Last night, County Executive Innamorato presented her 2025 budget. Here are my two main takeaways:
1. Doing nothing is not an option. If the millage rate is not raised, budgets for core functions like our county jail, roads, parks, and emergency dispatch will need to be slashed, necessitating significant layoffs. Our general fund will also be depleted, removing our ability to respond to adverse events and lowering our credit rating.
2. This problem was not created overnight. Allegheny County has had a structural deficit since 2021 and, instead of righting the ship, the previous administration and iteration of County Council chose to sail further into the storm.
Now for a more detailed look into the budget. County Executive Innamorato proposed a 3% increase in spending, raising the budget to approximately $1.2 billion. In order to pay for this budget, the County Executive proposed a 2.2 mill increase, which is a 46.5% increase on the current county millage rate of 4.73 mills. This corresponds to an approximately $182 yearly increase in county taxes for the median household. In addition to the millage increase, the County Executive also is proposing an increase in the Homestead Exemption from $18,000 to $21,000, resulting in a bit of savings that will especially help those living in less affluent areas.
At this point, you’re probably wondering how an only 3% increase in spending leads to a 46.5% increase in county real estate taxes. First, county revenue also consists of federal and state funding as well as programs like the sales and alcohol taxes. However, a bigger factor is that the county has been operating at a budgetary deficit since 2021. This year, the county is operating at a $81 million budgetary deficit created through last year’s budget, a hole which is being plugged by $48 million in temporary COVID ARPA funding and $33 million from the general fund. In a typical year, the county will also gain 1-2% in assessed value from tax appeals, but this year is projected to lose 1.74% due to the decreased common level ratio and commercial reassessments. Add in the lack of a millage increase since 2011, no countywide reassessment since 2013, and the rising cost of goods and services the county relies upon, and you can see why we have reached this point.
As alluded to previously, I do not consider failing to raise millage to be an option at this point in the game. With the amount that would need to be cut, we would see mass layoffs and cuts in core county services. We would also completely deplete our general fund balance, making it impossible to handle adverse events like a federal government shutdown (which has become increasingly likely with the current House of Representatives) and leading to a credit rating drop, which would significantly increase interest rates when the county borrows for capital projects.
All this being said, I also understand that many people are struggling with rising costs at the moment, and even the $15 median monthly cost that this millage increase would create may be difficult to budget. Over the coming weeks, I will be working with both my fellow council members and the administration to reach a budget agreement which best serves the people of Allegheny County by balancing the services the county provides with the costs to homeowners.