County Budget Hearings Begin This Week

Allegheny County Council will begin holding public hearings this week for the proposed 2017 County budget.  Presentations will be made by row officers, courts, operating departments, and on allocations to independent agencies like the Port Authority.

In the $1.9 billion in spending about $502 million is projected to come from “taxes/local”, $1.1 billion from “Federal/state” and $300 million from other.  On taxes, $360 million is expected from the property tax, $48.2 million from the County’s share of the 1% RAD sales tax, $45 million from the drink and car rental taxes, and $5.4 million from the “host fee” from the Rivers Casino, an amount that is affected by the Supreme Court’s decision on the statutory language. 

Our most recent report examined the County’s trends in workforce, revenues, and expenditures over the years 2000-15.  Of the revenues that were levied in 2000–property and sales (again, the County government receives 1/4th of the money raised by the 1% tax) collections rose 54% and 38%, per capita, respectively.

Pennsylvania’s Labor Data Stagnant

The State Department of Labor and Industry released the labor data for September and the results are not encouraging.  The seasonally adjusted household data shows that the unemployment rate remained constant from August at 5.7 percent.  However, the change in the employment levels inched up just five thousand, while those claiming to be unemployed increased by one thousand.


Payroll data shows more of the same.  The seasonally adjusted total nonfarm jobs fell 5,300 from August.  This continues a trend of little to no growth of total nonfarm jobs in the Commonwealth.  Going back to March 2016 when the level of seasonally adjusted jobs was 5.894 million to the preliminary September report of 5.895 million, the value has been largely unchanged.  This will have an adverse effect on state revenues as tax collections will also stagnate.  But given the heavy handed regulations, fealty to unions, and tax policies at the state level, the stagnant economy is not much of a surprise.

A Slight Modification to Planned Parking Rate Hikes

2016 represented a breather for the boost in Pittsburgh Public Parking Authority rates that occurred under a 2014 board approval for increases in 2014, 2015, and 2017.  We wrote in 2014 about the potential impact of the hikes and in 2015 of the results of the 2014 increase.  Now it appears as though the final round of increases from the 2014 plan won’t involve some of the price changes that were anticipated.

Based on the documentation from the 2014 plan, the changes that were planned, for example, show that the day rate for a patron parking from 4 to 24 hours at the Third Avenue Garage rose from $12.75 to $16.00 in August 2014, from $16.00 to $17.00 in August 2015, and would have risen another $1 to $18 in the coming August.  That $1 boost at Authority garages is what will be done away with.

We noted in another 2015 piece that forecasted parking tax collections for the City (which it collects from Authority and private garage operators on parking transactions) that private operators were probably going to set their prices based on what would happen to Authority rates under the rate hike plan.  But from comments in the article on the decision for the Authority to modify the 2017 plan it seems they will wait to see wait happens with rates at private garages.

Monroeville Taxes Look to Remain Same

The Municipality of Monroeville expects to keep its 2017 real estate millage flat at 4 mills for the coming year.  Recall that in 2013 Monroeville increased taxes under the procedures stipulated in Act 71 since that was a year of reassessment in Allegheny County.  Another increase occurred in 2014, but the Act 71 language did not apply since new values were in place.

In 2017’s budget the Municipality is budgeting $8.8 million in real estate tax revenue and in 2016 the County certification had $2.196 billion in taxable real estate in Monroeville.

It is also interesting to note that in 2015 the Gateway School District (Monroeville and Pitcarin) appealed the assessments of 56 properties in Monroeville that originally were valued at a combined $10.8 million pre-appeal and $16.7 million post-appeal, an increase in value of $5.89 million.  Those appealed values, if they remain unchanged, would have netted the Municipality around $23,000 in additional real estate tax based on its millage rate of 4 mills.  Owners in Monroeville brought appeals on 52 properties in  Monroeville.  The pre- to post-appeal change in value was a decrease of $2.16 million, an amount less than the change in value of properties appealed by the District.  Combined (taking the pre-appeal assessed value of appeals brought by owners and the District [$139.6 million] and the post-appeal assessed value of those properties [$143.4 million]) Monroeville would have netted close to $15,000 in real estate taxes.

State University System Faculty on Strike

How pathetic. A month or so into the semester, faculty at the state system universities have gone on strike. How is a prolonged strike supposed to “insure quality education” as one striking professor claimed? The union wants a better health care plan than other state workers and turned down pay raises.

This strike, like public school teacher strikes, points out the incredibly destructive fealty to unions in Pennsylvania where government employees can walk off the job with impunity, disrupting lives, shutting down vital services such as mass transit and as liberals claim, the education of our youth.

But when university faculty strike state funded schools, it is the epitome of wrongheadedness. There will be no loss for the faculty as with private sector unions.


When they go back to work, the terms will be finished and they will get paid with benefits. And no doubt their health care plans are still in effect while they are on strike. So they can get on their state policy created privileged character high horse and walk off the job, leaving their students in the lurch and suffer no consequences.

What a pathetic sight. But the Commonwealth has only itself to blame. It loves its public sector unions who keep voting for legislators and governors who will protect and enhance the unions’ power. This represents an ugly and damaging violation of James Madison’s admonitions against government siding with or colluding with a powerful special interest.

Pennsylvania politicians claim they want to see economic and jobs growth, yet they do not seem to recognize the harmful public image effect these public sector strikes have on the prospects for enticing businesses to locate or grow in the state. Public sector strikes mean one thing for sure. More public spending and higher taxes. They also bring into question the quality and reliability of the delivery of government services.

As we have previously noted, that is one of the reasons Pennsylvania spends so much money on various subsidy programs trying to attract firms to the state.

This strike is demeaning for the state and for university faculty. Of course, given the extreme liberalism and political correctness being fomented on campuses, maybe some time off for all concerned would be a good thing.

Auditor General Weighs in on Host Fee Decision

The Auditor General’s office issued a press release yesterday calling on the General Assembly to come up with a fix for the host fee established under Act 71 of 2004.  A recent Supreme Court decision severed the language creating the host fee due to a lawsuit over the uniformity of the municipal portion of the host fee.

The release does not spell out a specific recommendation for a fix to achieve uniformity (should the new language specify a percentage or a flat dollar amount?) but does chronicle the amount several municipalities and counties are receiving from the host fee currently.  The court decision came with a stay for 120 days, but the General Assembly has only a few days left in the session and many county and municipal budgets run on a calendar year rather than a fiscal one.

A Lawsuit Over 911

A news article today stated that 16 counties in the state are bringing a lawsuit against phone companies over discounts and non-collection of the surcharge that funds 911 emergency services handled at the county level in Pennsylvania.  The surcharge is tacked on to phone bills and was recently increased to help fund the emergency operations.

As we wrote in a 2013 Brief, the surcharge covered around 70 percent of the overall cost of 911 operations in a majority of counties.  Allegheny County was one of the counties in this group (i.e. it did not fully cover 911 expenses through the surcharge) and its average cost per call at the time (2010) was $22.

Mayor Speaks on ICA Relations, Host Fee Decision

The Mayor of Pittsburgh spoke to the City’s improved relations with the oversight board (ICA) and reacted to the State Supreme Court’s decision on casino host fee money.  The transcript of a radio interview on the topics is available here.

As we pointed out late last year, the appointment of board members by the officials responsible for appointing them would go a long way to improve relations.  One of the disputes between the ICA and the City was the interception of the host fee money, a source of revenue that, as of now, is non-existent.


Philly Pop Tax at PA High Court

Back in 2010, the then Mayor of Pittsburgh raised the idea of a sugary drink tax to raise revenue.  Philadelphia had explored the idea previously, but it never did materialize here in the ‘burgh.  Philadelphia did pass  the levy this past summer, and, no surprise, the courts are already involved in interpreting the legality of the tax.

In fact, it is the PA Supreme Court that has before it an emergency application under “King’s Bench” powers.  The filing by petitioners, as well as the response to the filing by the City of Philadelphia, are available here. The result of the litigation is obviously of importance to Philadelphia, to other municipalities in the state that would contemplate such as tax, and to the General Assembly which authorizes and prohibits sources of taxation for local governments.

The Missing Tax Piece 

This week the Allegheny County Chief Executive presented the County’s operating and capital budgets for 2017. The real estate millage rate won’t be increased and the Executive’s message in the Comprehensive Fiscal Plan duly notes that “for the 15th time in 16 years, the 2017 Comprehensive Fiscal Plan accomplishes [a balanced budget] without an increase in the property tax millage rate.”

In media coverage of the presentation, the Executive was quoted as saying “…the owners of the typical $100,000 house in 2002 paid $422 in county property tax. This year, that same house is worth $180,000, but the owners would pay only $468, a $46 increase amounting to 0.7 percent per year.”

In 2017, with no changes to the current millage rate of 4.73, and, no change to the current homestead exemption of $18,000 (last increased by ordinance in February 2013), a $162,000 assessment would throw off $766 in County property tax ($162,000 x 4.73 mills), a $344 increase in taxes.

The original scenario sounds pretty good, doesn’t it? Who would not want to live in a $180,000 home and pay about $300 less in taxes than that value would stipulate?  Alas, some information was missing in the article.

For certain, in 2002 a $100,000 assessment would have generated $422 in County property tax. That year, the millage rate was 4.69, the homestead exemption, established under a County Council ordinance in April of 2002, was $10,000. Applying a $90,000 assessment against 4.69 mills means the tax bill would be $422.

In order to have a $468 County property tax bill currently, the assessed value of the house would be closer to $99,000, and that’s after applying the current homestead exemption.  That was the missing piece.

And what of the point that such a home would be worth $180,000? That takes a lot of assumption: the demand for homes in the particular area would be important, but also what the market value of the home in 2002 was.  If it was close to $100,000 (since that was right after a reassessment), then we are talking about an 80% increase in value in fifteen years, an increase that far outpaces what County budgets list as certified taxable value in 2002 ($61 billion) and in 2016 ($76 billion) and the resulting 24% increase.  That’s a pretty extraordinary jump, assuming no change to the characteristics of the house or the property in fifteen years.

If the market value of that home was higher than the assessed value back in 2002, which is what the statement about the “worth” of the home currently implies, then the “worth” of the home in 2002 may have been closer to $153,000 (based on the % of “worth”/assessed in the current example).  Then we are talking closer to a 17% increase since 2002.