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Peduto tax increase?

Published by Tim McNulty on .

Back in January when he was still running for reelection, Mayor Luke Ravenstahl set a new property tax rate for Pittsburgh that went lower than most other local taxing bodies, post property reassessments. He cast the 30 percent cut as a taxpayer-protection move.

"It's revenue neutral," he said at the time.

RavenstahlActually it wasn't. As it turns out, his budget team miscalculated, sending the city's real estate tax revenue --  its single biggest source of income by far -- into the red this year. And it could force incoming Mayor Bill Peduto to "readjust" the millage, aka implement a tax increase, in one of his first acts in office.

City Hall reporter Moriah Balingit has the story.

At the end of the 3rd quarter this year the city was $11 million behind the $130 million it budgeted in real estate tax receipts. With money still coming in, the Ravenstahl administration argues, it could tighten those losses to about $4 million by the end of the year. Maybe. Budgeters argue the overall impact on city finances will be minimized by greater than expected income tax revenues and cuts to spending elsewhere.

Most taxing bodies were more conservative. At the county, Rich Fitzgerald dropped the millage about 17 percent, with promises to adjust downward later if collections were too great. Some, including Controller Chelsa Wagner, criticized that as being too small of a cut, but at least that government's budget is in clover now (or some would say even drunk with money).

Peduto is already set to bring budget amendments to council in December as part of his transition. We'll see if he follows his ally Fitzgerald's model and attempts to implement a property tax increase then, before he officially takes office. His transition team will wait to see the latest numbers.

"We'll see what the hole is," transition chief Kevin Acklin said. "We're going to take a look at it and see what the options are."

UPDATE: Pitt economist Chris Briem argues the shortfall may not be related to reassessments at all -- city collections last year (before the new values kicked in) were even further in the hole.

UPDATE 2: Five council members with odd-numbered districts (including new District 7 Councilwoman Deb Gross, who should be sworn in December in time to vote on the budget) will face reelection in two years, which could possiblly factor into their appetite for a tax increase vote.

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