Allegheny County, Penn., Capital Program Calls For $37.2M in Bonds

Allegheny County, Penn., chief executive Dan Onorato proposed a $762.7 million operating budget and $63.4 million capital budget for calendar 2009 on Tuesday night. The capital program would be financed in part with $37.2 million of bonds.

The proposed operating budget is a $26.6 million increase over the enacted budget for the current year in part due to an $7 million increase in debt service payments caused by ballooning payments on previously issued debt. Debt service will take up $69.6 million of the budget. The county has $616.4 million of debt outstanding.

The largest area of capital spending - $26.3 million, or 41.5% of the capital budget - would be for maintenance of the county's 521 bridges. Most of the bridge work will be paid for through $22.7 million of state and federal reimbursements. Other capital projects include improvements to roads, parks, buildings, the county Port Authority and equipment purchases.

The budget proposal keeps property taxes constant for the eighth year in a row while reducing an unpopular tax on poured alcoholic drinks at bars and restaurants to 7% from 10%. The budget anticipates the drink tax will generate $26.5 million for mass transit projects.

Onorato pointed to positive outlook changes in the city's rating as evidence of sound fiscal management.

"The positive ratings from Standard & Poor's and Moody's [Investors Service] are further proof of the success we have had over the last five years in increasing efficiency, cutting costs, reducing debt and growing our fund balance - all of which have been accomplished without raising property taxes," he said in a prepared budget address.

Referring to the drink tax and a car rental tax, he also touted the creation of a "dedicated funding source for mass transit that does not include property taxes has improved the fiscal outlook for Allegheny County, which strengthens our long-term financial position in economic development endeavors."

Standard & Poor's upgraded the county to A-plus with a stable outlook in May from single-A. That same month Moody's changed its outlook to positive on the county's A3 rating.

The rating upgrade reflected that "they are really aware of the challenges that they face and that they've been able to come up with a plan that addresses those shortfalls," said John Sugden, director at Standard & Poor's. The county has been working to address a structural imbalance while dealing with rising health care costs and salary increases. Sugden said the drink tax and rental car tax were credit positives because the county was "moving from funding it from non-recurring revenues to recurring revenues."

The county council has until Dec. 31 to pass a budget.

Elsewhere in Pennsylvania, Philadelphia Mayor Michael A. Nutter said yesterday that the city faces a $650 million to $850 million budget deficit over the next five years as business-tax revenues fall and pension costs rise. Last month Nutter projected a $450 million deficit.

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