Budget season is looming on the horizon in Pittsburgh. Mayor Ed Gainey is preparing to formally present his proposed 2026 spending plan to City Council early next month, having released a draft version at the end of September.
The roughly $680.5 million operating budget and $100 million capital budget have faced questions and skepticism from some critics, who argue it underestimates coming expenses and doesn’t prioritize the city’s biggest needs enough. The budget, the last of Gainey’s administration, will debut amid a tight financial period for the city, as declining downtown real estate taxes and high debt-service payments weigh on Pittsburgh’s bottom line.
According to Jake Pawlak, deputy mayor and head of the city’s Office of Management and Budget, the administration is doing the best it can to address those challenges without resorting to layoffs or other drastic cuts.
“ We have had to pare back in a way that we hadn’t in previous years, in making some targeted cuts, by eliminating some vacant positions and another about $3.5 million in non-personnel operating spending,” he explained in an interview with WESA. The budget eliminates around 50 unfilled positions, but does not lay off existing staff or raise taxes.
“We think that with a few targeted reductions in spending, we can produce a budget that does not cut core city services, does not require any layoffs, and critically, does not require a tax increase.”
The budget allocates $10 million for the city’s vehicle fleet next year — which is more than the $6 million set aside in last year’s budget. Much has been said about the deteriorating state of the city’s vehicles, and public safety leaders have been clamoring for months to increase investment. But even $10 million falls short of what’s been recommended by observers like city council’s budget director Pete McDevitt, who has repeatedly recommended setting aside $20 million for vehicle purchases each year.
Pawlak said he agreed that $20 million was the ideal investment target: That number, he noted, came from a study the administration commissioned from the city’s fleet manager. But vehicle purchases are just one of the city’s needs.
“ To deliver that $20 million in fleet investment, we would have to find the other $10 million somewhere, and that might mean less funding for bridges [or] more drastic cuts that would probably extend into layoffs or other reductions in services,” he said.
The budget predicts other costs will remain flat over the next five years – one area, notably, being overtime costs. Gainey’s plan budgets $15 million for police overtime pay — the same as in the current year’s budget. But actual spending in recent years has been closer to $20 million. Fire overtime is budgeted for $17.5 million, which is $1 million more than budgeted in the past year, but still $4.4 million less than what the fire bureau actually spent on overtime in 2024. A recent report filed last week by City Controller Rachael Heisler, a frequent critic of Gainey’s budgeting, said the city is on track to overspend its 2025 overtime predictions for fire, police, EMS and public works by a total of around $15 to $20 million by the end of this year.
Pawlak argued that changes to the city’s collective bargaining agreements with first responders are set to reduce the need for overtime. While he admits the administration jumped the gun in 2025 on how soon it could expect benefits from those changes, he still predicts the moves will bear fruit in coming years.
“ We have instituted policy reforms, including in our collective bargaining agreements, our labor contracts, that we believe over time will reduce our reliance on overtime and so we think we can responsibly project that number going down,” he said.
But he conceded that “We were perhaps a little overly ambitious in the amount of savings we expected to accrue in 2025,” he said. “It is taking longer than we originally expected for those changes to work their way into the system.”
What overage does exist from overtime has been small enough that the administration has been able to make up for it with other savings elsewhere in the budget.
There could well be a surge in such costs stemming from the NFL Draft coming to town next year. But Pawlak also predicts help from other jurisdictions — state police, the county police, county sheriff’s department, and police from outlying municipalities — will help support the expected overtime costs, as it has in other cities that host such events. (He also expects the city to receive state-level aid for the event, though that relies on the state passing a budget bill.) And the city also hasn’t penciled in any anticipated revenue from the draft, either.
“ We don’t include one-time non-recurring bumps in revenue in our financial forecast because we want them to be conservative,” he said. “If we don’t include revenue increases from the draft in the budget and we see them, then that’s a benefit. If we overestimated them, and they came in lower than expected … then it could create a deficit and we don’t ever want that to happen.”
From some perspectives, the city is actually running a deficit already.
On paper, Gainey’s draft budget envisions a small surplus, as revenue outweighs expenditures by $485,403. But it also envisions transferring some $22.6 million from the city’s bank account into trust funds set aside for special purposes, like the Stop the Violence and Housing Opportunity funds. The result: The city is budgeted to end next year with less in its bank account, even as it says expenditures and revenues are balanced.
Pawlak said that approach was “consistent with generally accepted accounting principles” for governments. But he acknowledged that the spending plan projects that by 2030, the city’s bank account will be drained to the point where it has roughly 10 cents for every dollar the city will spend on operating expenses that year. That is the minimum balance required by state law.
“ I agree that the proposal that we’ve put forward when you look out five years becomes tight,” Pawlak said, adding that “ I’m not suggesting that it’s sustainable to draw on our resources indefinitely.
“We perhaps may have already potentially started down a course of needing to prune spending in some areas,” he said. “But because we have the ability to look out into the future five years, we can make those decisions in gradual steps rather than dramatically all at once.”
Pawlak said one reason the city is struggling with revenues is because Allegheny County had long delayed taking action on a reassessment of property values. Such revaluations are often unpopular with property owners, but they do allow municipalities to more accurately measure, and adjust for, changes in the value of the tax base. Pawlak said a reassessment could ease pressure on the city’s finances going forward.
“If there’s a solution to the reassessment question somewhere [between now and 2030], then that would immediately change the calculation by ending the annual decline in real estate tax revenue,” he said.
The budget also indicates that Gainey expects to receive less than $700,000 each year in “payment of lieu of taxes” — money that nonprofits pay to support city operations even though they are tax-exempt.
Gainey’s pledge to obtain more revenue from large nonprofits like healthcare giant UPMC was a signature promise of his 2021 campaign. But his strategy for doing so — challenging a number of their properties’ tax statuses in court — has produced little new revenue. Still, Pawlak said the next mayor should continue that fight.
“We always knew that to succeed in the course that we set for getting larger payments from the nonprofits was a two-term strategy, that it would take more than four years to be successful,” he said. “It was a gamble, that we would set out on that course and that Mayor Gainey would be reelected and that we would know we’d be able to see it through.”
(Corey O’Connor, who defeated Gainey in the Democratic primary, seems unlikely to follow the same approach: He has previously suggested alternate ideas, like asking the nonprofits for contributions to specific city initiatives.)
Whether O’Connor or Republican Tony Moreno prevail in November’s upcoming election, Pawlak says the new mayor will have room to make changes the budget. The budget will be open to further amendments by Council for the first five weeks of the year, and the mayor can reopen the budget at any time. But some portions of the budget are tied up in fixed costs like salaries and benefits, he noted.
“ I don’t know whether they will seek to reopen the budget and make those changes early in the new mayor’s term or wait to do so when the budget season starts up again next year. But I expect they’ll make changes,” he said. “I expect there will also be lots of continuity.”
In the weeks after Gainey’s budget presentation next month, council will hold public hearings to discuss each department’s budgetary needs before amending and then voting on the overall plan. The city must have a 2026 budget in place by the end of this year.