Issue Summary (Updated January 2010)
Pittsburgh’s Parking Tax

The Issue:

Pittsburgh has the nation's highest parking tax at 37.5 percent.  It will stay at that rate and possibly increase as a result of the state's attempt to help the City's pensions. 

What We Know:

Going back to 2002 when we studied the market for parking in Downtown Pittsburgh there has been a mismatch between the supply and demand for parking.  Exacerbating the problem is the parking tax, which at the time was 31 percent.  In 2004 City Council raised the tax to 50 percent. 

As a result of entering into Act 47, coming under the watch of an oversight board, and receiving an overhaul of the taxes levied by the City, the parking tax fell in steps from 50 percent to 37.5 percent in 2009.  It was to end its reduction at 35 percent in 2010, but the state's pension overhaul contained a provision in which the tax would stay at 37.5 percent with a portion of the revenue going to the City's pension contribution.

Then, if the Mayor's proposed lease or sale of parking garages is successful and the proceeds of the sale are deposited with the state's municipal pension system, the parking tax would be raised to 40 percent with all of the revenues from the additional 2.5 percent used for funding pensions. 

Recommendations:

The demand for parking in Pittsburgh is in the inelastic range--we know this because the City did not see a big drop off in revenues despite the increase in the tax rate in 2004.  Now that the Mayor has proposed leasing garages, lots, and meters owned by the Parking Authority to a private interest in order to obtain a lump sum payment for pensions, various parties are starting to raise concerns that a private owner would do irreperable damage to Downtown parking.  It is unfortunate that these parties did not speak up louder against the parking tax when it was increased or when annual budgets were proposed as the state law did not prohibit the City from reducing the tax further than the mandated reductions in the state law.