The takeaway: Allegheny County's fiscal condition is good, but policy makers shouldn't be complacent because challenges are on the horizon.
That's according to County Controller Chelsa Wagner, who released her 2013 Comprehensive Annual Financial Report Tuesday.
The report shows that the county’s fund balance stands at $28 million — up $15 million from the previous year, and Standard & Poor’s rating agency has upgraded the county’s debt from A+ to AA-. Wagner also noted that jobs increased by more than 20,000 making the region home to more than 1.2 million employees.
However Wagner sees trouble ahead, most significantly in the county’s funding of its pension, which is 60 percent funded, meaning there’s an outstanding balance of roughly $500 million dollars. Financial strategists recommend the debt be at least 80 percent funded.
“And that is looking at the fact that the liability of all of the current and future retirees is not near being fully funded," Wagner said. “When you look at our counterparts, the city of Pittsburgh and other municipalities, I think people have a tendency to say, ‘Well that’s not all that bad,’ but it is.”
Even the county’s fund balance of $28 million is inadequate — Wagner said it should account for 5 percent of the operating balance, or $40 million. She noted that the discrepancy means the county can’t fund long-term capital projects.
“Just like a house that has a roof leak, we need to set a plan so that we don’t come to that day of reckoning on any of these projects when it’s much, much more costly than if we’re planning,” said Wagner.
Wagner attributes the current health of the short term budget to increased revenues, but said the county needs to look at the other side of the balance sheet for long term solutions, as well as policy solutions. She suggests there should be a formal policy of refinancing debt and said the county needs to trim expenditures.
“The difficulty here is that it really involves a lot of pencil sharpening … it’s really in the details and incremental measures,” Wagner said.
Wagner also suggested improving the property reassessment process as well as lobbying the state to fund it obligations to the county. Her report said state revenue decreased by $10 million from 2009-2013, including an unfunded $4.3 million criminal justice grant and $1 million crime lab grant.
Her report also noted that the county carries a debt of about $1 billion, or $700 per resident.