Tuesday, November 27, 2007
Put in Writing?
Allegheny County Chief Executive Dan Onorato signed an executive order on Monday that backs up his promise to withhold money from the Port Authority (PAT) unless the transit agency reduces costs. Since providing local money is necessary to unlock state funding, this Order may be the proof needed that the Executive will finally get tough with PAT and force the cost cuts needed. Or the Order may do nothing more than provide County Council members with enough cover so that they will approve the two new taxes he is seeking to plug the hole in his budget.
With Act 44, the state has increased its allocation to mass transit. But in order for a transit agency to receive the extra funds, the local government must provide matching funds of 15 percent. To receive $184.4 million in state money, Allegheny County must provide PAT with $27.5 million. Also through Act 44, the state gave Allegheny County permission to institute two new levies in order to meet this matching fund requirement—a 10 percent poured alcoholic drink tax and a $2 per day rental car levy.
Currently the County provides PAT with $25 million from property tax revenues which the Executive would like to see returned to the County budget to plug an expected deficit. He uses the argument that other cities do not use property tax revenues to fund transit, but rely on other sources. In the Executive Order, he mentions ten such cities. While some of these cities use a dedicated sales tax, Allegheny County also has a sales tax, the Regional Asset District (RAD) tax, from which a portion of the County’s proceeds could be used for transit. But this swap of the property tax for the RAD tax would still leave a hole in the County’s budget and force the Executive to deal with it through either cuts, which he says is nearly impossible, or through the property tax, for which his base year assessment plan has frozen the revenue stream.
Thus he needs the new levies to bail him out. But the reception from County Council has not been too warm. To reassure them that the new money will not be wasted, he had pledged not to give any of the revenues to PAT until changes are made and costs are cut. With the Executive Order, he even put it into writing.
Unfortunately for the Chief Executive, the union is used to these types of tactics—tough talk of cutting costs and reducing service only to see money come pouring in to avert a shutdown. Also, he may have tipped his hand when he also said; “obviously, we’re not going to let Port Authority shut down.” The language of the Executive Order does say that the County will be “expressly prohibited from distributing funds derived from Act 44 of 2007” unless costs are “restructured” at the Port Authority. But could a shutdown be averted by using money from another source, or even by convincing the Governor to release the state’s contribution anyway? After all, Act 44 does have a hardship clause that waives the matching fund provision.
Hopefully the Chief Executive is serious about restructuring the costs of the Port Authority and reducing its crippling legacy costs. However, these actions can be done without the imposition of two new taxes on an already overtaxed population. If he is successful in getting these two costs reduced, then the need for extra revenue would be negated and he can begin the process of reducing taxes for the residents of Allegheny County, not imposing new ones.
With Act 44, the state has increased its allocation to mass transit. But in order for a transit agency to receive the extra funds, the local government must provide matching funds of 15 percent. To receive $184.4 million in state money, Allegheny County must provide PAT with $27.5 million. Also through Act 44, the state gave Allegheny County permission to institute two new levies in order to meet this matching fund requirement—a 10 percent poured alcoholic drink tax and a $2 per day rental car levy.
Currently the County provides PAT with $25 million from property tax revenues which the Executive would like to see returned to the County budget to plug an expected deficit. He uses the argument that other cities do not use property tax revenues to fund transit, but rely on other sources. In the Executive Order, he mentions ten such cities. While some of these cities use a dedicated sales tax, Allegheny County also has a sales tax, the Regional Asset District (RAD) tax, from which a portion of the County’s proceeds could be used for transit. But this swap of the property tax for the RAD tax would still leave a hole in the County’s budget and force the Executive to deal with it through either cuts, which he says is nearly impossible, or through the property tax, for which his base year assessment plan has frozen the revenue stream.
Thus he needs the new levies to bail him out. But the reception from County Council has not been too warm. To reassure them that the new money will not be wasted, he had pledged not to give any of the revenues to PAT until changes are made and costs are cut. With the Executive Order, he even put it into writing.
Unfortunately for the Chief Executive, the union is used to these types of tactics—tough talk of cutting costs and reducing service only to see money come pouring in to avert a shutdown. Also, he may have tipped his hand when he also said; “obviously, we’re not going to let Port Authority shut down.” The language of the Executive Order does say that the County will be “expressly prohibited from distributing funds derived from Act 44 of 2007” unless costs are “restructured” at the Port Authority. But could a shutdown be averted by using money from another source, or even by convincing the Governor to release the state’s contribution anyway? After all, Act 44 does have a hardship clause that waives the matching fund provision.
Hopefully the Chief Executive is serious about restructuring the costs of the Port Authority and reducing its crippling legacy costs. However, these actions can be done without the imposition of two new taxes on an already overtaxed population. If he is successful in getting these two costs reduced, then the need for extra revenue would be negated and he can begin the process of reducing taxes for the residents of Allegheny County, not imposing new ones.
