Fitzgerald vetoes two tax breaks as too costly

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With an eye toward holding property taxes steady, Allegheny County Executive Rich Fitzgerald used a veto Friday -- his first -- to strike down legislation passed last week by county council that gives tax breaks to people who purchase newly constructed homes or make home improvements.

If the county gives a small group of county residents a tax break, "then everyone else has to pay for it," he said. Instead, he is working with members of council on legislation that will change the programs and "taper it off."

Mr. Fitzgerald said the Act 202 program, which gives a two-year county property tax abatement to people who buy newly constructed homes, and the Act 42 program, which gives a tax break for home improvement renovations, were enacted 18 years ago as "temporary boosts" for an industry that was struggling.

"I think it was a good program," he said. Indeed, during his tenure, he voted yes on the legislation seven times, each time it came up for consideration.

But he said it was intended as a temporary fix, not a permanent tax break

"That same climate doesn't exist in Allegheny County today as new construction continues to grow," he said in a statement announcing the veto. "If we were to continue this tax break, or give others to a small group of people, it means that we would have to raise taxes on everyone else sooner than I feel is reasonable or acceptable."

Both tax abatement programs are relatively small. The new home construction cost the county just over $2 million in 2013, with 1,699 people applying for it. That same year, the home improvement abatement cost the county $1,011 dollars, with only 11 people applying for it.

Michael Finnerty, D-Scott, chairman of the council's budget and finance committee, plans to introduce new legislation that will continue the programs through 2015, but with alterations. Mr. Fitzgerald, as well as county council President John DeFazio, D-Shaler, will co-sponsor the new legislation.

The new bills will increase the amount of the home improvement exemption program from $36,000 to $66,000 but will reduce the amount of the new home construction exemption program to 50 percent of the assessed value. Mr. Finnerty had suggested similar changes before the bills were approved.

Jim Eichenlaub, executive director of the Builders Association of Metropolitan Pittsburgh, said he and other homebuilders planned to attend the county council meeting scheduled for Tuesday to persuade members to override Mr. Fitzgerald's veto, which would require a two-thirds vote of council, 10 of the 15 members.

Jeff A. Martin, a partner at Richland Holdings and treasurer for the association, said the veto will hurt some of his recent customers, such as a retired couple who moved into a West Deer home assessed at $204,000 last year. They anticipated an abatement on a $945.16 county tax bill, he said.

Sue Means, a Republican from Bethel Park who has championed the two tax breaks as a way to encourage people to move to Allegheny County and increase the tax base, said she is in favor of an override, but that she doubted the votes are there.

As for an override to his veto, Mr. Fitzgerald said, "I think we'll be fine."

Kaitlynn riely: or 412-263-1707. First Published February 14, 2014 1:22 PM

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