Is There Flattery in Local Government?

In northeast Pennsylvania, the city of Scranton (population 76,000, only Second Class-A city in Pennsylvania, home rule since 1976, in Act 47 since 1992) and the county in which Scranton is located, Lackawanna (population 214,000, one of twelve counties of the Third Class, home rule since 1977) are proposing some very southwestern Pennsylvania ideas as of late.

For Scranton, a state senator has raised the possibility of a Pittsburgh-like shift of business taxes like the reforms made in 2005 when the General Assembly approved creating the payroll preparation tax and eliminating the mercantile and business privilege taxes. The senator noted "This would be a tax shift…[however] I haven’t gotten a clear view on whether it makes sense." Many of the arguments made in the Pittsburgh case pointed out the exemptions that had been crafted under the BPT and that a payroll tax would be fairer and fall on businesses across the board (non-profits and government are exempted from the tax).

Lackawanna County is debating whether to amend its home rule charter to replace the three commissioner system with an elected executive and a part time council, though that option would not be binding on a government study commission. There is also talk of consolidating some of the administrative row offices that are elected under the County’s charter (clerk of judicial records, recorder of deeds, register of wills) and appears that the whole of the matter might end up in court since there is a petition for a study of the Charter at the same time an ordinance calling for a referendum on the row offices.

Bye, Bye Property Taxes?

Can Allegheny County, by virtue of being home rule, eliminate property taxes for the County, its municipalities, and school districts?

It seems like the chances are slim, but there may be legislation to try just that in the near term. Spurred on by the current reassessment, the legislation would apply only to Counties of the Second Class, in other words Allegheny County. The legislator sponsoring the proposal noted that "the best option for the assessment situation is to apply the Home Rule Charter if our local government cannot determine a long-term solution".

Leaving aside the issue of what a tax shift involves, problems abound with the proposal. The language in Section 2962 of the state’s home rule law-the section that prevented petitioners from rolling back the rate of the drink tax a few years ago-rears its head because the section prohibits a charter from giving a home rule entity powers regarding "regulation of public schools", "fixing the subjects of taxation", and "the assessment of real or personal property and persons for taxation purposes". It would take an act of the General Assembly to remove that language from the home rule law.

But there is language in the Allegheny County Charter itself that prevents the proposal from moving too far forward as well. Article I of the Charter says that "this Charter shall not limit in any way the jurisdiction, rights, powers, or autonomy of the municipal governments in the County". Prescribing a cessation to property taxes and a shift to a new menu of taxes via a County driven referendum as opposed to state legislation for municipalities seems to do that. In addition school districts are not mentioned anywhere in the Charter.

Additionally, the legislation would allow County Council to pass an ordinance eliminating assessments. If Council does not do it by a simple vote, "the county council, or the voters of Allegheny County, will have the ability to propose the ordinance through a public referendum." That’s where other problems arise. Article XII of the Charter says that voters can ask for a referendum on an ordinance as long as the requisite number of signatures is gathered and the issue is singular and germane to County government. While property assessments are the domain of the County, can voters put an issue on the ballot that would affect the taxing powers of the municipalities and school districts in the County? Seems unlikely given the 2962 language. And since the Charter says Council can only call for a referendum by ordinance to amend the Charter, is the proposed law going to spell out that Council would be able to ignore that language so they could put a general question on assessments and tax mixtures on the ballot?

Other home rule counties could provide guidance here. There are six, not counting Philadelphia and Allegheny. Many have been home rule since the 1970s, and all still levy property taxes, as do their municipalities and school districts. It is not clear if the General Assembly has tried something like this proposal for them, but if the referenda and initiative powers vested in them by home rule would allow for the elimination of property taxes and replacement of other sources, one would think they would have done it by now. Curiously, two of them-Lehigh and Erie-have new assessments scheduled to go into effect for 2013, just like Allegheny County, which was to have them ready for 2006 before embarking on the present course.

Long story short, if the goal is a tax shift away from property taxes to something else, particularly giving taxing powers to entities that don’t have them now (like sales taxes to schools or wage taxes to counties), it is going to have to be a statewide plan.

Voter Approval of Taxes Still Out of Reach

Should voters in the City of Pittsburgh have the right to approve or reject property tax increases?  A majority of City Council does not think so, and have effectively killed a measure that would have put a question on the ballot asking voters if the City’s Home Rule Charter should be amended to require a referendum for tax increases. A petition containing the requisite number of signatures could override the Council’s decision and place the measure before voters.

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Reverend Presents a Good Tax Policy for Pittsburgh

Reverend Burgess, a Pittsburgh Councilman, has proposed amending the City Charter to require a voter referendum on all property tax rate increases. What a wonderful idea to launch the New Year. The Allegheny Institute has been recommending voter referenda for tax increases for many years.

The premise is very simple. Many legislative bodies and executives are heavily biased toward spending, ultimately necessitating more tax revenue to feed the insatiable spending appetite. Giving voters the power to approve or reject tax hikes provides a strong deterrent to imprudent spending. Taxpayers who vote are likely to be much less inclined to raise their own taxes to enable continued irresponsible behavior by spendthrift legislative bodies.

So, congratulations to Councilman Burgess for proposing the voter referendum. It is a ray of sunshine in a very dreary stream of awful legislation coming from Council recently. Let’s hope his fellow Council members don’t scuttle the plan. It would be politically smart for them to get on board with the Reverend’s idea as soon as possible.

Improving Home Rule in Allegheny County as the Second Decade Begins

As home rule government begins its second decade in Allegheny County-the effective date of the Home Rule Charter was January 1, 2000-taxpayers and residents of the County have several big issues coming at them related to their government. 

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Sunset Review Still Hasn’t Seen Light of Day

Back in March of this year (Policy Brief Volume 10, Number 16) we inquired as to the whereabouts of Allegheny County’s mandated periodic sunset review. Under language in the Home Rule Charter-“the constitution of Allegheny County” according to its drafting committee-the County’s departments, agencies and functions are to be subjected to periodic review to determine if the needs of County taxpayers are being met.

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A Court Decision the Executive Likes

After a series of court rulings that have gone against Allegheny County government, the Supreme Court finally reached a decision the Chief Executive approves of. In the case of whether taxpayers should be allowed to vote on cutting the drink tax, the Court held that under state law only the governing body has authority to determine tax rates. That means voters will be denied the opportunity to express their wishes about the matter.

The decision is one the County will gladly go along with, unlike several court rulings on assessments to which the County has basically thumbed its nose. Indeed, the Executive was quoted as saying, "I am glad the Supreme Court resolved the issue in the manner it did." Contrast that with the response to the Supreme Court ruling in April that ordered the County to reassess properties because its base year scheme was unconstitutional. In that instance, the Executive had attorneys looking into whether the County could sue in Federal court to have the decision overturned and asked the Legislature to, in effect, have the Supreme Court ruling set aside by legislative action while the General Assembly came up with a new statewide plan for property assessments. What an absolutely catastrophic action that would be for constitutional government.

Thus far the County has pursued delaying tactics in abiding by the Court’s decision. Earlier lower court decisions have been totally ignored for four years at least. And now comes a ruling against the people’s right to have a say about taxes and the Executive is pleased about it. Go figure.

On the referendum issue, we have urged and continue to urge the Legislature to repeal the statutory language that places governing bodies’ power above that of the electorate in determining tax rates through referenda. There is no step more important in controlling runaway, excessive government spending than allowing taxpayers to have authority through referendum to approve rate hikes or order rollbacks of existing tax rates.