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City pulls a fast one to get fast money
Thursday, October 26, 2006

A tip for anyone working for low pay in Pittsburgh: Start saving now, or maybe look for a job outside the city limits in January.

Starting next year, Pittsburgh will be the last place in Pennsylvania where workers continue to pay the full $52 local services tax from one paycheck in January. Everywhere else, the tax will be no more than a dollar per week.

The bill making Pittsburgh the final outpost of confiscatory tax policy for the next three years overwhelmingly passed both houses of the state Legislature this week. It now awaits only Gov. Ed Rendell's signature, even though not all legislators knew the Pittsburgh exemption was in the bill.

You have to read those 17-page bills to the end, guys.

As the premise for treating Pittsburgh differently is that it is a "distressed'' community, I called leaders in Braddock, Johnstown and Scranton, which also have been declared distressed under state Act 47. Here's what they think:

"I don't consider Pittsburgh a distressed community, not in the same vein as Braddock,'' John Fetterman, the borough's mayor, said. "That's a ridiculously overblown label for Pittsburgh, and does not do an apt job of describing the situation in Braddock.''

Yet the big city gets the waiver, not the borough that went from roughly 20,000 residents in the 1950s to less than 3,000 today.

Mayor Fetterman is happy low-wage workers won't have to take that hit anyway, and his borough will figure a way to work with a slower stream of tax revenue. Braddock police start at only $7.86 an hour, he said, and $52 was a big slice from "an embarrassingly low wage.

"I don't expect [receiving the tax incrementally] to have a significant impact on our bottom line.''

In Johnstown, City Manager Curt Davis faces the same issues as Pittsburgh. Almost half the property is held by non-profits and produces no property taxes. The largest employer is a hospital that pays no business taxes.

Mr. Davis said he'd argue for an exemption the way Pittsburgh Mayor Luke Ravenstahl has, but since it's too late, "I'll probably make somebody wait to get their payment'' from the city.

Scranton Mayor Chris Doherty, president of the Pennsylvania League of Cities & Municipalities, got nowhere trying to get Democratic legislators to exempt all distressed communities. Why the Republican-controlled Legislature gave this break to a Democratic bastion like Pittsburgh is anyone's guess, but "obviously their leadership or their representatives made some arrangement,'' Mayor Doherty said.

The change will mean less tax revenue up front for Scranton and more than 700 other communities imposing this annual tax, but that can be handled with tax anticipation notes. Scranton will borrow a little money in anticipation of getting tax money later. Mayor Doherty didn't make that sound like a big deal.

Sen. Sean Logan, D-Monroeville, is among those arguing for a 72-hour waiting period before final approval of any bill: "Until we fix the bad rules, we'll have bad laws.''

Though Sen. Logan knew of the Pittsburgh exemption, he voted for the bill because it gave breathing room to taxpayers working in other communities. But Rep. Don Walko, D-North Side, said he did not realize a city exemption was in place.

"You're kidding,'' he said. "I didn't pick that up. I can't believe it. They just snuck that in. I was wondering why the city hadn't approached us regarding their budgetary concerns. Maybe that's why they didn't.''

Rep. Walko said it was unfair "to the citizens of our neighborhoods, including my daughter.''

The legislation still would allow City Council to vote to levy this tax a little at a time like every other community, according to a House Democratic staff member. But you have to figure if suburban legislators didn't stop this, council won't.

Nonetheless, Councilman Bill Peduto, a sure rival for Mayor Ravenstahl in the May primary, said he would try to get council to stop a taxing system that is "unfair, egregious and an abuse of government.''

At a certain income, a $52 slice from a paycheck is a mere annoyance, but census data suggests about 36,000 people working in Pittsburgh earn less than $12,000 a year. They're eligible for a $42 rebate, but they have to pay the $52 up front and wait for the refund next year, at which point the city would want $52 more.

Pulling yourself up by your bootstraps is tough when the city takes the bootstraps, returns most of them a year later, then takes your new straps.

First published on October 26, 2006 at 12:00 am
Brian O'Neill can be reached at boneill@post-gazette.com or 412-263-1947.