For the second year in a row, Allegheny County spent more than it brought in.
Allegheny County Controller Corey O’Connor has warned that the county’s financial circumstances are “unsustainable”.
According to the county’s annual financial report being released on Monday, its expenses exceeded its revenues for the second year in a row. Property revenue taxes declined for the first time in a decade.
Along with the county’s spending problems, it is facing an underfunded pension system and running low on federal funds from the American Rescue Plan Act.
According to the report, the county spent $45.5 million more than its revenues last year.
This is an increase from the county’s 2023 deficit. The county utilized COVID relief funds to fill in budget gaps, which has become an unsustainable method of addressing an ongoing financial problem.
The federal funds being used by Allegheny County must be spent by 2026, and they are already running out.
If the county does not figure out how to combat the growing deficit and its spending problem, it will have to utilize funds from its “rainy day fund”. At the end of 2024, the fund held $79.7 million. This was a decrease from $113 million the year before.
Auditors that generated the report found “emerging areas of uncertainty.” Property tax revenue, which accounts for 40% of the county’s income, fell by $5 million.
Last year, the County Council approved the first millage increase since 2012. The increase is expected to bring in an additional $130 million and stave off service cuts for 2025.
The 36% tax hike was a compromise the council negotiated after some members were against Allegheny County Executive Sara Innamorato’s initial proposal to raise taxes by 46.5%.
“While the first millage increase in over a decade may prevent immediate cuts in the coming year, our situation remains unsustainable,” O’Connor wrote.
Decreases in sales, drink, and vehicle tax revenue accounted for a loss of about $6 million.
By the end of 2024, the county pension system was only 31% funded. While the funding level held steady from the year before, auditors referred to it as being “alarmingly low” despite an increase in employee contributions.
County Manager Josh Fournier said officials “are very closely managing the budget and are very aware of the continued challenges of dwindling federal funds and increased costs.”
The county will plan its annual budget for 2026 this coming fall.
