Pittsburgh’s 0.3 Percent Solution Is a Very Bad Idea

According to Mayor Ravenstahl there is unanimous agreement in his task force of government, university and business leaders that Pittsburgh needs a new source of revenue to bail out its ailing financial situation. We can think of a few gigantic problems with the Mayor and his task force’s assessment of the situation.



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Mr. Ravenstahl Goes to Harrisburg

Unlike Mr. Smith who went to Washington and attempted to do the noble thing by defending liberty and attacking graft, Mayor Ravenstahl is going to Harrisburg to plead for state money to help the City with its perennial and seemingly unfixable fiscal problems. After rebuffing the Legislature’s efforts to help the City with its pension difficulties last year, the Mayor might get a polite but cool reception when he shows up in Capitol City.

This time he is coming with the purported support of yet another newly formed coalition of corporate, university and elected officials. Interestingly, one of those is the Chancellor of the University of Pittsburgh who vigorously fought the Mayor’s effort to impose a tuition tax on college students in the City. The Chancellor also headed the task force looking into a City-County merger. A task force that recommended strongly the City and County consolidate duplicative services. In two years since, there is no measurable progress in that direction. Now the Chancellor is back as a member of the new coalition agreeing to help lobby the state for additional sources of revenue for the City.

How ironic. The state is facing serious fiscal problems of its own and to make matters even worse, revenue is coming in a half billion dollars below projections in the current fiscal year-an additional shortfall to be made up somehow. The universities have complained about the inadequate funding they receive from the state while many municipalities and school districts will also be pleading for more state funds. And the answer from the Chancellor is to lobby for more or higher taxes on already strapped Pennsylvanians to fix Pittsburgh’s spending problem.

Perhaps it never occurs to these folks that the voters in Pittsburgh were silent partners and enablers in creating the monstrous fiscal mess the City finds itself in. And, it must be noted, the state has helped with new revenues several times already over the past couple of decades. If more revenue would solve the City’s financial problem, it would have been solved. Even under supervision of two state watchdog groups for the past six years Pittsburgh has failed to make substantial progress. The real problem is the City cannot bring itself to make the serious cuts it needs to make and it has refused to take the steps other communities have taken to reduce expenses through outsourcing.

Basically, Pittsburgh’s government is run by and for the people who work for the City government. Until that situation changes, Pittsburgh will never get well.

Pothole Ridden Thinking

A PG editorial this morning said that "the sorry condition of Pittsburgh streets is testimony to the fact that the city is not out of the fiscal woods". True, Pittsburgh is not out of the fiscal woods-it won’t be until there is an execution of a plan to deal with legacy costs and bring per capita levels of spending down to more competitive and taxpayer friendly levels.

A lot of people might think that the condition of the roads is testimony that the City has been focused on other things, like economic development and conjuring up schemes to grab more taxpayer money, than taking care of the municipal basics of public safety and public works. But the PG feels that the City needs to turn to commuters and non-profits for more money in order to take care of basic road maintenance.

Never mind that the City (like all counties and municipalities) gets a share of the Liquid Fuels tax ($4.6 million in 2010) that is used for road maintenance and levies the Local Services Tax ($12.5 million in 2010) which replaced the old $10 Occupational Privilege Tax and has statutory language that mandates that one of the four possible uses for the LST is "road construction and/or maintenance". What else would they suggest? An increase in the wage tax under Act 47? For one, it cannot be done because of legal restrictions and two it would cause an increase in the wage tax for people living in the City, making their rate far higher than it would be on non-residents. Plenty of places have commuter taxes (New York, Philly, etc.) and that has not solved the financial difficulties.

Maybe a return to focusing on the basics would work.

Is Pittsburgh’s Pension Solution Local or Not?

That’s the question that needs ananswer the day following the Mayor’s inauguration ceremony at which, when talking about how to close the gap between the assets and liabilities of Pittsburgh’s pensions, he said "our options locally are extremely limited".

Recall that just a few months ago the Mayor practically begged for independence when it looked like the state was moving toward a modest reform of municipal pension plans. Wanting a "chance to solve this locally" by leasing/selling parking garages, the bill was opened to get Pittsburgh out and the reform provisions were watered down to the point of being ineffective.

So which is it? On the one hand we see the Mayor wanting the supposedly "pain free" options of a boost to the $52 Local Services Tax (levied by a municipality on anyone who works within the municipality) or a way to wring money out of non-profits. Even if the state were to entertain a request from the City-after having been told they were going it alone on pensions-and the $52 tax were to be increased, they would likely permit it across the state in all municipalities, thus increasing taxes on City residents that the Mayor says are taxed enough already. And the non-profit community cannot conjure up money for the City without curtailing investment or cutting services to the City.

Maybe the Mayor has received initial numbers on how much the parking garage deal would net and is not happy. Remember that the City has to show the state that the pensions are at least 50% funded by 2011 in order to avoid a takeover under the provisions of the current legislation. The City wanted to meet that threshold by turning the garages over to the private sector-and the state needs to honor their decision.

Humbug: Coal to the Coalition for More Taxes

Monday, December 21st marked the demise of the proposed tuition tax, also known as the “Post Secondary Education Privilege Tax” and the “Fair Share Tax”, as the City and the Pittsburgh college and university community reached an accord in which the Mayor and Council agreed to table the tax. But what has arisen in its stead brings a new set of very troubling concerns. 


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