Wednesday, April 30, 2008
The Drink Tax Overfloweth
Based on the first three months of collection, the new countywide levies on poured drinks and car rentals could exceed $30 million and might be closer to $35 million. That raises the question: if those projections are reached, what happens to the overage?
Recall that the reason the levies were enacted was to move the County’s annual subsidy to the Port Authority (in the range of $20-$25 million) from real estate taxes, since the executive told us that no County uses real estate taxes for mass transit, to new dedicated sources of funding. Act 44 allowed drink and car rental taxes, Council enacted them, and now they are sitting in a fund waiting on the outcome of the Port Authority contract negotiations.
Assuming the transit union agrees to concessions and reworks their contract to allow for changes to legacy costs, retirement age, and other benefits, the Executive said he would release the money. But does the subsidy go up to include everything from the drink/rental taxes, or just the historical level of subsidy? If it stays at $25 million or so, what happens to the rest of the money—does it stay in escrow and carry over to the next year? Or does the County have the ability to use it for general operating purposes?
Recall that the reason the levies were enacted was to move the County’s annual subsidy to the Port Authority (in the range of $20-$25 million) from real estate taxes, since the executive told us that no County uses real estate taxes for mass transit, to new dedicated sources of funding. Act 44 allowed drink and car rental taxes, Council enacted them, and now they are sitting in a fund waiting on the outcome of the Port Authority contract negotiations.
Assuming the transit union agrees to concessions and reworks their contract to allow for changes to legacy costs, retirement age, and other benefits, the Executive said he would release the money. But does the subsidy go up to include everything from the drink/rental taxes, or just the historical level of subsidy? If it stays at $25 million or so, what happens to the rest of the money—does it stay in escrow and carry over to the next year? Or does the County have the ability to use it for general operating purposes?
