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Peduto’s first budget proposal seeks to increase real estate tax rate | TribLIVE.com
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Peduto’s first budget proposal seeks to increase real estate tax rate

Bill Zlatos
| Monday, September 22, 2014 11:31 a.m
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Stephanie Strasburg | Trib Total Media
A graph of 2015 cost drivers for city spending displays on the screen behind City of Pittsburgh Mayor Bill Peduto as he presents the 2015 budget and five-year plan for the city with Pittsburgh budget director Sam Ashbaugh (left) during a press conference at the City County Building in Downtown on Monday, Sept. 22, 2014.
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Stephanie Strasburg | Trib Total Media
City of Pittsburgh Mayor Bill Peduto (right) and Pittsburgh budget director Sam Ashbaugh look towards a screen with budget information as they present the 2015 budget and five-year plan for the city during a press conference at the City County Building in Downtown on Monday, Sept. 22, 2014.
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Stephanie Strasburg | Trib Total Media
Pittsburgh budget director Sam Ashbaugh (left) points past City of Pittsburgh Mayor Bill Peduto as he references a graph while presenting aspects of the 2015 budget and five-year plan for the city during a press conference at the City County Building in Downtown on Monday, Sept. 22, 2014.
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Stephanie Strasburg | Trib Total Media
City of Pittsburgh Communications Manager Timothy McNulty is silhouetted by a graph for total public safety premium pay as Pittsburgh Mayor Bill Peduto fields questions from the press after his anouncement of a 2015 budget and five-year plan for the city during a press conference at the City County Building in Downtown on Monday, Sept. 22, 2014.
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Stephanie Strasburg | Trib Total Media
Sam Ashbaugh, Mayor Bill Peduto’s budget director, said information gathered by Massaro Corp. will be incorporated into computerized budget and asset management systems and serve the city for decades. The study will take a year, he said.
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Stephanie Strasburg | Trib Total Media
City of Pittsburgh Mayor Bill Peduto answers questions from the press after presenting the 2015 budget and five-year plan for the city during a press conference at the City County Building in Downtown on Monday, Sept. 22, 2014.

Pittsburgh real estate taxes would increase for the first time in more than two decades next year under Mayor Bill Peduto’s proposed $505.9 million budget.

Peduto on Monday proposed a 0.5-mill real estate tax hike to help cover a $35 million shortfall projected for 2015.

Blaming the situation on past administrations, Peduto said last year’s tax decrease — triggered by a countywide reassessment — plus increased pension, debt, health care and other expenses led to the budget deficit.

“We’ve been placed in a situation that really has been created through unrealistic expenses and false revenues that kept us from solving our problems,” he said. “Today is a new day and a new era of truth in budgeting, and in the next five years, we will finally solve the city’s financial crisis.”

Peduto said former Mayor Luke Ravenstahl’s administration budgeted with inaccurate numbers, erred in dropping the tax rate to 7.8 mills after the reassessment and saddled the city with an $11.4 million increase in annual pension payments.

Ravenstahl, now a consultant for the energy industry, fired back, calling Peduto’s claims “flat-out wrong.”

“He talks about truth in budgeting,” Ravenstahl said. “From my perspective, if this is the beginning of truth in budgeting, it’s a pretty bad sign when you’re lying right out of the gate. The implication that’s being made is simply wrong.

“There has been oversight. The (Intergovernmental Cooperation Authority) and Act 47 team approved our budgets. Our administration proved over the last seven years that Pittsburgh can be the most livable city without raising taxes,” Ravenstahl said.

Peduto spokesman Tim McNulty declined to provide comment on Ravenstahl’s assertions.

The tax increase, if approved, would generate slightly less than $8 million a year. City Council last raised the real estate tax in 1990 when the millage went from 151.5 mills to 184.5 mills, according to annual reports from the controller’s office.

In addition to raising the real estate tax rate, Peduto said the administration is counting on a $10 million increase in revenue each year from the Pittsburgh Parking Authority, along with debt refinancing and expense cuts across all departments, to balance the budget.

Peduto said the tax increase, on average, would cost the owner of a $100,000 home about $40 more a year. The city’s tax rate would increase from 7.56 mills to 8.06 mills (a 6.6 percent increase) under the proposed budget, which requires approval from a state financial overseer and City Council before it can take effect.

Peduto could have problems persuading a majority of council to approve a tax hike with five members up for re-election next year. A tax increase would provide prime ammunition for challengers.

“I definitely will not vote for a tax increase,” said Councilwoman Darlene Harris of Spring Hill, one of the five who would have to face voters. “There’s absolutely no need for a tax increase. We need to manage the money better than the way it’s being managed.”

City Controller Michael Lamb was equally critical, calling the proposal a “step backward for Pittsburgh.”

“City residents currently pay more than their fair share,” Lamb said in a statement. “That the mayor has failed to deliver on his promise of payments from our large nonprofits is, to say the least, disappointing.”

McNulty said Lamb should have known the tax decrease last year was too low. Pittsburgh was required to drop taxes to avoid realizing a windfall after the reassessment.

“It’s too bad the city’s fiscal watchdog missed it when the millage was miscalculated last year,” McNulty said.

Councilwoman Deb Gross of Highland Park, whose seat is up for grabs next year, said it might be time to raise taxes.

“I think we’ve gotten to a point after many years of downsizing that I don’t think there’s any more downsizing we can do,” she said. “… It looks like adjusting the millage may be our only option.”

Peduto said he’s been negotiating a long-term agreement from the largest nonprofits for payments in lieu of taxes. He said he has a “50-50 chance” of reaching an agreement by year’s end. Peduto previously said he hoped for $20 million annually,

The mayor said his budget proposal would eliminate 75 vacant positions to save about $3.4 million and impose a 5 percent cut to non-personnel expenses to save about $1.6 million.

The Intergovernmental Cooperation Authority, one of two state-appointed financial overseers, has 30 days to review the budget proposal.

Executive Director Henry Sciortino declined to comment, saying he has not had time to look over the proposed budget. City Council will receive the budget for consideration in November.

Bob Bauder is a staff writer for Trib Total Media. Reach him at 412-765-2312 or bbauder@tribweb.com.

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