The City of Pittsburgh is recovering nicely from the financial blow of the COVID-19 pandemic, thanks partly to increases in parking and amusement tax revenues. The findings are detailed in the city controller’s 2021 Popular Annual Financial Report.
Those two tax sources were hit hardest by the pandemic. But City Controller Michael Lamb credited rebounds in those tax streams, along with coronavirus relief from the federal government, as reasons for the city’s improved financial health. Factoring in the federal aid, revenues for the city totaled $606 million in 2021, a 12.6% increase compared to the year before.
Last year, the city received $36.7 million in parking tax revenue, an increase of $5.4 million compared to 2020. Amusement tax revenue increased to $7.5 million, a $5 million jump from 2020.
But there remains a lot of ground to recover. The parking tax generated $60.6 million in 2019, while the amusement tax generated $16.1 million.
Lamb said much of the improvement in parking tax revenues can be credited to people driving in for special events and paying premium prices to park in the city. But another key source for parking tax revenue — daily commuters working Downtown — has not yet returned to pre-pandemic levels.
Lamb said that some garages report being "less than half full” on workdays. “We’re still not bringing commuters into Downtown ... near a regular basis.”
Lamb speculated that work patterns have changed, and a return to pre-pandemic commuter level may not be on the horizon. He argued that the city could continue to recover parking tax revenue from people coming into Downtown nights and weekends.
“I don’t think Downtown is going to be the Downtown that we knew in 2019 any time soon,” he said. “But the fact that Downtown has really revived itself in its nighttime economy … that will correct a lot of our financial underpinning.”
What impact has the decreased revenue had? Nearly $30 million from the city’s parking tax revenue is dedicated to shoring up the city's pension fund. According to Lamb, parking tax revenue has continued to exceed that benchmark, so pensions weren't impacted even at the height of the pandemic. “The bigger question is if we see a drop in those revenues, what impact does it have on the larger budget of the city?” Lamb said.
In the report, Lamb characterizes the city's pension as "underfunded" and argues more commitments will be needed soon. At the end of 2021, the city's pension fund had less than 70% of what it needed to cover its obligations, though that is a marked improvement from earlier years.
The report also breaks down the impact of the first wave of coronavirus relief the city received from President Biden's American Rescue Plan Act. The first installment of aid, amounting to $167.5 million, was allocated last June; the second half arrived earlier this month.
The report stressed the significance of the American Rescue Plan Act for the city’s survival. According to Lamb, if Pittsburgh had not received the rescue funds by July last year, 600 employees — including firefighters, paramedics and police — would have been laid off, while some city services would have been eliminated. More than $25.6 million in rescue funds were used to prevent the layoffs.
“These ARPA funds were a lifeline that kept the City from having to make painful cuts that would’ve reduced services residents rely on,” Lamb said. “A focus for our office going forward is to ensure funds are spent in a way that is transparent.’
Other ARPA funds remain unspent, and sums not spent by the end of 2024 must be returned to the federal government. But Lamb said it’s too early to raise concerns that funds could be lost. And his report praised the relief brought by the ARPA funds spent so far.
“The investment in the City’s recovery is considerable, and we are thankful to have been able to fully offset our financial losses over the last two years," he said. "While much will be said in the years to come about the impact of the virus, the efforts to mitigate the fiscal downturn have been notable. ... The city was well-prepared for the COVID-19- induced economic downturn, and we anticipate continued growth.”
