Tuesday, May 06, 2008
Should PAT Get Tax Overflow?
We’ve written at length in our Briefs and on this blog about the twists and turns surrounding the new taxes on poured drinks and car rentals authorized in Act 44 to provide dedicated funding to the Port Authority. These taxes would swap places with the $20-25 million or so from property taxes that the County had historically sent to the Authority for a local match. Then the Executive said that the match from the new taxes would not go to PAT until they changed standard operating procedures like being able to retire at 50 and getting health care well into retirement. With the union contract set to expire on June 30th and the authority’s fiscal year starting the day after, the PAT board has floated plans to borrow the local match as a way of protecting itself against the Executive withholding the funds.
Since the taxes are sitting in escrow and the Executive has said that he won’t allow the transit system to be shut down, the union isn’t as boxed in as the Executive would have us believe. In fact, early projections on the drink tax are running ahead of targets and the first quarter of collections are so high that, if sustained, the drink tax will come in at 28% above the budgeted amount.
So what to do? County Council will debate legislation tonight that proposes to cut the rate on the drink tax from 10 percent to 5 percent. No change is proposed to the current $2 per day rate on a vehicle rental.
Here’s another interesting part. The ordinance proposes that “in the event that [drink/rental] tax revenues are generated in excess of those required to meet the statutory matching fund requirement” they will be used for “the purpose of funding other operating or capital needs of the Port Authority”.
That’s quite a change from how this process has shaped up thus far. The rate cut provides relief to those unhappy about the drink tax, but why offer to just hand all the money generated from the tax to the Port Authority, especially when its powerful union may not concede any ground on its contract? With their ability to walk out and shut the system down, pressure will come to bear on the PAT board, management, and County officials to get the buses and trolley running again. This could mean that the new contract ends up a lot like the current contract, and since the Executive’s order states that the County is “legally required” to send a local match, this new legislative language would offer a higher reward to keep PAT operating as is.
Rest assured that if the Act 44 taxes produce more money than is needed for the local PAT match that a lot of people will be clamoring for any dollars they can grab.
Since the taxes are sitting in escrow and the Executive has said that he won’t allow the transit system to be shut down, the union isn’t as boxed in as the Executive would have us believe. In fact, early projections on the drink tax are running ahead of targets and the first quarter of collections are so high that, if sustained, the drink tax will come in at 28% above the budgeted amount.
So what to do? County Council will debate legislation tonight that proposes to cut the rate on the drink tax from 10 percent to 5 percent. No change is proposed to the current $2 per day rate on a vehicle rental.
Here’s another interesting part. The ordinance proposes that “in the event that [drink/rental] tax revenues are generated in excess of those required to meet the statutory matching fund requirement” they will be used for “the purpose of funding other operating or capital needs of the Port Authority”.
That’s quite a change from how this process has shaped up thus far. The rate cut provides relief to those unhappy about the drink tax, but why offer to just hand all the money generated from the tax to the Port Authority, especially when its powerful union may not concede any ground on its contract? With their ability to walk out and shut the system down, pressure will come to bear on the PAT board, management, and County officials to get the buses and trolley running again. This could mean that the new contract ends up a lot like the current contract, and since the Executive’s order states that the County is “legally required” to send a local match, this new legislative language would offer a higher reward to keep PAT operating as is.
Rest assured that if the Act 44 taxes produce more money than is needed for the local PAT match that a lot of people will be clamoring for any dollars they can grab.
