we see the questions around overtime utilities and and other factors differently than has been the discussion here.

We didn't propose a tax increase because we believe that with the fifty positions we did 50 vacant positions we did eliminate and the other nonpersonnel spending that we proposed to uh cut from the budget, we were able to produce a balanced compliant budget.

And at the end of the day, we then determined that under those circumstances we we did not deem it warranted to propose a tax increase.

That is that that is uh I acknowledge that the margin for error in that proposal makes it a worthy subject of debate that's happening right now and subject of discussion.

Um if if uh if council as councilwoman warwick has done wanted to propose a tax increase, but it was uh we we looked at that.

We we that was part of the calculus that we were examining scenarios in the early days of putting this budget together.

We ultimately ruled it out when we were able to um produce a uh a budget proposal that didn't re require one.

Okay, yeah.

I mean I I think it is a a worthy subject of debate and it is something that I wish that you know, debate that you would be willing to engage in.

But we are I see that that's not happening.

So that that's that's not the case at all, Councilman.

As I've said uh I uh countless times in the course of this hearing.

We are here to participate in this discussion.

We offered to begin this discussion in October when we provided the original proposal.

Um we are here now to have this discussion and happy to have it.

We're happy to engage in this conversation.

At the same time you also think the budget is balanced, so you know Well, you're uh you're asking me why we proposed what we proposed.

I'm going as the as uh in the in the response to that question or in questions where you ask why we prop made the proposal that we did.

I'm going to provide the rationale that led us to that conclusion.

That doesn't mean we're not prepared to discuss alternatives, but that's not been the question.

The question has been why did you do this and why do you think that this is acceptable?

And I'm providing answers to inform a discussion around changes.

I've been saying since the beginning of this hearing that we acknowledge council's clear desire to discuss ways in which additional room for error or cushion can be included in certain targeted places as well as the desired.

Or we can meet basic services.

You know, that like that we can make sure that our our ELA is funded properly and that we've got correct funding for the land bank and demo and all those other things that that we've neglected um you know in these this time here.

So with that, I I really do I'm I'm really not interested.

Uh thank you for for being here, madam chair.

I'm thank you.

Thank you, Councilman Concom.

Thank you, Madam Chair.

Good afternoon, gentlemen.

Thank you for being here.

Uh I want to find common ground with you because I want to believe that the balance that the budget is balanced.

I really do.

Because I'm not in the camp of wanting to raise taxes.

And I'll tell you why I'm not.

Um, you know, I've been pretty public about it.

I feel that we've misspent, squandered, however you want to say it.

When I say we, I don't mean the administration as much both.

Administration and council, we approve.

You know, things proposals come from you, we approve.

Um first in the way of affordable housing, okay.

Let me ask you, how much money, including the bond have we put in in the past four years into affordable housing?

Do you have a raw figure for not not counting the HOF, but just what we transfer from ARPA money to the URA for um affordable housing preferences?

Patrick can probably create a a more precise number, but I'll I'll start with we spent about 40 million in ARPA on affordable housing.

Then there are the annual payments we are making associated with the affordable housing bond.

Um those would be the direct city including ARPA city resources, um, as Kelly presented on earlier, a poor a significant portion of our C D BG funds also go to affordable housing, but of course those are not directly, you know, transferable with other forms of of funding.

So um and then there is the HOF and there is the investment that uh in affordable housing we are able to um uh secure through competitive grants and other activities that occur at the URA, but direct you know in the city budget, not C D B G restricted.

Um uh that would be in the ballpark of uh I'm guessing the the 40 million in ARPA plus it's what two and a half what's the I what I can't remember is the let's just use the total allocation of sixty two million dollars of debt payment.

What's the I what I can't remember is the let's just use the total allocation of $62 million of debt payment.

Okay.

Not counting as just this year.

It's like what we've committed to, right?

So we could be about a hundred million.

$62 million.

So we're over $100 million in in uh affordable housing.

Sure.

I don't know of a unit that's been built in my district, I will tell you.

Um maybe there is that I don't know.

I'm unaware of uh maybe in the way of rental assistance and things like that nature.

Is that come to my district, I guess.

What benefits from that?

There would be the and again, I don't know the exact locations of all of these things, right?

But the the way in which that would manifest itself most likely in your district um is the uh individual type, you know, homeowner assistance and things of that nature because it is largely zoned as lower density residential, whereas most of the major projects are higher density residential projects.

Those are possible in the Brownsville Road Corridor in a relatively limited number of places in your district.

Of course, the um uh Berg Place project is advancing, which is exciting, um, but that would mark probably the first of that type or scale development in your district that I'm uh thinking of an example of.

And and I don't mean to uh downplay the benefits and the wonderful things we're doing with the HOF and affordable housing in general.

I think it's really great.

Uh until I'm forced to say I have to go ask my constituents for a tax raise, because when I look back on it, um, even though those are really good things and a lot of people have benefited from them, um, you know, they also, whether it's Habitat for Humanity, whether it's City Bridges, whether many, many foundations that apply for those funds and that are granted rewards, um, you know, they also go to our big foundations.

And I think in many ways, the city of Pittsburgh, we have been acting like a foundation or like a philanthropist of some sort with affordable housing.

I understand the importance of it.

For me, the city's role was always in zoning, planning, uh, you know, where we can make it easier for developers to build affordable housing, but for us to take that on at the expense of our financial security, and that's why I can't come to the grips to say, yes, we need a tax raise, because I feel we've been irresponsible, uh, affiliate administration and council has.

On top of that, we have the you know, the the uh comprehensive plan, which you know, six million dollars there, thirty million dollars here, and I just felt like if we had been more responsible over the past four years, and again, I'm accusing both of us, um, we wouldn't be in this position.

So I went really hard to get to the point where I feel like you're what you're presenting us is a balanced budget because my preference would be, and I and I'm not I'm realistic, okay.

Um I see and I understand councilwoman Warwick's proposal.

It's it's an easy way out, I feel, you know.

I would use that as a last resort.

I would like to take time and whether it's passing the budget that you put in front of us, and then if I have to take that on next year, and if we just decide that we can't meet what you were saying was uh was a balanced budget, then I would entertain the fact of raising taxes.

But not until then.

You know, I mean I feel like we need to do everything as a council, turn over every leaf, make every cut, look at pots of money.

Which uh may I respond?

Sure.

So uh I think obviously we disagree on whether the expenditures for affordable housing have been wise expenditures.

But I think that at the end of the day, that's secondary to your question, so I don't want to dwell on that.

Um as it relates to the overall position of the budget and the plan that we have presented, I would again say that it is our perspective that the sp the spending plan we laid out can be met by existing revenues, and that much of the concern about whether or not that is true is been driven by uh incomplete accounting for the sources of funding that pay for things like overtime utilities and other things like that.

But going back to my conversation with council woman Warwick, it does not provide the level of funding that we would like or others would like in the fleet and in some other areas it leaves the margin for error close.

I think the judgment call for council is uh about about those questions.

And again, I I will say um that you know we we proposed a budget that we believe meets the mark in terms of not requiring a tax increase to be functional next year, understanding that it included some spending reductions and some tough choices about deferred needs.

Um whether council wants to accept that approach or take a different approach is uh what I believe you were all debating, and again, we're happy to participate in reviewing, discussing, and um, you know, refining those different approaches.

Okay.

So I want to go back to what you said as far as our philosophical differences to affordable housing.

I philosophically I think we're on the same page.

And you said you you see it's why is that we made those investments.

And I'm just gonna tell you my philosophical difference from you is okay, let's say we put a hundred million dollars into just as a round figure into affordable housing, right?

From the ARPA money.

That money could have been used for our fleet.

Now, don't you think if we could turn the clock back that we should have probably put forty million into the fleet and fifty million into or sixty million into affordable housing, wouldn't it have been the wise thing to do?

Patrick, how much did we of our book did we put into the fleet?

More than 15 million.

Right.

So it's that's it's more than 15 million.

Okay.

I I I I think I think the question of I think both are important.

I think both were worthy uses of ARPA funds.

And I think that reasonable people who agree on the objectives of the city can have reasonable debates about whether 15 and 40 versus 20 and 35, you know, w what the exact right mix is.

And each each taxpayer, each public official, each council member from different districts that face different needs will have their own different sweet spot if they got to make the decision alone.

So in that sense, I think I don't think that we vary dramatically in our thinking.

I think I I am I I look back on the investments that we made and am satisfied with the way that they were distributed across the two categories.

Uh but I you know, if it was 20 and 35, I I probably would feel the same way, right?

I think those are reasonable conversations to have.

In the end of the day, though, no, I do I do stand behind the allocation choices that we did make.

Um for affordable housing.

Yes.

Okay.

And and what um uh other than being good hearted, um, what residuals do we get from investing into affordable housing and not including people's lives and putting helping people get into affordable home.

That is the benefit.

That is the benefit, right?

Right.

So there is no financial benefit to the city of Pittsburgh, other than they may be paying taxes on a house that they buy, I get that, but but that's that numbers we can't even compute that number at this point.

It it it it is not a uh it's not a revenue generating um uh endeavor in the same way that trash collection is not in the same way, right?

I mean I I I personally, frankly, councilman, and again I'm not looking to for an argument.

I I don't think that's the right way to to look at the question.

The question is can uh the Pittsburghers of today afford to remain living in Pittsburgh tomorrow in a world where not just here but nationally the cost of housing is the is going up dramatically and is the driving factor in displacement.

I I believe that's a legitimate public service in the full suite of public services that we offer to um to have a countervailing impact at uh on the market there, but but it's not it it is yeah, it's it's not about I I don't want to I don't want to sound like I don't have a heart here, okay?

I do.

But again, I feel like we act like a foundation idea in many ways.

I agree that you you you do care about those residents that it's not your intent to say you didn't.

The way you asked the question was is the way I responded because you are proposing a hypothetical.

So I'm I'm not calling I'm not questioning.

Well, I'm just no, it's not hypothetical.

It's it's it's clear as day.

I mean, I'm saying our investments in affordable housing have not helped our financial situation in the city of Pittsburgh.

Where if we would have purchased a whole new fleet, would have put us we wouldn't be talking about raising taxes today.

That's the difference.

It's the two differences.

So I'm saying we could philosophically, I have as big as heart as anybody, believe me.

I I want to make Pittsburgh affordable for everybody, but not at the expense where we have to put it on the backs of the homeowners.

That's all.

So again, I think I think those are those are legitimate perspectives.

Yeah, it's I mean I just I I uh the reason why I'm doing this, I don't mean to rehash old arguments.

But it really is the fact that is why I can't sit and face the people in my district and say I need to raise taxes now, because I feel we should have been more responsible with this decisions of the past, whether it's the comp plan, whether it's the bond, whether it's the money we gave to the URA.

Okay.

So those are the reasons.

And that's why I so want to believe in your budget.

Okay.

Sure.

And I want to be able to look to the public and say, no, we really don't have to raise taxes.

And if we do, I want to do it next year.

I don't want to do it this year.

I don't feel like I'm prepared to do it because I want to look turn over relief over.

I want to find every means of savings that we can before we go to the public and say I want to raise taxes.

On the question of of savings, you know, again, I'll just reiterate we um have proposed in this budget the elimination of 50 unfilled positions and uh roughly three point five million dollars in further non-personnel um spending reductions, which was part of how we produced a uh proposal that we believe is is balanced.

Um we believe those to be the it it is it was it produces challenges, right?

It is there is pain for the departments that would be losing those positions in not having them.

Um so there is a sacrifice being made there, but we believe that that is a uh a level of spending reduction that can um be implemented without eroding our ability to provide services at the level we're providing them.

Again, that is a question ultimately for every council member to reach their own conclusion on.

Okay.

So I've explained my reason why I am on the team of raising taxes, and I hope that we don't do that.

I hope we find other ways.

I know with it was a pretty grim picture that was painted to us yesterday, and you know, I mean it is kind of like we can't go back, we can't reallocate monies that we already spent and are accounted for.

So we are where we are.

But and and again, part of the our our intention in the presentation we provided today was to fill in what would we believe to have been some gaps.

It made me feel a little bit better about you know taking a stance for not raising taxes, and and I want to feel even better about that.

And I'm hoping I can't.

So tell me where the big difference is.

Okay, now we see uh obviously, and I know we talked about it at the table, but just to reiterate quickly, we don't have to get in the details, but um we we're guesstimating let's just say 20 million dollars in premium fees, and you're saying with the vacancy allowance with the police, just the police, right?

Vacancy allowances.

No?

Um if you look at the where are we off?

We're guesstimating 30 million.

Where are the main okay we get premium pay?

We got like if you look at page seven of the presentation that we provided.

Okay.

You will see in 2025 a variance of 16.17.

Well, you for you will see 20 point nine million dollars in uh uh overage in premium pay, right?

Right.

But you will also see sixteen point one seven five million in savings on actual wages beyond budget.

Right.

So that means we came in sixteen point one seven five below under budget in that regular wages, twenty point nine million dollars over simple subtracting one from the other, that means that the actual variance is three point two one million dollars.

That's that's where I'm yeah, so what we're projecting and what we have been saying, what we've been talking about twenty million dollars in the hole, and you're saying no, it's really only three million with the if if you offset it with the savings that are in the same financial category, yes.

Which we can do and we will do, right?

Well, it's you don't have to.

You don't have to do anything.

No, right it's it's one bucket of funds that pays for both things.

So the actual amount that sub-account is is out of line with budget is only three point two million, right?

And so that that's simply I believe the council has been discussing the twenty point nine million dollar number, and I'm not denying that that is a real number.

What I'm simple what we've been endeavoring to do today is to provide uh the rest of the picture so that the decision you're making is informed by the whole set of circumstances there.

That's all.

Okay, well that's a little encouraging, I will say for me as to taking a stance where I don't want to raise taxes.

Um what about the negotiations now?

You know, we're negotiating.

Yes, I I don't mean to get in the details.

I mean just we have to figure out I can provide a general money there, right?

We we what we as we said um we have included in the budget proposal um funds that would allow us to uh incur additional costs projected.

We we we have projected where we believe those negotiations will land um and included cushion for them both in some reserves in the Department of Uh Human Resources and in the salary and benefit lines of the departments where those represented workers work.

Um, we remain hopeful that we will reach a resolution with the Teamsters and AFSME before the end of the year if those negotiations are active and ongoing even as of today.

Um those monies are factored in your twenty-six budget.

That's what your guesstimation will call it.

Again, yeah, we can't as with any labor negotiation.

We won't know the outcome until we reach an agreement.

But it's realistic in your eyes.

In our eyes, we have factored in uh a reserve to it to meet the cost of where we expect those will land.

As Patrick mentioned, because the FOP contract has gone into arbitration, we know there won't be a resolution to that case likely until May at the earliest.

But there are still um you know funds included in our proposal to account for what we expect uh uh arbitrator's award could be.

Right.

Okay.

Um Pittsburgh Water, we have an 11 million dollar bill.

Is that for this year?

It was for this year.

I'm expecting to receive a 10 million dollar bill for the 10 million dollar water over the weekend.

Yeah, yeah, yeah.

Uh now when we had Will Pickering at the table here not too long ago with the budget hearings, uh I know the PUC kind of mandated that they bill us.

That's right.

Right?

Okay.

Yes.

Okay.

Now you have a history with Pittsburgh Water.

I was there when that mandate came in, yeah.

Oh, is that right?

Okay.

So um mandate is one thing, but um is does Pittsburgh Water have the ability to say, oh, well, we forgive you of your bill this year, City of Pittsburgh.

No, they they cannot forgive it.

They cannot forgive it.

Uh again, Councilman, this from our perspective, um, is not our ability to actually pay the bills that we owe is not uh uh not something that we think we're going to confront.

We expect a $10 million bill.

Um we have offsetting city charges that go back to Pittsburgh Water to reduce the amount of that bill.

We have then some funds in the general fund budget.

We believe that that is resolvable for 2025.

In 2026, we have proposed 8.5 million dollars budget for um the Pittsburgh water payments because we are trying to transition out of the true up process.

We we believe again that this budget is adequate to address our Pittsburgh water costs.

Right, all right, all right.

We're on a roll here.

You're you're making a believer out of me.

Not quite yet, but we're getting there.

Um the liquid fuels trust fund, is that right?

Okay.

What explain what that is?

We've received monies from the state uh as part of gasoline tax, and um we receive about 8 million.

It it varies every year.

Uh and those funds are in a segregated account and they must be used for things related to streets maintenance, streets operations.

Um right now, uh what we do with some of those funds is we do reimburse the general fund a little bit for salaries for those people who are plowing the roads, taking care of the roads, payment the roads.

That's I was gonna say how do you tag it into the streets, but I got you so it's like public works, yeah, public water.

The eligible I'm sorry to interrupt, but the eligible uses of liquid fuels tax funds are for our operations in managing the right of way, right?

And so some of it we use to offset some of the cost of paying folks who do that work, some of it we use for things like paying the bill on street lights.

We couldn't use it, we couldn't use liquid fuels money to you know pay the electric bill in a uh in this building, but we can use it for the use it to purchase salt to salt.

Okay.

Yes.

And how much do we set aside for salt?

So the funds roll over year over year.

It's one of the benefits of having it separate from the general fund.

Um I talked to Director Hansin this morning, you know, it it varies based on what's actually happening with snow.

Um they like to leave a balance and expect around three million dollars worth of salt, could be higher, could be lower.

But the funds that carry over also help we know when it's more than three million.

Yeah.

So we're fully loaded on salt right now.

Um we anticipate carrying funds over in the account year over year for future purchases this winter.

Um but we also think that we can between I just we think that we can address the variance that exists in um uh you know, with with those funds and other funds.

So we're not concerned about electricity.

Yeah, that's fine.

Okay, so finally my last question really is, and again, I I don't know what to make.

You know, again, like Councilman Warks said we're going back and forth as to we think there's a $30 million deficit.

You think we're on budget.

Um I'm kind of somewhere in between right now, I will tell you.

And in between to me means that I don't think that warrants a tax raise.

I think we could make cuts, do things to remedy that, and then if we always want to raise taxes next year, or if we need to raise taxes, I should say, we could take that up then.

But um, so the last thing is, you know, I asked you um recently we met about the municipal courts building.

Um again that we own that place.

I'm worried about the HVAC, I'm worried about the roof.

I'm worried about a lot of expenses there.

It's 30 plus years old.

And if something goes on it, the courts have to be there.

We are gonna have to foot that bill at this point.

But I asked you to get something in writing from the county saying they will pardon that cost.

It's an ongoing discussion.

Right.

But if as if is today, this winter, if the HVAC goes, it is our expense.

And we don't have any commitment from the county to pay for anything on that.

Unfortunately, the original arrangement as it relates to that building was and it was a unfortunate series of circumstances that none of the folks who are involved could have fully understood.

You know, when the building was built or at least started to be built, we managed the Pittsburgh municipal courts.

Oh, I know, I think.

So we uh yeah, yeah, we I believe me, I know.

I'm saying this for the benefit of someone watching at home.

You know, and so we incurred the cost and retained the ownership of the building.

Um when the the judiciary reorganized the way it was managing the courts in Allegheny County moved eliminated the Pittsburgh municipal courts, move those responsibilities to the district magistrates.

Um there was an agreement that was never written down with the Rendell administration that would have pr provided us with resources relative to the building that never materialized and we've been holding the bag.

We are working to rip rectify the situation.

If there were an emergency in the building, we have improved our collaboration with the courts administration for how they could move to alternative space or remote work, so we we it wouldn't be in like immediate um you know urgent repair situation, most likely.

Um but we do need to continue to work on that, and I you have my commitment to continue to work on that, you know, all the way up through January 5th if necessary.

I I appreciate that.

And how much have we spent in uh maintenance on that place this year?

Do we have a figure on that?

No, I don't have it.

We don't have an itemized number for that building.

It's safe to say, first of all, the place is a wreck.

And I'm glad I don't want to put money into it.

It's not going to be ours.

I don't want it the building.

Why would we go sinking money good money into a bad investment?

Um I want to give it to the county.

I want them to take ownership.

If they don't take ownership, I want to sell it.

Let's just sell it.

I'm sure David Onorado, maybe the parking authority would be interested in it.

So that could generate cash for us.

But at any rate, right now it's a cash sucking cash from us right now.

That's not something that's not something we've explored or discussed with them.

I have been involved in discussions with the county and the courts administration on the which they understand the the untenable nature of this arrangement that's you know in the history here, and and I believe we're working together in good faith to find a resolution, but I don't have more to say on it on that now.

Okay, I understand.

I just think we're just keep kicking the can down the road on this.

I appreciate your work you've done on it.

Um when that major expense comes, I don't want to have to approve any money for that place.

I think it falls should fall in the county.

As of now, they could stick it to us.

We know that.

That's where we're at.

So uh that's why I keep bringing attention to it because I know the big expenses coming with that eventually being in the building business, the place is 30 plus years old.

All those big item tickets are about ready to go.

And then they're gonna look to us so they could hold court.

I'm like, well, we barely have any employees there.

Why are we footing the bill?

So okay.

That's it for me.

Thanks.

I appreciate you being here.

Thanks.

Thanks, Councilman.

Thank you.

Councilwoman Cal Smith, I know you're on a um a bit of a time crunch.

Sure.

Do you mind, Councilman Wilson?

Okay, thank you.

I just I know you were waiting here longer.

Um just when we talk about the differences and and what you know, you're seeing where the gap is and with the uh our budget office.

What do you think that number is?

Did you say that?

I didn't expect that.

Again, I I don't believe that there is a gap, right?

I uh for for the reasons that I've laid out today, you know, when when there has been a discussion of a 20 million dollar gap around um overtime, I I've I've attempted here to explain why we don't see that challenge, right?

We we believe we're we acknowledge we are probably uh slightly over three million dollars off this year, and we would we've made a corresponding proposed change in next year.

So the information that we that went into our proposal, we would not have presented a budget that we thought had a gap in it.

So I don't believe there is a gap.

I believe that that achieving balance in our budget comes at the cost of the the position eliminations and cost reductions we proposed.

Um, but I don't believe there is a gap.

I I I believe that if council is uncomfortable with the small margin for error which we left in a couple of categories, which I understand, I understand that position.

I couldn't put a number to it, but I think that the the light number you are solving for is likely much smaller than 30 million dollars.

It would take more discussion to understand exactly what it is.

That's all I'm I'm trying to say.

So I I would first of all thank you all for your work.

I know this is not a great time, and I know it's very difficult to continue working with all the current situation, you know, that we're everyone's gone through.

But I also don't think it's fair.

I don't want to raise taxes.

And I definitely won't vote for a 20% increase.

But I mean if we absolutely had to do something, I would like to have a conversation, you know, and make sure the public understands.

But um I don't think it's fair for a new mayor coming in who didn't have anything to do with any of this.

Um when he was here, our budgets were okay.

I don't think it's fair for him to have to wear it either.

But I so I I'm I the whole the whole idea is of uh a tax increase is where I think we should look at ways we can cut back and we are talking about some ways that we can freeze some things and maybe um you know hold just hold some things up for a little bit and maybe cut some places.

And I and I do have some ideas of where we can do those things, and I've talked to people a little bit about it before.

Um and I think some of my colleagues are also thinking the same way.

So I I'm looking forward to those conversations, but it's not like I really want to you know do any of this stuff.

We I wish we had money to do everything.

We know who we need here.

Um we have the wrong uh coghill here.

We need uh Carrie Coghill with her financial uh the uh consulting firm here.

Um yeah, you do really good, I'm sorry.

Yeah.

Councilman, if I you know what I do want to ask real quickly though, where are we with we were talking about doing like advertising on like you know different you know, parks or buildings and different things?

Where are we with that?

Because that would bring some revenue.

Yeah, we don't um we don't have significant I'm forgetting the name.

Market based revenue office.

Yeah, that's it.

I can think of that.

Yes.

Um we are not extensively engaged in any market-based revenue at this time.

I mean, there are there are the limited examples um of I think like the the role we have in the bus station ads and things like that.

There have been proposals at times to put um you know advertising on other city assets that that's there's there is no currently active program doing that.

So you know what would be a good place to start maybe with the salt domes.

Six million dollars salt domes.

Um one of the things that uh they asked in Elliott all the time is could we get a dick sporting goods because it's a near ball field and it's shaped like a ball.

And so they thought if they could just get Dick Sporting Goods to paint like a baseball and then we do we do have standards that allow for sponsorship.

You know, I I'm I'm not saying that this is the there are limited examples where sponsorships are permitted, but we don't presently we don't presently have a program by which DICs could pay for that.

That is something that has been considered in the past.

It's not an issue that's really come up much in the last four years, so I don't have uh a ton to share with you on that path, I think has been.

I know the aesthetic design of that salt dome was uh very heavily discussed during this design process over the course of you know the art commission, civic art design.

Um but what I can do is we can talk to Director Goula MBRO was formerly in the Department of Finance when I you know started here.

Uh there was someone in the role who was exploring opportunities.

Um those can get very egregious very fast.

So I think that would be very important for the administration and council.

And we did have conversations, you know, with you in particular, I believe.

Um it was you know, Chuck Durham was in that role before he moved up into the mayor's office.

But there's there's definitely some opportunities.

I think about it when I'm in Dormon and see their ball fields and and banners and things like that.

Yeah, we have it all around us because we surround so many boroughs.

Um I would like to look for that as a possibility and what we can do.

It's not something we've explored either here or in general in the past four years, but I know there's been work done on it that can be.

And if we could just seek you know, hey, we're looking for a sponsorship for the you know, da-da-da-da.

Yeah.

You know, give them some idea, and then maybe you'll be surprised what we get back.

We we do see sponsorships for special events.

Right.

Um, they do a great job.

But they can take a five percent increase decrease on their budget.

They just can't.

Correct.

And those specific events, a lot of companies like that visibility, you know, but it's worth considering.

We'll look into it.

Okay.

So that and then um any other ways that we can cut back and think of other revenues before anybody ever even you know goes down that road of raising taxes, I think is something we should all discuss.

Um, but I have to leave.

I have another event I have to go to.

But Councilwoman Strasberger, I want to thank you.

You've done a great job cheering all these meetings and and serving as the chair.

I just want to thank you for all the work that you've put into this too.

And I know I give everybody a hard time.

It's you know, but but I do appreciate you, okay?

Thank you, Councilman.

Thank you.

Thank you all for the work you do.

For the record, I love your salt.

I love your salt dome idea.

Which is we'll paint it as a soccer ball.

We'll put a dick sporting good and perfect.

Maybe the River Hounds will sponsor it.

Um we'll move on to Councilman Wilson.

Sorry, thank you.

Thank you, Chair.

And uh thanks for being here.

Congratulations on closing out with a win.

Thank you.

With the soccer team.

Thank you very much.

And uh it's a good way.

It's a good yeah.

I I I'm I'm appreciative of how much uh I don't think I really deserve the congratulations just as a fan, but I appreciate you all for bringing it up.

So thank you.

Super fan.

We've never seen it.

We've we've been hearing about it for some time.

You're you are the reason.

So that's certainly not true.

But thank you, Cosmo.

All right.

Um thank you all for going over this.

Um I have some questions I've been writing down here.

Let's go back to the beginning when you said uh direct, you said artificially depressed.

I think you were referring to um the common level.

The common level ratio.

Can you explain why you think it's artificially depressed?

It is uh uh the number is going down annually as a result of not a reflection of what's happening in the market, right?

But on the as a result of a court order that is uh ultimately about an administrative dispute, right?

If that number were re if there were a reassessment and that number were reset to 100% and it wasn't on a court ordered schedule to go down, we would be projecting modest real estate tax growth every year.

That is why I'm saying that the um that the intervention of that very particular set of legal circumstances is has uh uh uh negative impact on real estate tax growth.

I I could have used a different term, but that's what I went was meant meant by that.

All right.

And the 1.6 billion in 2024 uh of construction costs, that's based on permit data.

Permit data that PLI gets uh basically the numbers that the uh construction uh when folks are when when folks are engaging in construction activity, they report the value of their project and and it is based on that.

Yeah, I see the chart.

Uh I believe it's on it's on a city website somewhere.

Yeah.

I was looking at where it moves.

Um do you have 25 2025 numbers?

I don't know that I I remember that that number because when we did a final reconciliation, but that's the first that's the last full year, excuse me.

Um if I'm remembering correctly, I believe the last number I heard for 2025, though it wouldn't be a complete year would be about 1.2.

So it is slightly slightly below that, but still a very large number.

Um and and I don't know whether it's lower because of difference in construction activity, which can obviously vary from year to year, or just because it wasn't for the full year.

Are these numbers based on closed permits?

I believe they're based on the uh initial permit application.

But they are uh reconciled so that the same permit is not counted twice.

You know, if maybe that that number appears on multiple stages in the permit process.

We they make sure that they're only counting it once.

So it may be for activity that is still ongoing.

Okay.

Yes.

Do you have a list of those?

We've provided that.

I don't have it with me right now unless you can pull it up, Pat.

Peter, does that match our list that you presented?

So there we what we've provided to the council budget office uh as a list of currently vacant positions.

Um we can pull the list of positions that were trimmed.

But is that the same list that no?

What I showed was the current list uh so we showed was positions in the general fund that are budgeted for next year that are currently vacant and also that aren't union.

And also some other stuff.

And your list is the ones that we already took out in the proposed budget.

So these would not be the same lists.

Can't cut them because they're not in there.

Yeah, we've already cut the that's those 50.

And we have that list.

I will I can make sure you have that list.

I believe we sent it when we sent the budget over, but we will send it in.

I like to get that list.

Yeah, yeah.

Um then I had to get right to the questions that everyone's been asking, but I have to ask them for myself so I can understand it.

Um go back to this chart on on seven.

The so these are wages for all union and non-union, the the regular wages.

Yes.

Okay.

Premium pay is overtime.

This is over time for everyone that's available for overtime pay.

Yes.

And we keep on looking at 2025 line, but really we're you could look at any years.

So these are the proposed numbers that in 2026.

What are what is the So let me let me answer why we are looking at the why are we keep looking at 2025?

Because 2025 is a year where we have actuals and it is a year because we actually spent the money.

And um it is the year in which many questions about overtime have arisen, right?

The the uh so we're looking at that because that is often what is used as the benchmark in the conversation, or at least as I have heard it, right?

That's where the 20 million dollars.

I think we've been going on.

I mean, for my um in my conversations, I think I've been going off of what you proposed for 2026.

And so when we look at overtime, because that's the budget we need to need to pass.

So I'm trying to then let me let me simply say it this way, right?

When you look holistically at regular wages and the savings we've achieved there and uh premium pay and the overage that exists there, and you net those two things out for 2025, you get 3.2 million dollars.

We have increased the proposal for regular wages, the vacancy allowance, and overtime in 2026.

So we believe that it lands us in a similar place.

We've accounted for some of what led to the um overage this year, and uh not reflected here is what I was discussing earlier about state reimbursement for draft related overtime expenses.

So here's where the disconnect is for me.

This number 414 uh 41.4?

Yes.

This is like this being higher than 38.

That is the narrative that I've been hearing.

Um trying to the narrative I've been hearing is that the numbers been low balled, and I've seen it for myself on a spreadsheet in the budget, and I don't I I can't speak I can't speak to that.

We are proposing more in premium pay in the budget for next year.

Peter, do you because we we went over this yesterday where you know I asked were you are you um averaging taking the average of the last three years?

Yeah.

So we that's why we think that their their estimate is off.

Like I do like I said earlier, like we're gonna pay around 24 million dollars to fire for a premium pay, and they're overstaffed.

There's no reason to like they there isn't they're not working so much overtime because they don't have enough staff.

They're working so much overtime because that's how much overtime they can get away with working.

So there's like I don't think they're gonna cut back on that through the goodness of their heart.

So there's there's no reason to think that we're gonna that number's gonna go down.

Okay, so I'm sorry.

You're saying 24 million.

That's just for fire.

The year estimating.

Yeah.

That's a different number than what they budget 17 and a half.

Okay, 17 and a half.

So this one just need to break this down here.

Yeah.

And I apologize if everyone's already gone through this, but I think we we keep on going back to this sheet.

This sheet isn't what I've been going off of.

Um the conversation, the narrative, the narrative that we've all been talking discussing.

So why is that?

Why why is Peter in 24 and you're in 17 and a half?

This goes back to what we were discussing with Councilman Charlotte, right?

The way in which we've produced these figures relies on the the and if you look if you if you look at every year, not just 25, but every year here, we are coming in significantly under on regular um wages and somewhat over on vacancy.

Because the vacancy vacancy allowance is a piece of that.

And uh what's the other piece?

There are savings beyond vacancy allowance for a variety of reasons.

Like what?

Uniform longevity.

There are there are other categories of gotcha.

Salaries that are also part of that.

Correct.

And so the net impact is what you see at the bottom.

In 2021, um the the net variance there was slightly depth in deficit, the but of you know about a quarter million dollars.

In 22, 23, and 24, then the the net is a surplus this year.

We are in deficit about 3.2, which can be absorbed in the balance of the rest of the budget.

And we think we are correct.

That that ultimately is the scale of problem we feel the need to correct for in 26 across this entire category of expense.

We could achieve that, and again, I I've I said earlier, but we'd be happy to work to achieve that at least in part.

Um council could propose it yourselves, or we'd be happy to work with you, however, you all prefer to do it.

You you could we could achieve that by uh having a higher premium pay budget and a higher vacancy allowance from an accounting perspective that would um correct this issue without in my in our opinion having to require an additional spend in this category.

What is the what are the charts that I've been seeing?

Is that in the budget?

Somewhere to keep someone keeps pulling out that shows 17 and a half.

That's just a more itemized version of this.

Yeah, so the 17 and a half, if you just look at the budget page for fire, it shows what is estimated.

Okay, okay.

And that's been done for all the time.

Police is fifteen.

Okay.

All right.

So after seeing the calculation here, Peter, do you so are you are you?

Like you could totally so the way that you make this work.

Do you have any awakening with this?

Or what I mean to a degree, sure.

But the way you get here is you you know that you're gonna pay another six and a half million dollars in premium pay.

So instead of showing that, what you're showing is I'm gonna have fifty laborers, but I'm only gonna hire 40.

And then we don't have to pay 10 of them, and the 10 that we don't pay, we're gonna put towards premium pay.

So like that's how you make it work.

You just don't hire everybody else you need and everywhere else.

The only difference I would I would put to that is that we're not we we we we have not halted hiring, right?

Uh we we we have not um we have not uh intentionally prevented the hiring of vacant positions.

They are posted regularly.

The process takes longer than I would like.

Um at the same time, I would expect that if we filled more of the positions than the overtime utilization.

Your your point about fire is well taken.

Yeah, fire is the yeah, that's the one hour there.

I would say is an outlier, but I I think you would agree that we see police will pay for itself.

And I think you would you would agree that that relationship works as you would expect about laborers and other bills.

So yeah.

So it so we could adjust the distribution of funds across these categories of expense, and in most cases that would close the gap because it's it's not true that we are you know intentionally hiring less than the number of budgeted positions as a matter of policy.

It is in in practice, we end up we never end up with a full compliment.

People come, people go, we finish hiring a new laborer only to have another one leave, and we just simply never hit full staffing.

That's really how that manifests.

All right.

Um with this uh variance here, this estimated variance, what would it be for 2026?

We can't estimate variance for a year where we don't have actuals.

Variance measures the difference between the budgeted amount and the actually spent amount.

There is no actually spent amount in 2026.

So we can't estimate variance.

Yeah, I realize you can't, but I just didn't know if you had a projection.

We no, we don't have a projection for that.

Also keep in mind they eliminated 50 positions, so that's 50 less to not fill to then plug the gap for premium pay.

Yeah.

Okay.

Let's move on to water.

Um explain to me again this issue where we see eight and a half, but we're expecting 10.

Run through that again with me.

Sure.

So when we proposed the budget in November, um we used the best full year data we had, which was approximately 8.3, 8.4 million dollars for 24, right?

Um we know now, literally, I found out from Deputy Director Kevin Paulis yesterday, uh, it's gonna be closer to 10 million dollars.

Right.

So they're probably what we know that there was no rate increase with Pittsburgh Water since 2024.

What that means is that is usage for the city of Pittsburgh that has increased.

So next steps would be um, as we discussed, for public works to go in and start to analyze, you know what are the council woman gross put it well.

What are there inconsistencies with the bills we are receiving?

But also from a usage standpoint, are there places where there are leaks or where we don't need to fill up something as frequently?

You know, so next is moving into the performance side of things to look at that.

Yeah.

So we believe we'll be able to pay 25's bills within the existing budget.

And the 8.5 estimate for 26 was the most reliable information we had at the time we proposed this budget.

Um I think if it if we if we assume it will be 10 again, which we don't have to assume because we can look at why usage went up and take proactive steps to bring it back down.

But if we presume it will be 10 again, that is still within the kind of um uh uh the the range of stuff that we can handle administratively, you know, uh in in the budget.

Okay, so I'm just hearing that you put eight and a half because you thought those would be and then recently you're finding announced more because what's the what's the one word?

Because we got we got a more uh up-to-date bill.

We we we use the 2024 total in August.

Okay.

And that was the most current information.

Okay.

We now have the 2025 bill.

Also on top of that, Patrick brought this up, so this is another point to to them is the the true up costs.

It's gonna bring that 10 million down closer to 7 million, but there's also about a million we pay every year.

Yeah, what's the Pittsburgh?

Transition out of the true what?

The true up.

So the the cooperation agreement with Pittsburgh Water Um called for an annual true up.

And it is complicated.

Um we compile all of the things that we the city of Pittsburgh.

Why do I call it true up?

Because what we're doing up is we're trueing up costs that each party has paid.

So we are paying on behalf of Pittsburgh Water Um pension, right?

We make our contributions from the general fund into the pension fund.

Um state aid offsets some of that.

Um but there are other things that we do on behalf of Pittsburgh Water, street sweeping, um Domey permitting, you know, there are things that we pay um or Pittsburgh Water does not fully pay us for during the course of the year.

Okay.

They pay a lot of the permits, but a lot of them, you know, are longer term projects and they don't pay them um until the project is done, something like that.

On the flip side, now with the way that the PUC changes uh and this co-op caught for a gradual increase of us paying for water usage, sewage, things like that.

So they cover that.

We cover our stuff, and then every year we have to work on the truth to get there.

And the timing of it, you know, there's a good thing.

Yeah, yeah.

It's it's a it's a bill reconciliation process.

I get it, yeah.

Same thing with the city county building.

All right, when we want to liquid fuels.

So how does this uh account get replenished?

Uh we receive monies from the state every year after they audit it.

Uh the state collects the monies from their gasoline tax, a portion of it.

And it's divvied out to all municipalities.

Money from state after gasoline tax.

Okay.

And we are paying what with that again?

Part of the cost of electricity, specifically uh streetlight.

Anything in the anything in the right of way.

Well, anything that with the right of way is eligible and we use it to cover streetlights as well as some ploughing operations, salts, the uh variety of expenditures like that.

Okay.

Uh I had a couple questions about the bond uh in in terms of um how we've been uh you know putting in um for like we've been putting in projects for the for the bonds want to hear from OMB uh why we want to go the route of what the county has done in the past and which is putting in the uh like some vehicles in in the in a in a bond ask.

Yeah.

So for the bond, we're looking to have um for kind of the suite of things that we're paying for our useful life that's equal to or longer than the debt service on the bond itself.

So traditionally we've gone out for a 20-year bond.

So we've used 20 years as kind of a rule of thumb for any of the assets we're spending bond funds on.

We want to make sure that's gonna last for at least that debt service.

Yeah, look into this, I don't want to have further conversations, but my understanding is that um what they're doing isn't wrong because they take the average of all the the length of each project and that overall average is you can we're actually sorry.

It's 20 years.

Yeah.

We've we're kind of already doing that with paving.

We're getting caught up on paving.

So that whereas when I first started 10 years ago with the city, you could be pretty confident that you're you were not gonna touch that segment of road with another 20 years, right?

Before you went to repave it again.

I mean, unless you're putting it with PWSA.

That's true.

Fair point.

Um, that's for the water, sorry.

Yeah.

If you're listening.

Yeah.

I'm sure they are.

I was just about offending them.

Yeah.

Through um the dummies work with their prioritization of the streets, though, we're starting to see that that we're getting to to back through some of that backlog um cycling background again.

So we don't have hard numbers on how much that is, but we know that's kind of lurking.

Additionally, a lot of our vehicles um don't meet the standard useful life due to uh weather road conditions, I'm not sure what, but fire apparatus, for example, don't last the 10, 12, 15 years we're expecting either.

They're lasting seven, eight years.

Yeah.

I yeah.

I mean I get that you're I'm saying there is this other model out there.

Yeah.

And so I'm trying to understand like uh we don't we don't utilize that we don't analyze that model.

Uh we don't we don't it it is it is correct.

They also do a two year it it is correct I don't know if they're currently doing that, but then in the past they have, sorry.

It's okay.

It is correct to say that they're not doing anything, you know, illegal or untoward.

I don't know.

Yeah, D C D signs off, yeah.

Yeah, uh it it w we view it as a best practice to to use bond funds for things that th we we view what Dave just said as a best practice, and so we utilize bond funds in that way, um and then utilize other funds for vehicles.

I think you know so.

Yeah, I like to see the numbers on that.

So I know that I've I've asked uh Pete, so we'll we'll talk about that and um you know, trying to extrapolate that out what that looks like.

Uh because I think it's worth doing since we're in a pretty uh dire situation here.

And uh I think the I think the public would understand.

I mean, we all go to the dealership and uh you know pay our car off in five years, you know, or if we're gonna buy a car.

And so I just don't know what that looks like.

Does that make sense to the to the public that we would do that?

So the other thing to think about is the true nature of bond.

You don't really want to be using bond funds for recurring everyday maintenance style expenses, right?

So if we have vehicles that we know are part of just the core delivery service, they're not a one-time transformational project.

Um we're gonna get it's gonna get really expensive to start using bond funds for vehicles.

You're paying, you know, forty to fifty cents on the dollar in debt service for every dollar you're taking out in bond.

Yeah.

So the vehicle that was a million dollars is now one point five million dollars over the course of we we would candidly like to uh move in the other direction and have taken incremental steps in that direction.

I I would rather pay for more vehicles out of the operating budget um and then reduce our debt service, right?

Or uh uh but but that's that's a much bigger long there are several ways to solve this problem.

And they they are they're the considerations are primarily financial.

G I mean GFOA would tell you that that is goes against every best practice, and it would also very much hurt our bond rating.

For use, add more to the operating budget.

Yeah.

I mean it's not uh let me hear counties went up.

I'm I I I I defer I I genuinely I on on that issue.

I mean we're not those arguments here, but I'm just like I'm saying on the on the GFOEM, on the GFO issue I would defer to others, but again, if it's shorter term bond, then like it's gonna increase your debt service over the next five years.

So like if you're looking for a quick win, like it's you're still gonna like that's gonna shoot way up over the next five years, and then you're gonna have to pay for that out of your operating budget, which means you have less stuff for literally everything else we're talking about, we don't have enough money for what would shoot up.

Your debt service payments.

Yeah, okay.

Okay.

Uh and then so why wouldn't we when we do a two year then?

In terms of taking out um bonds once every two years.

We have um kind of a debt period then, right?

So the first year, let's say 2026, we're taking out a bond for both 26 and 27.

The 27 capital funds would just sit for an entire year.

And we we'd be paying debt on them without getting any of the benefit of of spending it and seeing it out on the street.

The way the county achieved that transition was by doing two issuances in one year.

Um we have not uh it as a different way to to get on a different schedule.

Um and we we simply have not um if this is that's an idea that we've been discussing in the entire time that I've been here um looking for an opportunity to pursue asking our our financial advisor about it.

We've not identified a year where there was a a prime opportunity to make that transition in a way that made financial sense to the city.

And I should say I believe that conversation was happening before uh the gain administration started as well.

I think it is it is something that is worth looking at as a long-term goal when you consider how it fits into the the schedule of uh planned projects, the city's debt service payments and the the limit on debt service payments, what Dave's saying, the the year we were paying interest on money that we're not spending.

Um you have to really kind of find the sweet spot moment to make a transition like that, and and we haven't found it.

But it's not a bad idea.

We uh went down that route 2016-17.

Yeah, 2017, 18.

And it it proved to not be as practical as we'd hoped.

The money sat.

So some of it is project delivery, right?

As that goes strong grows stronger and stronger, it becomes easier to to move monies.

Okay.

Uh just want to bring up that uh great topic since we're in times of uh thinking outside the box.

And I have some other ideas, but I'll save that for a different time.

My last question is uh who would be if right now if we move 301 into the OMB office like proposed by the I'm not sure who actually proposed it, but you know, it's on it's on your budget and it's also shown as a monus in the mayor's administration.

Who who would in the OMB right now would oversee 311 manager?

As with a hands are good.

As with several other positions in uh OMB, you know, at the they would report to me.

Okay, yeah, nothing in I mean I just don't see how they like procurement and Kelly.

I just have real other real questions about being an MB and just the broad topics that OMB covers.

I just you know constituent services.

I I I understand this was a topic of discussion at the hearing yesterday.

I think those folks answered those questions to the the best we're gonna be able to answer them.

I understand it's an ongoing topic of discussion.

Certainly the management side over the budget side.

Yeah.

I feel bad for them.

They keep getting moved around.

All right.

Uh thank you uh for for your time today.

Thank you.

Thank you to my colleagues for all the questions that they've asked because we've asked a lot a lot of the questions that I wanted to ask as well.

So and I I just I want to say this is really helpful to daylight some of these conversations.

I actually think it's although yes, we could have been having these conversations behind closed doors, we're having them in the public light, and that's helpful for the public to understand along with us what we're grappling with.

So I appreciate everyone's questions, appreciate answering them and laying it out here.

I'll also say um before I launch in that um to questions that I I want to well I I um maybe differ with from uh from Councilman Coghill's position slightly.

Um I still do think we're solving for 20 to 30 million.

I do think that we will find a common ground to to get there.

And I don't know what that'll look like, but we're continuing our conversations.

Um that said, I want to I want to be clear in asserting a couple of things.

One, um uh it's like a it's a confluence of factors that have contributed to this, and it does not happen um it it is not unique to Pittsburgh.

There are cities across the country that are freezing salaries and freezing hiring and freezing programs and freezing taxes.

And I also acknowledge that we have not raised the millage in 12 years.

That's multiple administrations, not just one administration.

I also acknowledge that despite our will of counsel, um there were multiple county administrations, well at least one but prior to this one that did not reassess, uh embark on a reassessment, um a second reassessment.

And we also have a state legislature that has is is the only one in the country that does not force a mandatory regular countywide reassessment county by county.

So that's what we're dealing with.

It is not one leaders or one executives um doing that that it got us here.

I think it is important to keep in mind, right?

That as you said, I don't I don't fault um Allegheny County necessarily for being in a challenging situation with this question.

Um conducting a reassessment costs 40 million dollars, right?

It is and and Allegheny County um much less so than the city of Pittsburgh is more directly impacted by reductions in federal funding and and cascading effects on of federal funding on state funding than we are because they receive a lot more of their funding.

So they're facing um uh budget, they're they're facing significant revenue, larger revenue reductions than us because of those federal and state changes.

At the same time, they would confront a 40 million dollar one-time expenditure to do that.

So I I say that just to underscore your point that the real um sustainable resolution to this question comes with a clearer state mandate to reassess regularly and perhaps assistance with the resources to do so for counties if we're gonna get into a stable place for the long term.

This particular example is likely to be worked out ultimately in litigation, but um, you know, it's it's uh it's easy for me to say that uh reassessment is important because it would solve a structural challenge in the way our our revenue is calculated, and that's true, but I don't have to figure out how to pay for the reassessment.

So we should all be mindful of that factor.

I'm glad I appreciate you bringing it up.

Absolutely.

Um my point being it's it's a confluence of factors that it brought us here.

It's it's you know, it's everything from um living in a uh uh post-COVID world where um downtowns and for us that means a you know contributing to a a shrinking uh or a consistently lowering um um common level ratio.

It's it's you know it's everything from um living in a uh post-COVID world where um downtowns and for us that means a you know contributing to a a a shrinking uh or a consistently lowering um common level ratio that means um grappling with a post-ARPA world like it's everything so I just I want to acknowledge that that said I want to ask some questions um we um we are we are contemplating property tax increases at any point when in creating this 2026 budget were there internal discussions about it and give even even with the budget that you presented us um and your defense of it today um we can all agree it's it provides a slim margin for error um uh if you did if you did not have internal discussions about a property tax increase why not?

We did um you know at the beginning of the process um as we were reviewing all of we we were reviewing you know the both the requests the projections as they appeared at the time right the the this isn't uh uh an entirely linear process right the propo the process of assembling an initial budget proposal really looks kind of like a funnel with a lot of information coming in and a lot of parallel conversations and exploration so uh tax increase was on the table in that as we were waiting for other uh numbers to solidify I would just say a tax increase has been on the table in every single budget we've proposed because we don't rule anything out until the numbers solidify.

So it's been ruled out at some point in the process each year as the numbers come together.

In this case we elected not to propose one because we saw the ability to propose a path again I'll agree with a narrow margin for error but but a a credible path and uh elected to make that proposal upon reviewing all of the various options uh you know with the OMB internal team then ultimately with the cabinet and the mayor's executive team and with the mayor.

So we we selected a course from a variety of potentially viable courses and we ultimately determined it wasn't necessary but yes the trade off is it is a narrow margin of error.

Okay.

With regard to overtime and premium pay I guess um just shifting a little bit from the conversation we've had up until now other than higher levels of staffing in some of our public safety bureaus which we wouldn't we know um could impact this is there anything that the incoming administration could do from your perspective to contain those overtime or premium pay costs um so that it becomes less chronic as a management issue.

I I think that there are the the answer is different bureau by bureau right I think I think in police and EMS it is a question of um in you know filling staff is filling vacant positions and in fire um you know it's something we attempted to address in the most recently bargained contract we're seeing that those efforts are we think they help but they've been less helpful than than we had originally hoped and I think continued work both at a managerial management level and then ultimately in future contract negotiations would be necessary there.

Pat you've really been closer to those if you want to add anything um the Bureau fire is an interesting case because of callbacks right there's mandatory staffing so we know how many firefighters are on at any given moment um on one hand that is helpful we know how many firefighters are on at any given moment um but on the flip side you know it when someone is on returning to work you know as a callback it's different from their regular rate um so what I would encourage the next administration to do is really dig into you know we had these thoughts and assumptions as we moved through bargaining so what was off about them right so revisit the ideas um behind the proposals that were made and negotiated um to see what what didn't come to fruition was it um implementation is it HR the way it's calculated you know how how did we get to this place where what we thought was going to happen didn't happen um on the EMS side I think that Chief Gilchrist has a clear vision uh for the bureau um and we have seen I'm sorry that I'm gonna say it John Atkinson is going to fight with me combo units have been working to reduce forced overtime right so what does it look like if you have medics and EMTs together on an ambulance not just to reduce forced overtime but perhaps when there's a another need.

So I think that could help there.

I think if I could just quickly add there we we we saw that potentially reducing overtime overall what we have seen it has been successful in doing is reducing forced overtime but not as successful in reducing overtime utilization overall.

But we are seeing recruitment improve and so we think we'll be able to fill more paramedic positions which will produce less overtime shifts continued conversations between public works, DOME and our public safety bureaus um you know we realized there was kind of a a gap in information with the Panther Hollow bridge what does that actually mean for our response times and it took a while to get to the place where we said oh we have to put another engine on right um so how do we react to that so making sure that those those bureaus are communicating with you know up through the the director of public safety into DOME and public works.

What does that actually mean for our response times?

And it took a while to get to the place where we said, oh, we have to put another engine on, right?

Um so how do we react to that?

Um so making sure that those those bureaus are communicating with, you know, up through the the director of public safety into DOME and public works.

Um there's also always going to be situations that we can't account for, like the storm uh at the end of April, which did increase a lot of public works over time, but didn't rise to the threshold of county, state, or federal support.

Okay.

Um moving on.

What was the methodology behind the estimated reduction of health benefit expenditures from 59 50 60 million September budget to 57 58 in the November proposal?

Um so that is working through um some of our external from the general fund accounts, you know, what um could be supported additionally from the VIBA or from uh the external OPEB trust fund uh in this case between September and November, it was working with Gen Gula and having conversations with the um OPEB trust, though they have not voted on it to support retiree benefits using those external funds from the general fund.

Okay.

Is that the same reason for the 2027 drop from September to November as well?

It goes from 67 million to 63 million.

Yes.

Okay.

Yeah.

And it's one of the things is of course that that is not a solution for all five years of the plan, um, but there is a good amount of funding in that OPEB trust fund that is you know, can be used per code for offsetting these costs for retirees.

That's a s a group of employees, former employees that get smaller um, you know, new employees no longer have access to retiree health care.

So that is a shrinking group of population.

There's also a rebate built into the outer years that was very confusing to me and Kirsten at first because we just didn't ask questions.

But when Director Calluman was on the floor yesterday, we pulled her into the office and asked, like, what is this?

And it's it's just some additional savings that are they were worked into that for the outer years.

For and that's for active health care.

That's correct.

And I can't remember um if that was one of the things that changed from uh September to November, but I just I do know we were going through the process working with our um providers to look at the the plant benefit changes, and I know some of those adjustments were reflected as adjustments between the two drafts.

It was right.

The decision to move from three carriers to two happened in between those documents.

And that resulted in a more competitive proposal that included the rebates.

Okay.

Um the budget proposal anticipates a uh 163,000 or 164,000 surplus for the current year, which is down from 3.2 million surplus anticipated this time last year.

Are we going to have that surplus at the end of the year?

A surplus?

I think so.

Um and this one of the things that Councilman Wilson was talking about.

Why do we keep talking about 25?

Why do we keep talking about 25?

Um, because we're so close to the end of the year, right?

The 25th pay was loaded into JDE yesterday, so now we know there is one pay left.

And we have a good sense of the second pay in December is probably pretty close to the first pay in December.

Um we also know that departments, as we hit end of year, um, there's less being spent because the controller's office is closing the books, right?

So um purchases are winding down, P cards are winding down, um, explanatories are winding down.

So we know that there are um fewer opportunities for things to be spent.

Um we know that departments are still able to encumber funds and open orders, but at the end of the day, that cash balance does not change.

Um that will reflect perhaps with our rollover dollars in 22.

But at the end of the the year and the beginning of the year, the money is in the general fund bank account, if that makes sense.

Yeah, sure.

I'm optimistic.

And I know there are reconciliations that happen in the new year, all of that.

But I guess I'm asking in part because I want to make a point.

We we shouldn't have to rely on the most sophisticated accounting within our OMB and with other um brilliant people who work for us to to be playing with this margin of error in the future years, and that is why um, you know, uh despite the opposition from from well, from the public, obviously, but from some council members who um you know don't want to have allow for every possible both expenditure cuts to expenditures and and revenue generation on the table.

It's why I think we need to look at everything because we don't want to be in this position next year.

We're we're doing okay, like we've made it work.

We don't want to have to be doing that every year.

No one wants it to happen.

The budget has to be balanced.

If the actuals end up in a deficit, which did in 2021, you know, that's the only time it has in the past, you know, since I've been here.

Um it happens, that is what the fund balance is for.

That is that is why we use those and replenish those to make sure that we have the ability to maintain.

And to that point, we want to continue to not only grow like double our fleet, but also have a strong fund balance to meet the code and to be able to have that when it's truly an emergency, like it is in 2021.

And and and the only thing I just to come back sort of full circle.

Um I believe there is a uh uh sort of a window of of reasonable discussion around the the size of the margin for error, whether it needs to be larger than is in our proposal and how to achieve that or whether we hit the right balance.

I think that those are conversations that are worth having right now and we're open to them.

I I think I just want to add a uh if you look at the five-year um forecast that we have here, right?

The the the margin for error is is very narrow in 26 because we have the additional um impact of the debt retirement.

It then opens up significantly at 27 before trending down again, right?

So part of our philosophy was simply like a narrow margin for error in that one year, the second of two years that are constrained by the debt cliff, followed by some breathing room with a longer term challenge to be um resolved, the res resolution of which may be external, right?

Is why we felt comfortable recommending that margin of error next year.

Um it would be different if you know the the it was equally tight in 27 and 28, just in the thinking that we put in to um but again we could that does not mean we're not open to adjustments that makes it a little wider, if you will, um, next year.

Yeah, it's a level of comfort, right?

Exactly.

Yeah, it's it's what we're each each of us is comfortable with and us as a whole as a body.

Um okay, I have two, I think fairly easy questions um that are a little bit different that came up during uh as I was thinking through this.

Um is there um Kelly, this is for you.

If is there some delay that um is from CDBG or in the C D BG funding that is different from any other year that is um that is not normal.

Well, this year we have to do that.

Is that a result of of everything that's happening in Washington?

And that's why there's some confusion from some of the um beneficiaries.

Yes, ma'am.

Um so uh well, I'm looking at Pat.

Do you want me to just go there?

All right, so there were a lot of things different with the new administration coming in DC.

Uh they put in a lot of different requirements into federal language into the contracts.

We have to have four separate contracts for all the funding sources we receive.

Uh before the law department would allow the mayor to sign off on the contracts.

Um, we had to have those contracts reviewed.

The city actually joined part of a lawsuit through King County.

Uh from that lawsuit, there's an addendum in these contracts that's called addendum one.

Uh those link that language was struck stricken out or struck out of all those contracts.

Oh top uh factor in with Patrick was talking about our program year starts October one.

Um we submitted our annual action plan August 15th.

It had to be reviewed by our HUD rep, then also this year there was a new requirement where it had to be scrubbed for any type of uh language that went against any of the um executive orders that added more time, and then when that cleared, guess what?

Government shut down.

We were luckily able to get our contracts right in before the government shut down, but that delayed everything.

So we got specifically we were able to get the contracts in, but the HUD didn't there were no HUD staff to release the monies to us during the shutdown.

So even though the contracts were in the funds didn't move.

Yeah, so we got uh the three contracts for ESG, Hoppa, and home first toward the right line say post-Thanksgiving.

We just got the CD contract two days ago.

Uh we're hopeful that we'll have our CD funds come tomorrow because it takes time for them to load into a system that's called IDIS.

Uh we did or reach out to groups and let them know what was going on.

That um just it was different.

So yes, this was a more different year than ever the since 2013 I've been in this department that I've ever experienced.

Okay, that's helpful.

And if we get any any additional questions from beneficiaries, we'll um we'll direct them to you.

Oh, yeah.

You can explain it that whatever way you want to them.

No, we got it.

We got it.

Um, last question.

While we were sitting here, interest rates were um dropped another quarter of a percentage point.

Um I know this is not the Department of Finance, but your best estimate as to how quickly that could result in any kind of uh difference in um any of our lineup like our revenue line items, particularly those that have to do with the buying and selling of homes.

So that's a good question.

Um with respect to city revenue, we do get investment in interest earnings on um the dollar amounts we have to do.

And um in our capital fund.

Um the conversations we had with Director Gould and Deputy Director Fitzgerald and Finance as we worked through.

We've anticipated these cuts.

There was a lot of you know, whispers, will they won't they?

Um so we we expected it and we adjusted the forecasting.

You know, controller brought it up.

You brought it up as we worked through uh the revenue forecasting meetings.

Um that we we are anticipating that with gradual decreases down in the interest earnings case.

Yeah.

Um, but how does that impact other things?

If interest rates are down, there tends to be more purchases of parcels and homes, which would then increase deed transfer, which had seemed kind of the opposite dip.

But not immediately.

Not immediately.

And it's the Pittsburgh real estate market is incredibly chaotic um and lagging behind the nation by many years.

Okay.

Um so it's it's hard to see without though.

We'd be happy to exp explore it um with with the finance department.

I I our typical response to something like this.

Um one, I I don't know that it's a swing that would we would at this stage in the process necessarily change anything, but but um if we were what we like to do is uh you know maybe uh estimate the interest earnings going down.

Um I think we already incorporated that though based on the projection, but not do the uh uh corresponding you know more revenue somewhere else to remain conservative.

We did hold deed transfer constant for all five years just because we had no idea what was gonna happen.

Sure.

Um so hard to say right now if that could perhaps have a positive impact.

Yeah, okay.

Okay.

That's a good question.

Um I have no further questions.

Anything else that came to other members?

It's been a long, a long hearing, so I don't blame you if you don't.

Okay.

Thank you all for joining us today.

Um really appreciate it.

And um with that, I will take a motion to recess this hearing.

Can can't you actually uh aren't we done?

Yeah, we have to keep it open.

Do we have to keep it open for the like one where people come in?

Yes, we have to keep it open, but I will uh move to recess this meeting.

Thank you.

Uh the next is again a DOMI uh project.

It's for project manager for Mount Washington Landslide Repairs.

The prime here is CDR McGuire.

And uh the project cost is 33,000.

The next is uh Domi plan.

It's for three rivers heritage trail alternatives analysis.

Uh they have uh one sub uh GAG engineering, which is a WBE.

And the project cost is 59,708, out of which 3,500 goes to the subconsultant.

The next two are from DPW.

Uh this one is uh fourth division reconstruction.

Brian is Oro's group, and uh this is for HRAC commissioning and support service.

The project cost is sixty-eight thousand seven hundred.

The last one here is the Robert E.

Williams Mimold.

Uh is the prime.

Uh the fourth division reconstruction.

Uh the crime is a non uh MBE.

That means uh it's uh it's not certified.

Okay, yeah, it's not I don't know I see legislative.

I'm sorry about so the last one here is Robert T.

Williams Memorial Building.

Uh this is a change order.

The prime is R3A architecture LLC.

They have three subconsultants.

Uh and all of them are uh non-MWBEs.

The total project cost here is 18,295.

And these are the amounts allocated to each of the subconsultants.

That's it.

Thank you.

Let's go, Pens.

We are City Chair of Pittsburgh.

And we've got your government covered.

Let's go.

Hello everyone, I'm Sydney Cooper, Interim Communications Director for the City of Pittsburgh.

And I'm Olga George, Mayor Ed Ganey's press secretary, and for the city of Pittsburgh.

Thank you for joining us as we sit down for a special conversation with the 61st mayor of the city of Pittsburgh, Mayor Ed Gainey.

During this time, we will have a conversation with the mayor that reflects on his accomplishments, challenges, and lessons learned during his time in office.

This is your chance to hear directly from the mayor in his own words about the people, the purpose, and the work that defined his time leading the city.

I'm excited about this conversation.

Mayor, thank you for being here with us today.

Thank you.

Thank you.

Looking forward to it.

Absolutely.

I'm gonna take us back way back for just a second, all the way back to the beginning.

Can you tell me what was the primary goal when you decided to run for mayor for the city of Pittsburgh?

Primary goal when I decided to run for mayor was I wanted to build a city that was more inclusive, a city that we could bring everybody together.

For so long, our city had been si segregated.

You could tell by Zipco where people live.

You know, the fact that we never had a middle class neighborhood that was black or Latino was always a concern to me.

The fact that at the end of the day, a lot of people felt like they could be viewed here but couldn't be seen here was an issue for me.

The fact that we were all Pittsburghers but didn't treat each other like Pittsburghers was an issue, and those are all things that I believe that we could build a bridge to be able to make people more accepting of one another.

So to me, it was about how do you use core city services in order to improve the overall quality of life to make people see that we have more in common and we have that's different.

And that was really the the beginning of me running.

Now you talked about the beginning.

You're coming now to the end.

What lessons have you learned since being in office?

What lessons have I learned since being in office?

That's a that's a very very big question.

Um there's no question.

You know, the one the one lesson that I must submit that I learned is patience.

Um just being patient to be able to see the bigger picture, to not get caught up in the urgency or the emergency of the moment, but to have patience to understand that, you know, before I told my team that's I had to do it myself, I had to fall in love with adversity.

Because at the end of the day, this job is all about adversity and your ability to navigate that.

And the reason why you need so much patience is because you have to go through a process before you can before you can fix anything.

So for me, it was about how patient could I become in order to learn the lessons that I had to learn.

The second thing is I used to come in every day with a mindset that I don't know anything.

In order to be a great leader, you have to be a great student.

And every day this city will teach you lessons that if your mind and heart is not open, you will not learn.

So to me, I would come in every day, not what not betting on what I knew yesterday, but ready and focused to be able to learn what I needed to learn today to help improve the overall quality of life in this city.

So the two things, the two lessons that I would say were more were the biggest for me was one, patience.

You gotta have patience in this job because everything is high speed, everybody wants to move high speed.

But if you run with the crowd, then you can never be a leader of the time.

The time is how do we come together in order to break things down the root cause to be able to build up solutions that get us to an answer.

And that takes patience because you have to really be able to see a lot of what's going on, talk to your frontline workers, make sure your lieutenants are ready to go.

That's patience, and then just the ability to learn.

You can't, you know, every day you come to work, particularly if you work for the city, there's the ability to learn something new every single day, particularly if you want a fifth floor.

You can learn something if your mind is open, if you're not married to the way we used to do it, where you want to birth something new, then every day you come to work, your ability to learn is there.

The greater the learner, the greater the student, the greater the leader.

Now, you worked on the two previous mayors.

Staying in the realm of lessons learned.

What lessons learned on the those two mayors that to do or not to do that you brought into your term here?

Well, yeah, I'm not gonna say what not to do.

Um, because I never focused on what they did that was negative.

They're not me, so I don't need their behavior, right?

What I needed from them is how they was able to get things accomplished and be and be accepted.

So my first mayor was Murphy, and I had a boss named Tom Cox that was no nonsense.

Um and Tom was always a student.

Tom was always studying.

Tom was always looking forward.

And when you went in front of Tom, you better have all your materials together.

Or it was gonna be a difficult hour for you in that office.

And so it taught me how to be a student, not just to study what I needed to study, but study beyond what I needed to study, to know to know not only the main topics that I needed to have, but also the auxiliary topics that I needed to have, so that once we had conversations about how to fix certain situations, even we when we went out the scope of what I was there for, I was still able to learn and communicate and ask the type of questions that provides wisdom.

So just that's where the whole idea of being a student of politics came in at because I knew that I had one of the best teachers because he was no nonsense.

So when you know you're going to see someone that's no nonsense, your your your mental cap is already on.

You want to make sure when you get there that you know everything you're supposed to know.

You want to make sure when you get there that you're ready and prepared to ask any questions that you need to ask to help you get to.