Schools say 'no' to city on $5 million
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Pittsburgh's universities told Mayor Luke Ravenstahl yesterday they won't agree to his call for them to contribute $5 million to city coffers to avoid a tax on tuition paid by students.
Mr. Ravenstahl had given the universities until Monday to commit to the contributions he says the city desperately needs to replenish its underfunded pension fund. He said yesterday their decision leaves him no choice but to ask for approval of the tax by City Council, where five of the nine members have said they will support what he calls the Fair Share Tax.
"I hope they reconsider and re-evaluate their position. If they truly want to protect their students, then they will accept this very reasonable proposal," the mayor said in a statement about his $5 million request.
"But as it stands, their actions have left this administration with no choice but to pursue its only legally available option: the Fair Share Tax."
Council twice has delayed action to allow more talks about the tax, which would be 1 percent of a college student's tuition bill and is projected to raise about $16 million a year for the city. The tax would be the first of its kind in the country and is sure to face a lengthy legal challenge if it is implemented.
Mr. Ravenstahl said the city needs $15 million a year for its pension fund and asked universities to commit to $5 million annually in lieu of the tax. He said he would find the other $10 million through budget cuts, cost savings or contributions from other nonprofits.
In a four-page letter, the 10 members of the Pittsburgh Council on Higher Education reiterated their position against the tax and said they refused to discuss payments as long as the mayor continues to the threat of the tuition tax. They called the tax "divisive," "illegal" and "unenforceable."
Mr. Ravenstahl contends that the universities and other nonprofits never followed through on a commitment five years ago to contribute $6 million a year to the city to help when it faced a financial crisis. For three years, they averaged $4.67 million annually and thereafter offered less than $2 million a year that the city never agreed to accept.
"Many nonprofits, including the university community, have failed to contribute meaningfully for years and have even refused to enter into reasonable discussions," Mr. Ravenstahl said.
The decision by the university leaders set up a showdown next week unless last-minute, behind-the-scenes talks break the logjam.
Councilwoman Theresa Smith said she has spoken in recent days with both Dr. Hines and the mayor. She said everyone involved needs to dial back on the harsh rhetoric.
"Honestly, I think everyone needs to take a deep breath and come up with a solution to this huge problem," she said
Ms. Smith said the $5 million the mayor seeks annually for five years is "more than reasonable." She proposes that rather than "negotiate," the universities state up front in writing what share of the $5 million pool they are willing to fund each year, pledge to ask other nonprofits to do the same and "make it effective immediately after the tax is removed from the table."
"[Mr. Ravenstahl] didn't think that was such a bad idea, but he didn't think they would be willing to put it in writing," she said. "We'll find out Monday."
She was referring to a planned post-agenda council meeting on the proposed tuition tax that school representatives have been invited to attend. It's not clear whether the universities will attend.
"It's my hope that when they come to the table on Monday that everyone will drop some of the harsh stands," she said. "It will be a televised meeting. It will reflect on everyone as to who's working in the best interests of the city."
Duquesne University President Charles Dougherty, designated to speak for PCHE yesterday, declined to comment on Ms. Smith's proposal.
In an e-mail to his campus yesterday afternoon, he said the universities joined with other nonprofits to contribute to the Public Service Fund from 2005 to 2007. He said the purpose was to "help the city through a period in which it was on the verge of financial collapse"
He said "there was never any intent" in the agreement for the city to rely on nonprofits to balance its budget each year.
Quoting from the agreement, Dr. Dougherty said the city shall not use the contributions "as evidence that contributing charitable organizations can or should support the city under other circumstances, or, as a basis to argue for taxation of or to assess contributing organizations during or after the term of this Agreement."
Councilman Bill Peduto, who's against the tax, said he was not surprised at the position of the universities. He said he doesn't blame them for resisting what he called the mayor's gambit of "trying to extort from nonprofits and holding a gun to the head of students to bring it about."
"It's time to end this game and take a reasoned approach," he said. "I have faith that when we take this tax off the table, [the universities] will do the right thing."
The education council has acknowledged the city's financial need and said it would be willing to help by talking with other nonprofits and lobbying the state for legislative changes such as additional taxing authority or state participation in addressing the thorny problem of public pensions.
"This pension problem is not limited to Pittsburgh, and it requires a systemic statewide solution," University of Pittsburgh Chancellor Mark Nordenbeg said in a statement.
"Hopefully, the divisive tuition tax proposal will be abandoned."