After two years on the job, in Pittman's second two-year term, Ohio's State Auditor declared on September 9, 1988 that East Cleveland was in fiscal emergency. The fiscal emergency designation came when the water and sewer fund were found to have deficits in excess of $2 million. Pittman was defeated in 1989 by Wallace D. Davis, the council president and a funeral home owner. Prior to his defeat, Pittman convinced former U.S. Rep. Louis Stokes to support a congressional amendment that made East Cleveland a "direct entitlement city" under HUD. That designation gave the city the authority to receive more than $1 million a year in block grant funding directly from HUD.