A League of Their Own?

Or, is the task force organized by the Pennsylvania League of Cities and Municipalities (PLCM) a voice in the wilderness?

Seeing cities either in or close to distressed financial status, facing large legacy costs, and wanting more options for cooperation or revenues, the 29 member "Core Communities in Crisis" has been deliberating since its formation in June of this year to deal with "a long-term vision and strategic proposal" to give to the new Governor and the General Assembly in 2011. An urban agenda, if you will.

So what do they see as problems and what do they propose as solutions? To summarize from an October 14th PLCM news release, more regional-type service delivery, no unfunded mandates from the state government (they don’t specify in the release what these are, or the impact of Federal mandates either), reform of Act 111 and Act 205, more regular property assessments, and new revenue options.

We’ve seen no real interest in changing Act 111, and the effort to change Act 205 through Act 44 last year was headed off by public sector unions when they got wind of the possibility of 401k type pensions (just last week a high ranking union official reacted to the passage of a separate school pension bill that the "most important part of this legislation is preserving the traditional defined-benefits pension, which protects retirement security for all employees, helps state and local governments in recruiting and maintaining dedicated and skilled workers") and the seemingly never-ending desire for local governments to create new and inventive tax sources (the "parking space privilege tax" and the "secondary education privilege tax" come to mind) indicate that change of a different type is needed.

Perhaps a menu of available local tax sources of which municipalities can choose (4 of 6 or 5 of 7, for instance); a state incentive for municipalities that combine services and can prove that there are real and meaningful savings; and treating arbitration for police and fire more like a judicial process with objective criteria would be a good place to start.

More Choices on the Tax Menu

The real estate tax; the wage tax; the Local Services tax; the realty transfer tax; the parking tax; the poured alcohol tax; the gross receipts tax; the parking tax; the mechanical devices tax; the amusement tax…

You get the idea: there is a plethora of tax sources available to local government in Pennsylvania. That’s why it is always surprising to hear calls for even more sources of tax revenue, particularly when there is a call for layering more taxes upon the existing ones instead of phasing them out.

Just last week the PA League of Cities and Municipalities called for counties to get an additional 1 percent on the sales tax (except in Allegheny County and Philadelphia, which already have local add-ons) for "easing school property taxes (remember Act 1?) and helping county government and municipalities pay their expenses".

Or counties could get a poured alcohol tax like Allegheny County has or, failing those options, the state could just hand out revenue to offset the presence of tax-exempt property (which often generates much of the taxable activity that is captured by one of the many taxes listed above.

Maybe a better option-in light of the massive state budget shortfall, the looming problems with the two statewide pension systems, and the impact of legacy costs at the local level-would be to try and control the spending side of the equation with a spending cap that is tied to inflation and/or population, referenda on tax increases and creation of new tax sources, and a movement to a defined contribution system of pensions for new employees. Otherwise there might not be enough room in the local tax code to list all of those tax sources.