Allegheny County Executive Sara Innamorato proposed a $1.2 billion spending plan to County Council Tuesday. Her version of the 2025 budget calls for the county’s first property tax increase in 12 years, meant to address what Innamorato described as “challenging times” for the county economy.
The proposal is “fiscally responsible and moves our county forward,” Innamorato said.
Her spending plan proposed a millage rate of 6.93 — 2.2 mills more than residents currently pay. The change would result in about $167 million in additional property tax revenue.
But in an effort to take some of the sting out of the hike, Innamorato is also proposing a $3,000 increase to the homestead exemption, so that the first $21,000 of a home’s assessed value would not be taxed. If approved, it would be the first increase since 2013.
Under the changes, the owner of a home assessed at $110,000 (the median valuation in Allegheny County) would pay about $619 in property taxes each year. That’s up from about $437 under the current tax scheme, an increase that works out to roughly $15 more each month.
The budget is the first of Innamorato’s administration and includes a 3% spending increase from the 2024 budget created by her predecessor, former county executive Rich Fitzgerald. Innamorato said the hike is meant to plug a structural deficit that has plagued the budget since 2021. It was previously covered by federal COVID pandemic funds.
The proposal comes amid growing financial difficulties for the county. An interim financial report released by the County Controller’s office earlier this month warned that the end of COVID aid and an accumulating deficit could require leaders to make some tough financial choices.
Like many governments, the county has used federal funds from the American Rescue Plan Act to shore up losses incurred since the pandemic began. That money is set to expire soon, but expenses are still exceeding revenues, in part because of cratering assessment values for commercial properties Downtown and increased reliance on health care provided by the county through the Kane Community Living Centers and Allegheny County Jail.
The county is expected to have a $81 million deficit by the end of 2024, a figure Innamorato said is “years in the making.”
This year, $48 million in ARPA money and $33 million from the county’s “rainy-day” fund will provide a one time Band-Aid to the problem. But, Innamorato cautioned, “It is not a solution.” If the county were to ignore the structural deficit, she estimated the fund balance would hit zero in just two years, leaving finances “in a precarious situation.”
Innamorato’s proposal leaves critical services, like road and bridge maintenance, emergency response services, and Department of Human Services programs, intact.
Though Innamorato stressed that county employees are looking for fat that could be trimmed from the budget, “We cannot cut our way to a balanced budget,” she said at a news briefing Tuesday afternoon. “We’re not going to drastically cut critical services that the people of this county rely on,” or resort to “mass layoffs.” She described her proposal as “status quo in nature.”
County Council member Sam DeMarco, one of only two Republicans on council, urged Innamorato to consider “areas of potential savings or austerity measures that we can take. So if we recognize that there's going to have to be a tax increase, that it doesn't necessarily have to be 46.5%.”
“You talk about all the challenges that the county is facing, but all the taxpayers at home, we're facing these very same challenges. The cost of gas is up, groceries is up, rent is up,” he said.
To some observers, a tax increase seemed inevitable after 12 years of stagnant rates and no countywide property reassessment. In his address presenting the 2023 budget, Fitzgerald himself noted that “at some point, some council and some county executive is going to have to do an inflation adjustment on the millage.”
“I don't know when it's going to be, but it won't be able to stay that way forever as the operating budget continues to rise,” he said.
County Council member Bethany Hallam said few municipalities within the county, if any, are able to go more than a decade without a millage increase.
Innamorato’s plan “gets us to no reliance on COVID money, no reliance on dipping into the rainy-day fund,” Hallam said. “It's not adding anything. It's not funding anything radically different than what was already happening in this county. All it does is plug the holes of a ship that has been sinking.”
Christopher Briem, a regional economist at the University Center for Social and Urban Research at the University of Pittsburgh, noted that because millage and assessment values have remained frozen for more than a decade, the revenue collected by the county has, in real terms, only gone down.
It’s “certainly not on par with inflation under itself and certainly not on par with where their expenses probably are,” he said, noting that “all the normal costs that we're seeing impacting like inflation impacting our personal budgets are certainly impacting the county as well.”
The elephant in the room Tuesday was the issue of whether or not officials would order a countywide property reassessment, which hasn’t been done since 2012.
Innamorato declined to discuss the issue with council, citing an ongoing lawsuit filed by Pittsburgh Public Schools earlier this year, but noted that a reassessment would not raise county revenues. State law has an anti-windfall provision, which sharply limits the amount of revenue that property reassessments generate.
Hallam argued that a reassessment would offer county officials an opportunity to readjust the millage in the near future: If they initiated a reassessment (or were ordered to do so by the courts), the millage rate would likely go back down to avoid a windfall (though property taxes would remain higher for about a third of taxpayers).
But convincing County Council to approve back-to-back millage changes might be difficult. The Home Rule Charter requires a 10 of its 15 members — a two-thirds supermajority — to approve any change to real estate tax rates.
County Controller Corey O’Connor, speaking before the budget was unveiled, said that while he would have to wait and see what Innamorato presented, his office recommends that the county reduce reliance on contracted employees and move those workers to the county payroll. That would lower costs and bulk up the pension fund, he said, which faces its own looming crisis.
Innamorato said Tuesday that she plans to take those moves.
Council will hold budget hearings at 5 p.m. on Oct. 17, Oct. 28 and Oct. 30, during which members of the public can comment on the proposal. Innamorato and council must approve the budget in early December.
