2011 County Budget: A Shell Game

Continuing on the subject of yesterday’s blog, we now turn our attention to what is reported as the plan for two of the revenues received by the County for specific purposes, the drink tax and the hotel tax.

Printed reports state that first, the County Executive "would need [the] county Controller…to sign off on the use of $5 million in hotel tax revenues to help support the county’s parks. Such use would be defined as ‘tourism promotion activities’". Hasn’t the County learned from its 2009 debacle of trying to define roads and bridges as "transit support systems"? Recall that the County wanted to use a share of drink tax money for purposes other than what Act 44 permitted, and the Common Pleas Court denied their request.

The hotel tax generated $24 million in 2010 and is used for "convention related purposes" according to the County Treasurer’s website (the Treasurer is responsible for collecting the tax). So what is the Executive going to argue: that the parks have enticed convention business here? Or that convention-goers venture to one of the County parks when they are in town? If that is the case, spare the expense of a new hotel next to the Convention Center and add greenspace.

Second, "County council would have to approve taking $5 million from the drink-tax fund and making a $5 million supplemental appropriation to the Port Authority". The drink tax is expected to raise $27.2 million this year and is part of the County’s Transit Support Fund, separate and distinct from the General Fund, Debt Service Fund, and Liquid Fuel Fund.

The argument for the drink and car rental taxes to fund PAT was that the County no longer wanted to use property tax revenue and the state would not permit them to dedicate a share of the 1% RAD tax. So what, exactly, will be the source of the $5 million when the right time comes? If it is not the aforementioned taxes, the only other sources could be a piece of a tax lien sale or the host fees the County gets from the Rivers Casino. Beyond that revenues are from Federal or state sources, and we have heard long and tiresome arguments about how that money cannot be used for other purposes (see, Connector, North Shore).

Does County Have a Non-Profit Commitment?

It may be a small (perhaps miniscule is a better way to term it) piece but in the 2011 County budget there is $4 million in non-profit contributions that some on Council have labeled "phantom revenue".

That’s because there is no assurance the money is coming other than a prediction by administration officials that it will be there. That echoes what was said earlier this year. As of September it was reported in print media that "no deal has been reached to provide those funds, but [the County Executive] pledged that an agreement would be signed by year’s end and the money would be available for 2011. He declined to identify any of the non-profits with whom his administration is talking."

It is not clear if it is one non-profit or a group of non-profits, whether the contributor(s) carries out services in communities not including the City of Pittsburgh or if there is overlap between City and non-City locales, or if the $4 million is for a specific service(s) the County provides or if the money is restricted or targeted in its use.

If the County’s agreement does come through it will be quite a coup given the often contentious climate between non-profits and local government in the region. Recall that just a year ago the City attempted to impose a tuition tax after other fees aimed at non-profits fell through. The County Executive noted at the time that there were better ways than a legal fight to gain the support of non-profits. In addition, non-profit payments to the City have fallen from the 2007 audited amount of $5 million or so.

If the deal does not come through then there will be scrambling to locate another source of funds to make up for the shortfall.