Details remain sparse, but Pittsburgh and Allegheny County taxpayers should be on alert for what appears to be the latest in a long line of attempts to tax our way back to prosperity.
Allegheny Institute Research Director Eric Montarti found that on the afternoon of June 18, State Sen. Wayne Fontana, the 42nd District Democrat, circulated a memo seeking co-sponsors for legislation that would increase Allegheny County’s hotel tax and create a “Downtown [Pittsburgh] Development Authority (DDA).”
The current tax is 7 percent. Fontana’s memo says the legislation would increase the tax by 2 percent. We’re assuming he means two percentage points, which would increase the tax to 9 percent. That’s on top of the existing 7 percent sales tax, of which 6 percent goes to the state and 1 percent goes to the county.
Additionally, Fontana’s memo says that the DDA, “will have the ability to issue bonds for investment in public improvements and transformational projects downtown including public spaces, infrastructure needs, and riverfront improvements in the public realm.”
The proposed hotel tax increase supposedly would pay for the bonds.
This is troubling. The proposed tax increase aside – the more you tax something, the less you get of it, typically — the Fontana proposal would create yet another authority – an unelected body sure to be appointed by the proverbial “usual suspects” — to ride herd over the latest “renaissance” to end all “renaissances” and to further encumber the public.
City property taxes already have been raised 36 percent. County property taxes have been raised 20 percent. Pittsburgh Public Schools taxes have been raised 2 percent. And the think tank’s Montarti speculated in a Post-Gazette story last week that the county might need to raises taxes yet again to bring its woefully underfunded employee pension system up to snuff.
Now this with the proposed Downtown Development Authority. Let’s further bureaucratize and attempt to tax our way to prosperity for what, the umpteenth time?
Chronically crappy employment and population data show how spectacularly past efforts have foundered.
And all this coming fast on the heels of another tax-diversion scheme – the city Urban Redevelopment Authority’s (URA) Downtown Transit Revitalization Investment District, or TRID.
The Fontana proposal, by the way, raises a major question:
Is this how Pittsburgh and Allegheny County will help raise any part of the balance of public money required to build the new hotel proposed for the David L. Lawrence Convention Center?
Loews Hotels has pledged $135 million to build the $418 million, 500-room facility. How big of it, right? And that price tag is sure to balloon.
The Tribune-Review reports that the state’s Redevelopment Assistance Capital Program (RACP) says it will support construction of the hotel with three rounds of grants. The City of Pittsburgh has pledged to divert parking tax revenue as its share of the hotel project.
But what an absolute cluster cluck this whole hotel project is to begin with. Simply put, it’s not needed: The private marketplace for years expanded to provide adequate hotel rooms. And now, they will be forced to go head-to-head with a taxpayer-subsidized competitor.
As we’ve noted before, local convention center supporters who argued 30 years ago that a new convention center would bolster the local hotel industry now argue that a new hotel will bolster the convention center.
Again, taxpayers have absolutely no business subsidizing very profitable hoteliers to reduce the latter’s financial exposure. If this new hotel truly is the be-all and end-all to bolstering the David L., Loews, expecting grand profits, should be more than willing to seek private bank financing for the entire project.
That it insists on suckling at the taxpayer teat more than suggests that it believes such a new hotel very well could be a dog that won’t hunt, particularly as the convention center business model continues to operate in in severe stress.
Whether it’s the Downtown TRID, the proposed DDA or yet another tax hike to bail out the county pension system, one thing is certain – the local government chain-yankers are back.
It’s time for John and Jane Q. Public to invest in chain-cutters.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
