Credit rating agencies bullish on Pittsburgh's $62M bond issue, deem outlook 'stable'

Two credit rating agencies declared that Pittsburgh’s financial outlook is “stable,” officials announced Tuesday, even as some city leaders have raised alarms about the city’s finances.

The city received AA- ratings from S&P Global and Fitch.

Mayor Ed Gainey said the administration was “proactive in our work to have a balanced budget, dynamic regional economy and strong financial management.”

The rating means Pittsburgh is seen as a safe investment.

Officials said this should help the city to get favorable interest rates on the $62 million bond issue it plans to float this year.

Councilwoman Erika Strassburger, D-Squirrel Hill, who chairs council’s finance committee, said the rating will translate to lower borrowing costs.

The money raised through the bond issue will be used to fund projects outlined in the city’s capital budget, including bridge work, flood control projects, landslide remediation, paving and improvements at the city’s recreation and senior centers.

“Our city is on strong financial footing,” Council President R. Daniel Lavelle, D-Hill District, said. “These affirmations show that we are good stewards of our residents’ tax dollars.”

Gainey said the independent rating “validates what my administration is doing to care for the long-term financial health of our city.”

The ratings come after some city officials have voiced serious concerns about the city’s fiscal health.

Controller Rachael Heisler last week urged council and the mayor to reopen the city’s 2024 budget to reflect the fact that the city’s initial budget included $10 million in revenue it won’t actually receive.

That includes money collected through a tax on out-of-town professional athletes and entertainers playing and performing in Pittsburgh, which a court struck down. It also does not reflect the fact that property tax reassessments on some of Downtown’s skyscrapers have left the city collecting less tax revenue than anticipated.

Heisler on Tuesday said she was grateful for “the fiscal prudence of the last two decades and the fund balance that has the city in a stable position today,” which the rating agencies considered as reasons for the city’s financial stability.

The other reason for the city’s financial stability, according to the rating agencies, is the city’s ability to increase property taxes to cover its costs.

“This is not, however, a sign that there aren’t very worrisome factors looming,” Heisler said in a statement. “The current budget has anticipated revenue from real estate taxes and the facility usage fee that cannot possible be achieved.”

She urged officials to “get serious about our fiscal challenges so we can maintain a ‘stable’ outlook in the years ahead.”

Some other local leaders have joined Heisler in calling for such action.

City Councilman Bob Charland, D-South Side, last week told TribLive the city’s financial situation over the coming years is “really scary,” as federal American Rescue Plan Act dollars dry up and the city’s financial margins become increasingly tight. Peter McDevitt, council’s budget director, has warned a tax hike may be necessary in the coming years, as the city is spending more than it’s bringing in.