Pittsburgh colleges throw book at mayor's tuition tax
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The tuition tax that Pittsburgh Mayor Luke Ravenstahl sees as the city's ticket out of financial distress drew mixed reviews from council members, yelps from students and parents and harsh words from some of the biggest targeted schools yesterday.
The city's colleges immediately condemned the move and scheduled a news conference for tomorrow.
Duquesne University rallied its staff with an e-mail calling the proposed 1 percent levy on tuition "an attack on college access and affordability.
"[I]t would be extremely shortsighted to create a disincentive for students to come to Pittsburgh colleges and universities," Duquesne President Charles J. Dougherty wrote, calling the proposal illegal.
Mr. Ravenstahl, though, said the tax isn't just legal and fair, but essential.
"There is a tremendous amount of service that we provide already to these college students -- police protection, fire protection, building inspectors," Mr. Ravenstahl said, and it's time they helped pay for it.
His proposed $453.8 million budget for 2010 relies on $16.2 million from the tax on tuition paid to post-secondary schools, from the University of Pittsburgh and Carnegie Mellon University to the Pennsylvania Gunsmith School and Vet Tech Institute. The schools would collect the tax and turn it over to the city.
Its effects would range from a $403 charge to CMU students to a $20 hit to a Community College of Allegheny College enrollee.
The mayor's message to students and tuition-paying parents: "You have a role to play, and this is rather insignificant, in the grand scheme of what you pay.
"I would ask those parents to look at the bills that they're currently paying, and ask those institutions where the fees are going for security, safety, transportation, orientation, initiation," he said, implying schools should roll back those "questionable" fees.
Considered earlier, but off the table for now, are a proposed tax on hospital bills, surcharge on all-day parking at public garages, and hike in water rates for educational and medical institutions. Mr. Ravenstahl said hospital patients don't place the same burdens on city services that students do, and the parking and water charges wouldn't raise enough money.
The focus on students bothered some council members, five of whom will have to vote yes to make the tax happen.
"What about [health insurers]? What about the large hospitals?" asked Council President Doug Shields. "These institutions are not without their lobbyists, and [their executives are] not without their ability to make campaign contributions," whereas students usually don't even vote in local elections.
Mr. Ravenstahl said the city needs almost $15 million more each year to pump up its pension fund, which at last count included just one-third of the $899 million it should hold to cover its obligations. Along with proceeds from a proposed lease of the public parking garages, the tax should be enough to put the pension fund on a path to health, and avoid a threatened state seizure, the administration argues.
If the city can save the pension fund, it can ask Gov. Ed Rendell to remove it from the state program for municipalities in financial distress, which brings with it fiscal oversight by the state, the mayor said.
The leftover $1 million from the tuition tax would go to the Carnegie Library of Pittsburgh system, provided it cancels plans to close branches. The library administration issued a statement saying its leaders "greatly appreciate all of the ideas, offers and support that have recently come from our elected local and state officials" but need to evaluate the proposal.
In advance of tomorrow's news conference by the Pittsburgh Council on Higher Education, Pitt and CMU also issued statements condemning the tax.
Pitt's statement said the university already pays nearly $4.5 million in real estate, parking and amusement taxes to the city, and runs its own police force at a cost of $3.6 million a year that benefits city residents.
"Through all of our current avenues of direct and indirect support to the city, we do believe we are paying our fair share for city operations," it concluded.
CMU brought to the city more than $300 million in research revenue this past year, creates spin-off companies, and has been instrumental in luring companies like Google and Intel to the city, its statement said, claiming credit for generating "more than 250 jobs for promising young professionals who may not otherwise have stayed in Pittsburgh."
Nationally, Terry Hartle, senior vice president for the American Council on Education, called the tuition tax "unprecedented, as far as we can tell," and "a remarkably bad idea."
"The quickest way to ruin Pittsburgh's emerging reputation as a college town is to become the first city in the nation to tax its students," said Don Francis, president of the Association of Independent Colleges and Universities of Pennsylvania.
Though the mayor dubbed the levy the "Fair Share Tax," Mr. Francis asked if it was "fair to ask students who have been hit hard by these tough economic times" to pay more.
Kurt Stewart, a Sheraden resident whose son is a freshman musical theater major at Point Park University, Downtown, said raising taxes is "crazy."
"I feel like we're getting double-taxed," he said, since his family already pays property and wage taxes. "We'll have to find it somewhere."
Some council members are considering people like Mr. Stewart, and exploring a credit for families that pay city taxes.
Mr. Ravenstahl said that would violate the state Constitution -- which requires uniform taxation -- and ensure the tax's defeat in court. A percentage-based tax with no exemptions can be imposed without any General Assembly authorization, he said.
Council Finance Chair William Peduto, however, said he thinks the tax needs Harrisburg's approval and may rally council members to find an alternative.
"All of us would prefer a tax on nonprofit payroll preparation," said Councilman Ricky Burgess, since that would match a 0.55 percent levy on the payrolls of for-profit businesses. But with little General Assembly interest in allowing direct levies on tax-exempt institutions, the tuition tax "is certainly a way to begin to think about having nonprofits pay their fair share."
Councilwoman Theresa Smith said she hopes the tax proposal drives the city and colleges to petition the General Assembly for a fairer tax shift. But, she added, there may not be time for that.
"If this is the only thing we have at the end," she said, "I will vote for it."
First Published November 10, 2009 12:00 am