The attempt by Steel Valley School District to create a tax that would apply to free parking spaces serving businesses is over as the school board removed the tax after they heard rumblings that the business community raised the possibility that a lawsuit would soon follow enactment of the tax.
That was the predictable outcome based on the fact that it has yet to be established how a municipality or a school district can levy a tax on parking where there is no money paid for the transaction and how that would differentiate itself from being another tax on real estate. Calling it a "parking privilege tax" does not mean that it is a taxable privilege under Act 511. Much like the City of Pittsburgh’s tuition tax plan this past year, officials try to levy taxes based on the feeling that nothing in the law prevents them from doing so.
If the school board really believed they had this power, then they should have spent the taxpayers’ money to get the backing of the courts. After all, many on the board said they wanted to enact the tax so as to take pressure off of residential property owners, yet they exempted many types of businesses and the first 30 parking spaces from inclusion in the tax base. Instead the board passed a 2.86 real estate mill increase with enough wiggle room for the district to avoid putting the issue before those very same homeowners in an Act 1 referendum.
Thus in the last two years or so both Steel Valley School District and Robinson Township have considered the tax only to back off of it. Interestingly, the municipalities within the district (Homestead, Munhall, and West Homestead) are levying the tax and, for whatever the reason, have not faced a legal challenge.
As we have suggested previously, it would be beneficial for the General Assembly to revisit and clarify Act 511 and make it clear as to what type of taxes local governments are permitted to levy, the rates, and possibly a cap on how many tax sources they can draw upon.
As a quick follow up to our entry earlier this week on the Steel Valley school board’s discussion of a parking space tax, one of the directors argued that "Robinson Township has a similar tax on the books and it looks like Robinson Town Centre is doing just fine".
Well Robinson is doing fine, and it is likely because the township in fact does not have a parking space tax on its tax menu. It was discussed in 2008, which prompted an Allegheny Institute Brief soon after which raised the problems associated with taxing free parking. The tax was never approved, which was confirmed by both the administration office and the tax collector of that municipality. Hopefully the director doesn’t believe that the City of Pittsburgh has a tuition tax just because that tax was briefly entertained.
For now, cooler heads have prevailed in Steel Valley and the tax has been tabled.
We’ve written in previous Briefs and blog entries about the efforts of several municipalities in Allegheny County to levy a tax on supposedly free parking spaces where no transaction is carried out. Unlike the parking tax in Pittsburgh and other municipalities around the state where patrons pay for an on-street or garage space and the payment is subject to a tax, this new levy would place a flat fee on a business based on the number of spots they have.
Municipalities have taken this course of action under the presumption that parking is a taxable privilege under Act 511 and, since the Act does not prohibit taxing such a privilege (recall the same argument was made for the tuition tax) then they are free to do so. Someone wronged by the tax would have to bring a lawsuit to determine if the privilege is indeed taxable.
Well the stakes have been raised in the Mon Valley as the Steel Valley School District is prepared to discuss levying a $30 per space tax in the communities of Munhall, Homestead, and West Homestead-all three communities levy a similar tax-after exempting the first 30 spaces. Clearly, the logic for the District is either (1) since Act 511 applies to school districts as well as municipalities and nothing in the law prevents districts from having such a tax they should do it or (2) if no one has yet challenged whether this tax is permissible why leave money on the table?
Is there a limit to taxable privileges for local governments in PA? This instance might give us an a better answer to that still murky question.
With thirty co-sponsors, a bill introduced by Rep. Paul Costa would ban the imposition of the proposed education privilege tax in Pittsburgh and preclude any other municipality in Pennsylvania from enacting such a levy. The so called “fair share tax” is highly controversial and has enraged students and prompted university officials to mount a serious opposition campaign. And rightly so: as we have pointed out over recent weeks, this tax is one of the worst ideas ever to arise out of Pittsburgh government.
With 30 co-sponsors, a bill introduced by Rep. Paul Costa would ban the imposition of the proposed education privilege tax in Pittsburgh and preclude any other municipality in Pennsylvania from enacting such a levy. The highly controversial so called "fair share tax" has enraged students and prompted university officials to mount a serious opposition campaign. And rightly so. As we have pointed out in Policy Briefs over recent weeks, this tax is one of the worst ideas ever to arise out of Pittsburgh government.
But seeing the virtual certainty of widespread adoption of such a tax across the state if it is implemented in Pittsburgh, the Legislature is moving to stop the ill-conceived and damaging tax before it advances any further. The Legislature will have to move quickly or it might have to make the bill retroactive. Pittsburgh could decide in a week or so to pass the bill and it could stand up to court challenge under current state law.
And that means state law is severely flawed. Indeed, Act 511, which permits the consideration of such nonsensical taxes, must be reformed to narrow the range of permissible local taxes. So rather than simply passing a bill to ban the tuition tax, the Legislature should amend the governing statute to spell out exactly what can be taxed by municipalities, eliminating "privilege" taxes not specifically permitted by the statute. And there should be few, if any, of those.