Conservative think tank cites reforms to make Pittsburgh more business friendly

For Pittsburgh to become a solid economically performing city, it must be made into an attractive destination for businesses and residents by curbing public spending, reducing taxation, trimming excess public employment, encouraging the state to adopt Right-to-Work, and embracing free-market policies, according to the conservative Allegheny Institute for Public Policy.

“The solution is clearly not greater levels of public spending which landed Pittsburgh in its current situation, as some local policymakers have advocated,” the nonprofit Pittsburgh-based think tank said yesterday in a new report comparing Pittsburgh with the “benchmark city.”

The intention of the report is to examine how Pittsburgh fares against four comparable “regional hub” cities. The benchmark is comprised of Columbus, Ohio; Charlotte, N.C.; Omaha, Neb.; and Salt Lake City, Utah. The measurement factors from these cities of varying sizes were then averaged together to form the “benchmark city.”

The last full benchmark city update was published in 2019 due to the COVID-19 pandemic, which disrupted key metrics typically utilized in the benchmark report, the Allegheny Institute said.

“With pandemic relief money (for both cities and schools) drying up, it is appropriate to revisit this project and examine how Pittsburgh’s finances stack up to those of the benchmark city,” according to the update, which includes data collected from the respective cities’ Annual Comprehensive Financial Reports (ACFRs), school ACFRs, census population data, and pension plan data.

Regarding city fiscal metrics, Pittsburgh’s total revenues stood at $2,771 per capita, 37 percent higher than the benchmark city. Looking at just tax revenue, the City of Pittsburgh raised nearly $550 more in tax revenue per capita, 44 percent higher than the benchmark city, according to the report.

Pittsburgh’s total expenditures per capita totaled $2,828, which is 42 percent higher than that of the benchmark city, and the city’s debt per capita stood at $1,656.

“While Pittsburgh has made strides to close the gap with the benchmark city in the past, Pittsburgh’s debt per capita was 41 percent higher compared to the benchmark city,” the institute says.

In the area of city workforce and pension funding, the Allegheny Institute pointed out that one of the chief contributors to Pittsburgh’s “chronic overspending” historically has been its workforce size relative to the benchmark city.

That hasn’t changed, according to the updated report, which shows that compared to the benchmark city, Pittsburgh had almost four more total employees per 1,000 people (48 percent greater). Police and fire employees (civilian and sworn) per 1,000 people were also higher, with 22 percent and 38 percent more staffing than the benchmark city, respectively.

“The city budget is further strained not only by salary but benefit costs as well: Pittsburgh’s 68 percent pension funding ratio lagged behind the benchmark city’s 80 percent funding ratio,” according to the report.

Regarding school revenues and expenditures, Pittsburgh Public Schools (PPS) has long been a drag on the city’s reputation, despite being a separate governmental entity, noted the institute.

“PPS continues to face serious performance and budgetary challenges,” it said, adding that the district’s total revenues per student were $38,013, compared to the benchmark city schools’ revenues per student of $17,592.

PPS’ total expenditure per student similarly dwarfed the benchmark city, amounting to “a staggering 120 percent difference” at $39,941 per student.

“Despite the vast enrollment difference, PPS collected far more in revenue and spent far more per student than the benchmark city,” said the report.

The Allegheny Institute update also says that Pittsburgh’s “lethargic emergence” from the pandemic stood in stark contrast to the impressive recovery and improvement of the benchmark city.

“The latest comparison of financial and employment data on a per capita basis demonstrates in detail Pittsburgh’s very poor performance against the benchmark city on nearly every metric,” the report says.

For instance, the City of Pittsburgh spent far more on a per capita basis and took in much more in taxes on a per capita basis than the benchmark city. Likewise, debt per capita was far higher for Pittsburgh compared to the benchmark city.

“Pittsburgh’s very high spending, excessive taxation, and embrace of unions have all contributed to an overbearing public sector, which has impeded growth and gives the city a reputation as being unfriendly to business,” the institute says.

At the same time, the school district also finds itself in a similar situation as the City of Pittsburgh, spending far more than its peers with exceptionally low academic achievement in most schools.

“An overhaul of the district is needed to improve continued dire performance, securing a better education for students at a much lower cost,” says the institute’s report. “A drastic reduction in expenditures is needed to ease the burden on its taxpayers, city, and state.

“With the enormous decline in enrollment over the last few decades, school building closures must be an important part of reining in expenditures,” it said.

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