Nine-month review by Mayor Corey O'Connor's team uncovers years of underbudgeting, unpaid bills and restricted access to city financial systems.
Pittsburgh's government faced a financial crisis rooted in hidden and opaque budget decisions made under former Mayor Ed Gainey, according to a Post-Gazette investigation published September 4, 2026, that found a roughly $250 million gap over five years between Gainey's stated financial picture and the city's actual books. The discovery followed a nine-month review by Mayor Corey O'Connor's administration after it gained full access to internal budget software previously unavailable to City Council and the controller's office.
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Underbudgeting and Hidden Contracts
The investigation identified chronic underbudgeting of overtime, utilities and healthcare costs, alongside signed contracts left unfunded. Gainey's administration projected the city would spend nearly $7 million less on utilities in 2026 than in 2025, despite rate increases from Duquesne Light and Pittsburgh Water. A new police academy class received no budgeted funds for uniforms, and a roughly $500,000 police records management contract was signed without a corresponding budget increase. The city also spent nearly $9 million renovating the Oliver Bath House pool without budgeting for its ongoing operating costs, O'Connor said September 2.
City Controller's office staff, including budget analyst Heisler, reportedly were denied read-only access to the budget software by Budget Director Pawlak, according to the Post-Gazette. The 2025 budget, passed at the end of 2024, was projected to show a $3 million surplus but produced an $8.6 million deficit, driven partly by nearly $2 million in unpaid legal and fleet invoices kept off the books, a Post-Gazette editorial reported March 15, 2026.
Budget Reopened and Investigation Continues
O'Connor's administration reopened the 2026 budget in March, proposing $28.3 million in new spending on March 23 and ultimately adding about $28 million while drawing $6.5 million from the rainy day fund, City Council approving the changes with little resistance by April 8. By May 26, the projected 2026 deficit had grown beyond $24 million amid higher spending and weaker tax revenue.
Chief of staff Dan Gilman described the situation as "death by paper cuts," saying no single item caused the crisis but an accumulation of unbudgeted decisions. Allegheny County District Attorney Stephen Zappala is separately investigating city contracting and purchasing-card use, stating August 20 that "millions of dollars" spent on Gainey-era contracts appear unaccounted for, following a secret search warrant served on City Hall in March.
