Pittsburgh property tax revenue fails to reach projections

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The city of Pittsburgh is expected to fall at least a few million dollars short of the $130 million it was projected to collect in real estate taxes this year, which could force officials to adjust the millage rate or its budget for the coming year.

In January, after a reassessment of properties drove values up, Mayor Luke Ravenstahl dropped the millage by about 30 percent and also increased the homestead exemption as a way to blunt the impact to property owners.

Mr. Ravenstahl said at the time that his plan was "revenue neutral," and his administration even pledged to refund property owners if they collected more than they had budgeted for. But the city now appears to have the opposite problem.

Assistant finance director Cathy Qureshi said projections now indicate the city will come in at least $3.5 million short, but likely more. As of Sept. 30, the city was nearly $11 million short, but tax bills are still coming in through the end of the year. She said that when the city adjusted the millage, it attempted to take into account a lot of variables that were difficult to predict, like how many large commercial property owners would successfully appeal their assessments to lower their tax bills.

"It was obviously inexact," she said. "But we wanted to err on the side of the taxpayer."

Still, Ms. Qureshi said, the city will likely end the year in a surplus because of increased earned income tax revenues and because the city is underspending its budget.

City Controller Michael Lamb said the city ended up losing more tax revenue than it anticipated when commercial real estate owners successfully challenged the reassessed values of their properties, effectively reducing their tax bills.

In Mr. Ravenstahl's proposed 2014 budget, he's projecting $128 million in real estate revenues, $2 million less than the 2013 projections.

Ms. Qureshi said the adjustment was made after it was clear the city would fall short this year.

But Mr. Lamb, who has to certify the revenue projections, worries that projection has not been dropped far enough.

"That probably seems a little high at this point, so they may want to re-evaluate those numbers," he said.

Councilman and Mayor-elect Bill Peduto said he wants to ensure the administration presents a budget with realistic revenue projections.

"You can't present a budget knowing of a hole," he said.

Moriah Balingit: mbalingit@post-gazette.com, 412-263-2533 or on Twitter @MoriahBee.

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