Attempt to reduce drink tax stalls in committee
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No change is likely soon in Allegheny County's still-controversial drink tax.
County council's finance committee met recently to discuss -- but took no action on -- a proposal to lower the tax rate from 7 percent to 6 percent on alcohol, beer and wine consumed in bars and restaurants.
Councilman Chuck McCullough, R-Upper St. Clair, proposed the rate cut.
Council had passed a 10 percent drink tax and a $2-a-day car-rental levy in 2007 to provide a reliable source of funds for mass transit services. The two taxes raise local matching funds to help finance the Port Authority's bus and light-rail system.
County Executive Dan Onorato had supported the new drink and rental car taxes as the best alternative to increasing property tax rates.
When the drink tax raised much more money than was needed to provide the county's 15 percent matching funds, which the Port Authority needs to qualify for state transit aid, council trimmed the rate to 7 percent.
That rate is still too high, leaving $5 million in drink tax revenue unspent, Mr. McCullough has told his colleagues.
"Anytime we can cut taxes for people, we should do it," Councilman Matt Drozd, R-Ross, said at the Feb. 22 finance committee meeting.
Councilman Michael Finnerty, D-Scott, saw the issue differently. He described the $5 million as a cushion to cover unexpected costs or decreases in future revenues.
The reserve fund is not too large considering the amount of money the county provides for mass transit, he said. In addition to providing about $27 million annually toward Port Authority operating costs, the county also contributes toward debt service and capital projects, he said.
The county's total allocations for the Port Authority over the past three years have totaled $103.3 million while the local taxes have raised $108.6, leaving about $5.3 million unspent, he said.
Mr. Finnerty's position drew support from county Manager Jim Flynn. "It would be prudent policy to keep a fund balance" in the Port Authority account, he said.
Committee members agreed that it was too soon to take the measure before full council for a vote.
Finance committee chairman William Robinson, D-Hill District, said he would schedule another committee meeting to discuss the tax rate. No date was set for that session.
First Published February 28, 2011 12:30 am