OK readers, grab your scorecards.
After a three hour session, City Council passed a plan to boost the pension fund to 50% by using the future revenue stream of the Local Services Tax (LST) the $52 tax that falls on every person who works within the City’s limits. This replaced the plan (let’s call it Council plan A of December)that would have used parking meter revenues as the pledged source to get the funded ratio of pensions up to the legislatively acceptable level under Act 44. The Mayor did not like that one, so soon after, the LST plan (that would be Council plan B of December) was put together and then that was scrapped in favor of dedicating a portion of parking tax revenue to the pensions (yep, Council plan C of December).
What happened to the LST plan (B), you ask? Here’s likely the answer. Act 222, the law that originally raised the tax from $10 to $52 and renamed it the Emergency and Municipal Services Tax from the Occupational Privilege Tax and Act 7, which subsequently renamed the tax the Local Services Tax, contain language that restrict the use of the tax.
Section 22.6 of Act 7 states "any municipality deriving funds from the local services tax may only use the funds for (1) emergency services (2) road construction and/or maintenance (3) reduction of property taxes (4) property tax relief through a homestead or farmstead exclusion". The act further states that 25% of the money must be used for emergency services such as police, fire, and medical services.
Using the LST revenue stream as a pledge to fund pensions was not going to fly. So the next act was to identify another revenue source, and that’s where the parking tax revenues come in. Right now that tax generates about $44 million for the City’s general operations, and dedicating $13 million as is the plan would require cuts or another revenue source to fill the hole.