Tax hike helped stabilize Allegheny County finances - but challenges loom as pandemic aid runs dry

Despite collecting an additional $132 million last year in property taxes, Allegheny County will need to run a lean operation to maintain a balanced budget this year, according to the county controller.

Amy Weise Clements, in releasing the annual financial report on Monday, said additional money raised by the 36% property tax increase enacted last year gave the county some breathing room, but costs are expected to rise and pandemic aid has run out.

The property tax hike marked the county's first since 2012.

"The 2025 Property Tax millage increase has bought the County only a brief respite from considerable fiscal concerns … it will be challenging to do much more than break even this year," she wrote. "Stability and growth will be key to reestablishing the County's financial footing, but belt-tightening is also likely to be necessary."

Weise Clements' warning comes as the county's budget projects spending to increase approximately $40 million in 2026, although a chunk of that is expected to be funded by federal or state dollars.

The county will be moving forward without federal pandemic aid funds, which will be fully exhausted by the end of the year. Allegheny County received approximately $381 million from the American Rescue Plan Act, which was signed in 2021 and provided $350 billion in state and local funds nationwide. That money must be spent completely by Dec. 31, 2026.

Weise Clements said county expenditures increased nearly $80 million last year, due in large part due to $32 million in expenditures at the jail and Kane Community Living Centers that are no longer coming from pandemic aid funds.

"The full exhaustion of emergency pandemic aid funds this year brings greater challenges moving forward," she said.

In the report, Weise Clements recommended monitoring costs within the county Department of Human Services and the Allegheny County Jail, in particular, which have combined to account for more than $100 million in increased spending since 2019.

She also implored the jail to take action to reduce its reliance on employee overtime and urged both departments to explore taking services in-house that are being contracted out at "continually escalating cost."

"Curtailing this cost growth without diminishing services is challenging but not impossible," she said.

In a statement Monday, Allegheny County Executive Sara Innamorato said the report highlighted the necessity of the property tax adjustments that her administration sought in 2024 and enacted last year.

"Since the County Executive took office, we have been aggressive with cost containment measures and will continue to do so," she said.

She also touted measures the county has already taken that include reduced spending at Kane Centers and on contracting nursing services in an effort to keep the county's $1.2 billion operating budget balanced.

"Spending at the Kane Centers falling and decrease in contract nurses are prime examples of where management has been able to identify cost savings opportunities that do not put clients at risk," Innamorato said.

"The County Manager's office has also prioritized working with departments to decrease the amount of overtime staff is needed."

While an increase in the property tax rate - which generates nearly half of the county's revenue - provided a much needed boost, Weise Clements said the pandemic's impact on property values, primarily commercial office space Downtown, has continued to cut into revenues.

Allegheny County Council recently proposed legislation that would require property values to be reassessed every three years. That would trigger the first countywide reassessment since 2012.

That means property taxes have been based on values set in 2012, although a property owner may appeal if they believe the assessed value is incorrect.

Since the pandemic, there has been a substantial drop in demand for office space, so many large commercial real estate owners have been appealing their property values.

Last year, property values were reduced a combined $440 million - with Downtown Pittsburgh properties accounting for more than a third of the total figure - as property values have fallen a combined $1.8 billion over the last three years due to appeals.

Weise Clements said the effects of a countywide reassessment, if approved, would not be immediate and will come with upfront costs.

"It has become impossible to argue that embarking on this process is not long overdue, she said. "It is difficult for governments to plan, businesses to invest, or homeowners to have peace of mind under a shifting and uncertain taxation regime."

Although the county needs to spend carefully moving forward, there are indications the region's economy is generally strong, according to Weise Clements.

The latest figures from the U.S. Commerce Department show the county's real GDP, which is adjusted for inflation, grew slightly between 2023 and 2024.

The county's employment rate remained slightly below the national average while its homeownership rate matched the U.S. average of just over 65%.

Weise Clements said that although the local economy showed some promising signs, uncertainty remains due to federal policy, emerging technology, and the national economy.

"The continuing effect of tariffs and higher gas prices as a result of the Iran war could have a major negative economic impact, and there is tremendous uncertainty surrounding AI and how it will affect employment and the economy over the next few years," she wrote in the report.

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