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Tax proposal pits bar owners against bus riders
Tax on drinks and car rentals seen as solution to transit crisis
Wednesday, October 03, 2007
Steve Musciano, a general manager with Aramark, joins the hospitality industry's protest yesterday of Allegheny County's proposed drink tax outside the County Courthouse, where County Council held a public hearing on the plan.

Everyone agreed that public transit deserves stable funding. Nobody likes to see property taxes increase.

What bothers local restaurant and bar owners is that the state legislators' menu of solutions for Allegheny County lists only two other choices -- a tax on poured drinks and a tax on rental cars, and the car rental tax could eventually be overturned by Congress.

"It's unfortunate that the Legislature has put us in this position," said John Tague Jr. of the Allegheny County Task Force on Disabilities.

Mr. Tague was one of nearly 50 people who testified last night before Allegheny County Council's Committee on Budget and Finance about recent legislation enabling the county to tax alcoholic drinks and car rental transactions to generate needed matching funds for the Port Authority.

The taxes -- up to 10 percent on drinks and a $2 tax on rentals -- are expected to be included in Chief Executive Dan Onorato's budget proposal next week.

After more than three hours of testimony last night, the issue will now go to the Budget and Finance Committee for consideration Oct. 16.

"I need to hear from the chief executive," said Chairman William Russell Robinson after the hearing. "I want to see what it is that he wants to tell us."

Although several speakers say this shouldn't pit restaurant owners against bus riders, the line has been drawn for some.

After fighting for years to gain stable, predictable funding for local public transit, many see the drink and rental taxes as the long-awaited life preserver that could save their cause.

"We recognize that it's not the best option, however it's the only option we have," said Amanda Zeiders, from Save Our Transit. She's called for a boycott of restaurants that oppose the tax.

Restaurant owners, meanwhile, still bristle at how state legislators slipped the enabling legislation into a transit funding bill without public discussion and believe it is unfair to single out any one industry to carry the funding burden.

Some also questioned why a tax that would generate perhaps $50 million needed when the transit matching fund shortfall is closer to $1 million, suggesting the extra money will be used for the countywide deficit.

"This is about a budget deficit at the county level. It's not about public transit," said Kevin Joyce, proprietor of The Carlton and chairman of the Pennsylvania Restaurant Association.

Tom Baron, of the Big Burrito Restaurant Group, said a tax would only add to growing costs of business, from wages to fuel. It would also hurt their workers. If a $3.50 beer costs $3.85 with the tax, the bartender likely will be getting 15 cent tips instead of 50 cents.

Representatives from the rental car industry said that, contrary to common perceptions, most car rental customers are local residents. If the tax is passed, said Tom Farmer of Enterprise Rent-A-Car of Pittsburgh, "Allegheny County would be the most expensive place to rent a car in Pennsylvania."

He also noted that if proposed federal legislation banning new taxes on rental vehicles passes, it would block the Allegheny County tax.

Council members acknowledged the difficult choice ahead of them. "You understand what we're up against?" asked John DeFazio at one point. "Number one, we all know we need a transit system. Somewhere along the line, something has to happen."

But Susan Caldwell, who represents the District 7 communities including Penn Hills, Oakmont and Verona, said she worries the tax would put suburban restaurant owners at a disadvantage with restaurants in adjoining counties.

"If there's a deficit in the budget, I don't think the way to cure it is to add another tax."

Another council member, Matt Drozd, said he has proposed an ordinance that would require voter approval by referendum before any new tax or tax hike could be implemented.

First published on October 3, 2007 at 12:00 am
Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963.