Ding Dong, the Parking Space Tax is Dead

The attempt by Steel Valley School District to create a tax that would apply to free parking spaces serving businesses is over as the school board removed the tax after they heard rumblings that the business community raised the possibility that a lawsuit would soon follow enactment of the tax.

That was the predictable outcome based on the fact that it has yet to be established how a municipality or a school district can levy a tax on parking where there is no money paid for the transaction and how that would differentiate itself from being another tax on real estate. Calling it a "parking privilege tax" does not mean that it is a taxable privilege under Act 511. Much like the City of Pittsburgh’s tuition tax plan this past year, officials try to levy taxes based on the feeling that nothing in the law prevents them from doing so.

If the school board really believed they had this power, then they should have spent the taxpayers’ money to get the backing of the courts. After all, many on the board said they wanted to enact the tax so as to take pressure off of residential property owners, yet they exempted many types of businesses and the first 30 parking spaces from inclusion in the tax base. Instead the board passed a 2.86 real estate mill increase with enough wiggle room for the district to avoid putting the issue before those very same homeowners in an Act 1 referendum.

Thus in the last two years or so both Steel Valley School District and Robinson Township have considered the tax only to back off of it. Interestingly, the municipalities within the district (Homestead, Munhall, and West Homestead) are levying the tax and, for whatever the reason, have not faced a legal challenge.

As we have suggested previously, it would be beneficial for the General Assembly to revisit and clarify Act 511 and make it clear as to what type of taxes local governments are permitted to levy, the rates, and possibly a cap on how many tax sources they can draw upon.

The Tax That Really Wasn’t

As a quick follow up to our entry earlier this week on the Steel Valley school board’s discussion of a parking space tax, one of the directors argued that "Robinson Township has a similar tax on the books and it looks like Robinson Town Centre is doing just fine".

Well Robinson is doing fine, and it is likely because the township in fact does not have a parking space tax on its tax menu. It was discussed in 2008, which prompted an Allegheny Institute Brief soon after which raised the problems associated with taxing free parking. The tax was never approved, which was confirmed by both the administration office and the tax collector of that municipality. Hopefully the director doesn’t believe that the City of Pittsburgh has a tuition tax just because that tax was briefly entertained.

For now, cooler heads have prevailed in Steel Valley and the tax has been tabled.