Dueling drink tax questions under review

Restaurateurs', property owners' initiatives differ



Both sides in the fight over Allegheny County's 10 percent drink tax submitted potential referendum questions to the county elections office last week, but whether both initiatives will make it onto the November ballot is not a certainty.

That is because the county's administrative code gives both groups -- restaurateurs and bar owners who want to reduce the drink tax and a group of attorneys and property owners who want to sustain it as is -- equal chances to kill each other's referendum proposal before it even gets to the ballot.

Activists on both sides of the drink tax, which was put in place in January together with a $2-a-day tax on car rentals as a dedicated funding stream for the county's $30 million subsidy of the Port Authority, want the voters to settle this yearlong public policy debate.

And yet now that the anti-drink tax group Friends Against Counterproductive Taxation has submitted more than the 23,006 signatures it needed for a referendum and Allegheny County Council has filed a counter ballot question in an attempt to protect the levy, both sides are paying attention to the ballot certification process for both initiatives, which will most likely face a couple of court challenges.

Mark Wolosik, head of Allegheny County's Elections Division, said his office completed the first step of certifying both ballot measures on Wednesday -- by verifying that 40,302 petition signatures of the 44,598 submitted by the anti-drink tax restaurateurs and bar owners are "facially complete."

The signatures were checked for proper names and addresses and to verify that the people who signed the petition -- to ask voters to reduce the drink tax from 10 percent to 0.5 percent -- were actually registered county voters. FACT began a campaign in June dubbed "Whiskey Rebellion II" to collect the signatures.

Allegheny County Council, which granted itself authority to put referendum questions on the ballot last month, also submitted to the county elections office a referendum question: "Shall the county enact an ordinance to increase real estate taxes in order to repeal the alcoholic drink tax?"

Mr. Wolosik said that both County Council's referendum question and the petition signatures by FACT have now been "transmitted to the county Law Department for legal review."

Therein lies the first hurdle for the anti-drink tax referendum.

According to the county's administrative code, Mr. Wolosik said, county Solicitor Mike Wojcik, has until Aug. 27 to issue an opinion to the elections office and the county board of elections on whether both ballot initiatives are "legally sufficient."

The board of elections, based on the county solicitor's opinion, will then have one week to rule on whether both referendum questions are proper and legal and ready for the ballot.

The board of elections includes Allegheny County Chief Executive Dan Onorato and the two at-large County Council members, John DeFazio, D-Shaler, and Chuck McCullough, R-Upper St. Clair. All of them have taken public positions on both sides of the debate -- each questioning the legality of at least one of the referendum questions.

As a result, Mr. Onorato said, all members of the elections board will recuse themselves from handling the referenda and have asked Common Pleas President Judge Joseph M. James to name replacements.

Mr. Onorato and Mr. DeFazio contend the anti-drink tax referendum is illegal because it unbalances the county budget, and its proponents have not suggested an alternative funding source for the county.

On the other hand, Mr. McCullough holds that the referendum question generated by council may be nullified by the fact that the private Democratic caucus meetings, which were the basis for council meetings to grant itself power to create ballot initiatives, may have violated Pennsylvania's open records and meetings law, commonly called the Sunshine Act.

On Thursday, Jim Roddey, a former county chief executive and the chairman of the county's Republican Committee, sued County Council in Common Pleas Court over the July 8 meeting. The lawsuit claims a quorum of council met in private -- in violation of the Sunshine Act -- to hash out a plan of how to get a referendum question on the ballot.

"This is the first step in challenging that whole process that they went through to put a referendum question on the ballot," said Mr. Roddey, who contends that not only did the Democratic caucus violate the Sunshine Act, County Council as a whole does not have the authority to generate any referendum questions, according to the county's home rule charter.

"[The lawsuit] is an attempt to reverse the power they gave themselves. They are circumventing the county charter," Mr. Roddey said.

And if Mr. Wojcik, the county's solicitor, determines that FACT's referendum petition is "legally insufficient," then Mr. Wolosik said: "[the administrative code] requires us to return the petition [to FACT.]."

Such a move is likely because Mr. Onorato and his administration consistently have taken the position that the anti-drink tax referendum is illegal. His position is that in addition to unbalancing the county's budget, the referendum may also be a violation of the county's home rule charter, which puts some limitations on county revenue sources that can be changed even by referendum.

However, FACT attorney Cris Hoel argues the county has no leg to stand on because even with reduced drink tax revenues, the county's 2008 budget still would be balanced. What is more, he added, the home rule charter has specific guidelines on taxes that cannot be altered by referendum. The drink tax is not one of them, he said.

The drink tax, as it is currently structured, Mr. Hoel said, is on pace to significantly exceed the $28 million it was expected to bring in for this year's budget. That revenue could be used to keep the 2008 budget balanced.

As for next year's budget, "then the county must seek other revenue sources," Mr. Hoel said. "They have no legal basis to challenge our referendum."

He added that FACT will most likely challenge in Common Pleas Court any board of elections ruling against the certification of its referendum question.

Meanwhile, Shawn Flaherty, a Pittsburgh business attorney and managing partner of Flaherty Fardo LLC, recently started the group Citizens Against Raising Taxes on Property to fight on behalf of sustaining the drink tax. He said his group will seek a court injunction to stop the anti-drink tax referendum from getting on the ballot, if the county doesn't.

He said that his group of about 20 attorneys and real estate developers who represent more than 3,500 homeowners in tax assessment matters will soon file with the county elections office to create a political action committee. That will allow the group to start fund raising in what is expected to be a costly campaign to sustain the levy.

"We have a problem with the wording of the [anti-drink tax referendum] question. It simply asks the voter to make a decision if they want lower taxes," Mr. Flaherty said. "That is irresponsible."


Karamagi Rujumba can be reached at krujumba@post-gazette.com or 412-263-1719.




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