Lamb questions whether Pittsburgh can impose tuition tax

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Pittsburgh Controller Michael Lamb said today that he's concerned with the legality of a proposed 1 percent tuition tax -- a sentiment that could jeopardize passage of Mayor Luke Ravenstahl's proposed $453.8 million budget for 2010.

His comments came on the same day that the heads of Pittsburgh's colleges spoke with one voice against the proposal.

"The fact that [Mr. Ravenstahl] actually came out yesterday and called this a tax is, I think, problematic," Mr. Lamb said. "I don't know that they have the authority to create a new tax like this."

The administration has said that state Act 511, the Local Tax Enabling Act, allows the city to impose "privilege taxes," like the proposed 1 percent levy on the privilege of getting a post-secondary education within the city.

The act "lists a number of taxes that local governments can charge," said Mr. Lamb, who is an attorney. "But for cities of the second class, the legislature has made it pretty clear what taxes can be charged" and a tuition tax is not among the privilege taxes described. Pittsburgh is the state's only city of the second class.

"It just seems to me that they are creating a new tax, and it's not clear to me that they have the authority to do that" without General Assembly approval.

Although Mr. Lamb has no vote on council, which must approve a budget that would include the tax by year's end, he effectively has veto power over the plan. Under state law, he must certify the reasonableness of the city's revenue projections before the state-picked Intergovernmental Cooperation Authority can give final approval to the city's budget.

The authority conditionally approved the city's budget last month, but demanded that the city return with a fleshed-out description of a proposed $16.2 million line item. The mayor did so yesterday, unveiling the tuition tax, meant to help fill the depleted pension fund, pay for capital improvements and aid the struggling Carnegie Library of Pittsburgh.

"I'm going to have some trouble certifying the revenues to the ICA, because I don't know if this is a [permissible] tax," said Mr. Lamb. He said he's communicating with city lawyers on the issue.

"Even if I agreed with the legal conclusion [that the tax is enforceable], I know that this thing is likely to be challenged in court," Mr. Lamb said. "It's very probable that that challenge would also involve a stay on the collection of the tax" leaving the city without that revenue for an indefinite time.

"I agree with everything the mayor said yesterday as far as motivation," he continued. "We've got to get greater revenue from the nonprofits."

The tuition tax, though, would hit universities without tapping medical institutions or tax-exempt insurers, he said. "This, while it's called the Fair Share Tax, doesn't extend that principle to a big segment of who we should be going after."

Deputy City Solicitor Ron Pferdehirt said that the proposed tuition tax is legal because the Local Tax Enabling Act allows collection of taxes on "privileges" exercised within their borders, and nowhere restricts any levy on tuition.

"There's nothing in there that says we can't do this," he said, noting that the city long taxed the privilege of doing business within its borders and is only now completing a phase-out of that levy. Studying at a school of higher education "is a privilege. There's general language authorizing taxation of a privilege. There's no restriction. Therefore the city can do what it's doing."

He said that because it hits residents and non-residents equally, the levy doesn't violate the state constitution's demand for uniform taxation.

ICA Executive Director Henry Sciortino said his agency "hasn't vetted any [new tax] with the city. We haven't seen the legislation.

"We continue to urge the city to maximize its operating efficiencies as its highest priority, and put forth all efforts to become the most efficient it can, before they go after new revenue."

If the ICA doesn't eventually approve a budget, it must inform state officials, potentially triggering sanctions against the city.

Also today, leaders of eight centers of higher education in the city came out today against the tax.

"We believe that the proposal is illegal and unenforceable," said Mary Hines, president of Carlow University and chair of the Pittsburgh Council on Higher Education. "We don't think it's going to pass, because we believe it is illegal, and if it does pass, we will have to do whatever we need to do" to oppose it.

She did not rule out going to court or seeking pre-emption through the General Assembly, but said that first she's writing to Mr. Ravenstahl inviting him to join the colleges, city council, and state overseers in a discussion on the city's revenue needs.

"We're happy to talk with him, the city council, the oversight committees" on alternatives, said Dr. Hines. "I wouldn't close the door on any way that we could collaborate. However, I wouldn't say we're ready to do any one particular thing," she said, when asked whether the colleges would help the city lobby in Harrisburg for some revenue enhancement.

Present at a news conference today were leaders of Duquesne University, the University of Pittsburgh, Robert Morris University, Point Park University, the Pittsburgh Theological Seminary, LaRoche College, Chatham University and Carlow University. Carnegie Mellon University has also come out against the tax.

LaRoche College is not in the city. But the assembled higher education leaders said the issue is important beyond the city's borders and emphasized that they are fighting the principle of taxing tuition.

"Pittsburgh would be the first to establish a tax on tuition paid by students," said Dr. Hines. "It takes away our competitive advantage in attracting students to this area."

Mr. Ravenstahl argued yesterday that students consume city services and don't pay their "fair share" of the tax burden that covers police, fire, paramedic, building inspection and other core functions.

Dr. Hines countered that a "great number of our students are already city residents," who pay a variety of taxes to the city.

Mr. Ravenstahl said parents and students should look at the "questionable" fees colleges and universities are charging today.

"He doesn't have exactly a clear view on what the fees are that we charge," argued Dr. Hines. "We try, very carefully, to ensure that the charges that we do give students for their education are directly related to the benefits they receive from our institutions."

More details in tomorrow's Pittsburgh Post-Gazette.


Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.


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