Discussing the Act 47 plan yesterday, Pittsburgh's Mayor said this about the plan's so called failsafe option of increasing taxes to fund budget shortfalls:  "I will not raise property taxes on the residents of this city. I will not raise any tax that will solely be levied on this city's residents".

Let's take both parts of the Mayor's statement.  On the first, it is clear that the Mayor would not support a direct increase in the 10.8 City millage rate, but he would be fine with the County (voluntarily or involuntarily) conducting a reassessment. 

The evidence? The Mayor's own budget presentation for 2009 noted "one of the greatest challenges on the revenue side is the flat real estate tax, due to the base year assessment system...[which] fails to reflect the changes in property values, suppresses growth, and leads to inaccurate assessments and disproportionate taxation throughout the City".  Even the amended Act 47 plan noted that the Supreme Court's decision striking down  Allegheny County's base year was "a ruling favorable to the City" (emphasis added).  A reassessment would absolve the City from raising the real estate tax rate according to the budgetary documents. 

As far as taxes that are levied solely on City residents, one would be hard pressed to find one that the Mayor has control over, whether they apply to City residents exclusively or not.  The state reform package of 2005 created new taxes (payroll preparation), ended old ones (mercantile and soon the business privilege), shifted some (gave the City a share of the school's wage tax), and phased down one (parking).  The amusement tax, a tax that would fall on City and non-City residents, is limited as a result of the RAD tax. That leaves the realty transfer tax (a tax raised before the declaration of Act 47 status) and the property tax.  It could be further argued that a millage rate increase would not fall solely on City residents since all owners of property in the City would have to pay the tax. 

There's a simple solution to all of this if the Mayor wants to avoid a tax increase that might fall on a good portion of the City's residents: commit to expenditure reductions, preferably through a spending cap amendment to the City's Home Rule Charter.