Another City Council plan to extract money from higher education in Pittsburgh has surfaced. Under the plan proffered by Mr. Burgess the City will negotiate a payment in lieu of taxes based on the value of land on which colleges and universities sit and the value of city services provided to the students at these institutions.
The Councilman’s approach is superior to the Mayor’s plan to levy an education privilege tax on students based on the tuition they pay. Mr. Burgess would at least try to determine the value of City services used by students. However, his plans falls short for several reasons.
First, the Burgess plan would base the estimate of student service use on what the City spends on other residents. But this obviously misses the mark. Most colleges have their own campus police forces and effectively replace city police for routine patrols and non-felony investigations. Then too, how many campus fires have City fireman responded to in recent years?
Large institutions and commercial establishments also pay separately for garbage collection so one of the City’s most expensive services provided to residents is not consumed by students. Beyond these drawbacks, the City cannot provide services to the students without providing services to the faculty and administrative staff. And since many of them live in the City and pay taxes, the estimate for students would have to take that into account. A very messy problem at best.
Using the spending on residents as a measure of the amount spent per student is simply not a meaningful way to approach this issue.
At the same time, how does Mr. Burgess intend to estimate the tax revenue paid directly or indirectly by students? Many students live off campus in nearby housing and pay rent to property owners who in turn pay a portion of that rent to the City, County and school district. Their presence creates purchasing power to support shops, dining and tavern facilities that simply would not exist without that spending. Those businesses pay property taxes, license fees, LST taxes, wage taxes and payroll preparation taxes to the City. Indeed, many students are employed in the City and pay wage and LST taxes to Pittsburgh, undoubtedly at levels that exceed their usage of city services.
Finally, evaluating the value of land for the tax exempt institutions will present enormous theoretical and practical problems. The land derives a great deal of its value because of the presence of the institutions and the people, businesses and housing facilities needed to support the institutions.
In short, unless or until some organization with the resources and public confidence necessary to carries out a full blown, credible study of the taxes paid and services used by the institutions, all the talk of education privilege taxes or land taxes should be put on hold.