Mayor opens tax crusade, wants city's commuters, tax-exempts to pay more

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Pittsburgh Mayor Luke Ravenstahl yesterday jumped at what he called a "golden opportunity ... to really fix our finances for the foreseeable future" by tapping commuters and tax-exempt institutions, even as some state legislators said any tax hikes were a non-starter.

With that, the age-old bouts of city vs. suburbs, and tax man vs. tax-exempt, entered another multimillion-dollar round.

The mayor's plan to keep the parking tax at 37.5 percent instead of making a state-mandated cut to 35 percent would keep some $3 million a year in the city's hands. A hike in the $52 tax on those who work in the city, to $145, could bring in $23 million -- two-thirds from suburbanites, the rest from city residents. And extending the 0.55 percent tax on business payrolls to tax-exempts like hospitals and universities could net $16.5 million.

Even if new revenue ends up being $30 million, that "allows us to obviously be sustainable on the operating side of things for years to come, but also allows us to begin to deal with pension [shortfalls] and debt, something that we've talked about for a long time but don't have the resources locally to make any significant impact," Mr. Ravenstahl said.

"If he thinks taxes are the first option, he's delusional, in this economy," said state Sen. Jane Orie, R-McCandless. "If you think other legislators across the state are going to agree to raise the city of Pittsburgh's occupational tax to $145, you're out of touch."

Mr. Ravenstahl was seconding the motions of the state-picked Act 47 recovery team, which submitted a 290-page plan to City Council Thursday. It's a sequel to a 2004 plan that pinched city workers' wallets and led to the creation of the payroll tax and a boost in the tax on those who work in the city from $10 to $52 a year.

The new plan would cut four swimming pools, meld two fire stations into one, ax a few jobs, and seek to save the city's two-thirds-empty pension fund.

The mayor called its menu of tax options "a great start."

Past parking tax cuts, which brought the levy down from 50 percent since 2006, resulted only in "giving the tax revenue right into the pockets of the lot operators," he said.

The biggest private lot operator disagreed. "People would be paying more for parking now if that tax hadn't been reduced, and if the tax stays the same now, rates will increase," said Merrill Stabile, president of Alco Parking.

Someone who lives in a suburban municipality with a 1 percent levy on a $60,000 salary, and has a $200-a-month lease at a Downtown garage, pays the city more in parking taxes -- $654 a year -- than they pay their home town in wage taxes.

"It has to go down," said Rep. Mike Turzai, R-Bradford Woods, calling it one of the highest parking taxes in the nation.

But leaving it at 37.5 percent "might be more palatable than increasing some other fee or tax, like the $52 tax," said Rep. Don Walko, D-Observatory Hill.

Nearly tripling the $52 tax on those who work in the city would still leave it lower than the commuter taxes in some other cities, Mr. Ravenstahl said, and would help address a fairness problem.

"To Sen. Orie and some of the suburban legislators, when you go out of town, and you're asked where you live, you say Pittsburgh," Mr. Ravenstahl said.

"We all experienced a great Penguin win [Thursday] night. There were a lot of people that came to that game that didn't live in the city. Our police officers helped them to get out of there afterward by directing traffic. Our firefighters and paramedics were there to make sure that everything went well."

But Mr. Walko, an ally of the mayor, called that "dead on arrival."

Council-mayor differences could muddy the waters.

Council Finance Chairman William Peduto said the city could raise about the same amount with a 0.25 percent tax on the earnings of everyone who works in the city, so those earning $20,000 would pay $50, but those making $100,000 would pay $250.

The mayor said there's "clearly the need for nonprofits to contribute more than they do currently, whether that's through state action or through increases in voluntary [contributions]."

The Pittsburgh Public Service Fund, a consortium of tax-exempt entities, has offered the city a total of $5.5 million for 2008 through 2010, down from $14 million it gave from 2005 through 2007. City estimates are that tax-exempts own $3 billion in untaxed property and have $3 billion in untaxed payrolls, and if all of that were taxable, the city would reap nearly $50 million yearly.

University of Pittsburgh Medical Center spokesman Paul Wood said yesterday that tax-exempt organizations benefit the community in other ways, citing the $518 million UPMC provided last year in free care, support to other nonprofits and investment in research and education, plus voluntary payments to the city and the Pittsburgh Promise for college tuition.

City Controller Michael Lamb has proposed extending the payroll tax to the tax-exempt employers, but lowering the rate by 20 percent, or exempting small businesses. That approach, he said, could win Chamber of Commerce support.

Extending the payroll tax to tax-exempt institutions could be unconstitutional and also politically tough, said Sen. Wayne Fontana, D-Brookline.

He has introduced legislation to tap large nonprofit landholders but has found few co-sponsors. "People just don't want to rock the nonprofits' boat, I guess, for whatever reason."

"The best thing to do is put these three proposals on the table and talk about them," Mr. Lamb said. "My guess is Harrisburg might be willing to go for one or two of them."


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


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