Allegheny County Executive Dan Onorato never should have tried to use revenue from the county's new drink and car rental taxes to bolster the rest of the budget.
The intention of the Legislature in passing provisions for the new taxes as part of a far-reaching transportation bill was to give the county's Port Authority a steady, predictable funding stream, something the county had been seeking for years. The law authorized the county to impose two new taxes, a 10 percent levy on poured alcoholic drinks and, to a lesser extent, a $2 per day tax on rental cars.
It should have been clear to Mr. Onorato from the outset that the new taxes were to fund mass transit only, not to cover other county expenses.
Last week, Common Pleas Judge Judith F. Olson said just that in response to a lawsuit filed by drink tax opponents, who asked her to bar the county from spending the excess $12 million the tax raised. Based on an overly broad definition of "transit," Mr. Onorato had hoped to use the money for bridge and road repair projects.
Although Judge Olson said no to that, her ruling was not a complete victory for the tax foes. Beyond the county's $28 million payment to the Port Authority for 2009, she said the tax revenue also could be used to pay debt service incurred from bonds the county issued for Port Authority projects and for Port Authority capital expenditures and other expenses.
Mr. Onorato already had planned to use $4.6 million for debt service and, as a result of the ruling, he said the remaining $12 million will be used for Port Authority capital projects over the next two years.
That leaves a $12 million hole in the county's operating budget that Mr. Onorato now must fill. Fortunately for county homeowners, he said he won't raise property taxes and instead will rely on belt-tightening, which could include layoffs or program cuts.
This problem was of Mr. Onorato's own making, but it is not one that's likely to recur next year. He proposed that County Council cut the drink tax rate from 10 percent to 7 percent, so it shouldn't generate that extra $12 million in 2009. Now it's time for bar owners, who raised their prices to cover the tax increase, to give their customers a small break in return. After all, it's the bar and restaurant patrons, not the owners, who actually pay the tax.