The Fair Post

On the "Fair Share Tax". First things first:

In a pronouncement that could complicate final passage of the 2010 budget, Controller Michael Lamb said he's not yet convinced that the tax can be enacted without state approval. (P-G, Lord and Schachner)

Versus:

But Bob Kassoway, executive director of the House Finance Committee, under Democratic control, said the city probably doesn't need state approval, noting that the Local Tax Enabling Act's nickname, decades ago, was "the tax anything act." (ibid)

This mirrors the debate going on at the County, where many are trying to levy other fees on non-profits. The way things roll in these arguments, it seems, is that those people philosophically in favor of a particular tax become convinced of its legality, whereas those people opposed on principle to it become convinced of its patent illegality. That includes the solicitors, on behalf of whomever they answer to. It's a standoff that's supremely annoying.

One thing's for sure: both the City of Pittsburgh and Allegheny County are so far behind the eight ball, they're going to need to find ways to milk money from the fiery engine which are our tax-exempt institutions in some way.

As it stands, none of the suggestions that have been floated are "legal" or "illegal" yet -- that's like trying to determine whether the child you have not yet conceived will grow up to prefer gin and tonics or scotch. The borderline, interpretive cases aren't legal or illegal until a judge makes it so.

So regardless of whether you'd like to tax college tuition, or hospital beds, or water usage, or square yards of real estate -- let's just debate those on the merits, select one or two, and go with it. Then a real life judge can finally tell us whether what we've attempted is kosher -- and if it's not we go back to the drawing board, and the Act 47 administrators will simply have to acknowledge we tried our best and cut us some slack.

Meanwhile, this crawling around in the legal dark isn't moving anything at all forward. Do let us try something.

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Mayor Ravenstahl has been arguing that no prospective college student is going to notice this tax when deciding where to go to school, and few of them are going to feel its impact compared to what the colleges and universities are already charging them for various things.

He happens to be right.

This is going to upset students who are reading the newspaper this month and next month, but that's about all. If twenty of those transfer out of protest, it will be shocking. But it's not enough to dissuade people into choosing another school or change our favorable educational dynamic. I'm even not certain how prospective students will discover that Pittsburgh charges an educational privilege tax until they see it on their invoices.

In addition, I tire of hearing the argument, "You can't tax the thing that is succeeding best! You'll kill the goose laying our golden eggs!" Well, do these people prefer taxing those activities which are doing poorly? The ones exactly in the middle? The activities at which we excel with predictability are the preferable things to tax with care -- because they are strongest for whatever reason and there's more cream to skim.

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There is still however a fairness argument to be made, and this is where I adore that it's called the "Fair Share" tax. I remember watching a Harold Hayes report on KDKA, in which he said that the "so-called Fair Share tax" would charge college students up to $400 bucks for utilizing Pittsburgh services eight months a year -- whereas the commuter tax charges workers a mere $52 for twelve months a year. It was crisp and devastating.

And by the way: plenty of non-matriculating adults get thoroughly wasted and trash Carson St., while lots of college students spend all night studying.

Meaning -- anything that impinges upon students alone without distributing the pain among our hospitals and medical centers is not "fair." That was the first tip-off that I wasn't going to like this tax proposal: they had to go and call it the "Fair Share". Kind of makes you wonder what they'll call their next tax proposal -- they already burned the most obvious Orwellian option.

Speaking of:

Pittsburgh mayor Luke Ravenstahl wants the entire City of Pittsburgh to wear University of Pittsburgh colors on Friday, November 13th in anticipation of Pitt’s football game against Notre Dame. (WPXI)

Chutzpah with a capital Ch! Well, the Mayor's last-minute attempt to transform a Steelers home game into a Let's Everybody Honor the Police event directly on the heels of the embarrassing night Oakland didn't exactly catch fire, so there's no reason to believe this stunt will wow anybody.

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Which brings us to the decision at hand:

The mayor's plan, though not ideal, gives the city a way to reap revenue from the burgeoning educational enterprises that have grown up to replace its shrunken manufacturing base.

Unless someone has a better idea. (P-G Edit Board)

Exactly. Now make no mistake: this tax is not going be approved or rejected based on whether Councilors think it a fine idea. It's going to get settled on whether they can A) agree upon other revenue generators or cost savings to take its place literally on-time or B) how they feel this time around about forging ahead into that Great Unknown of not having a balanced budget either literally after the deadline, or after the Mayor starts banging the drums, blaming Council, and complaining that it's about to destroy the City.

That's why I think this thing is sure to pass -- unless a bunch of them agree to go the way of, say, water fee hikes. Which would distribute the pain across far more non-profits, and place the onus on them as to whether and how to pass on those charges to their many respective consumer bases. Which would be preferable.

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That all having been said. Boy oh boy, wouldn't it be grand if one city official somewhere came forward with the proposal, "We can save half a million here." Or "We can cut half a million there." Just one. That would be stellar.

To be truthful, since we're agonizing over all these tax options, and the natives are growing restless, it might be the ideal occasion to for someone to gingerly broach the subject of bringing into the cruel 21st century our employee benefit plans as well -- but I don't want to give anyone a heart attack!

Two (I Thought They'd Be) Brief Thoughts on the Budget

I'm starting to think that we over think things...

Firstly: Didn't we have a $100 million surplus as late as May? I definitely remember hearing quite a bit about Pittsburgh having built up an impressive $100 million "rainy day" surplus during March, April and most of May.

Now I'm honestly not trying to be coy here -- but why don't we apply $15 million a year from that for the next three years, to patch this budget hole until maybe something better surfaces? Seems like as good a use as any, and we'd still have $55 million left over. And if we don't still have that $100 million surplus ... what happened to our $100 million surplus? Did we burn through it already? Did anybody ever ask? If it's gone already, I'd love to see a story which itemizes where it went off to so quickly.

That's probably enough for you right there, but I'll press my luck.

Secondly: From that one blog post -->

And while you’re at it, city, don’t even expect a single one of us to believe there isn’t a gross, gross waste of taxpayer dollars happening on Grant Street. Shall I remind you of the quarter of a million dollars spent on 250 trash cans? (That's Church)

Alright, setting aside the trash cans. We seem awfully quick to accept that we need to generate an additional $15 million per year, almost as though we are pre-programmed.

Every October before a general election, some Republican or Republican-like Independent will say something like, "We could still be more efficient!" or, "We shouldn't be taxing students and the sick!" And the Democratic incumbent will be like, "Then you need to tell us where to cut! Do you want to get rid of the fire department? Hmmm?"

But here's the thing -- it takes a very specialized, localized institutional knowledge to understand the city's budget: what the line-items actually mean and what are the encumbrances on the funds; but more importantly, it takes an absurdly specialized localized institutional knowledge to understand the ins and outs of City operations, in order to figure out how things are executed day-to-day and how much things could cost or might cost if done differently.

One example: we needed funds to keep our libraries open, and bam! Doug Shields discovers $600,000 extra sitting around in the fuel fund, due to price shifts. You can't notice that unless you're on the inside -- and not to take anything away form Shields, but that's a case of newly unaccounted-for money going to a library. Can you imagine the opportunities if you actually wanted to take money away from someone's turf to go towards -- shrinkage?

A second example: someone told me once about the mysterious "Pension Fund 3" or "Pension Fund 2B" or some such. This was an account so obsolete, that one mayoral administration didn't even pass knowledge of it on to the next; each one had to rediscover its slush-fundy potential over time. Again, not to take anything away from individual Democrats -- but I've got to imagine that in a government in which only maybe a dozen people understand the budget (four or five administration officials, three or four councilors, maybe a couple staffers and Bill Urbanac) and of which no classically conservative Republican individual has meaningfully set foot anywhere in the building in 70 years (except for the one currently writing the Mayor's speeches, and we know he won't stir trouble), all we can do is trust the government blindly when it tells us, "Yeah, we've already cut to the bone, there's a gun to our head, give us more money."

My point being: this discussion was framed in terms of, "We need $15 million more per year, and we need it now, now!!!" and we just think we're too well informed to question why / how / whether-or-not.

Mayor: College Students Can Do It All [*]

Pittsburgh had been informed since the summer that eventually there would be some "mix" presented among four (4) unpleasant options to cover a $15 million shortfall in the City budget.

If I had thought to make a prediction for today, I would have said a quarter, a quarter, a quarter and a quarter: even Stevens.

Well, ta-da:

Shelved, for now, are proposals floated by the mayor since May that include a tax on hospital bills, a surcharge on all-day parkers in public lots, and a hike in the water rates charged to educational and medical customers. (P-G, Rich Lord)

Instead, a 1% tax on college tuitions is to cover the whole thing.

And the sweetener?

The tuition tax would raise around $16 million a year. Of that, $15 million would cover increased payments to the city's limping pension fund and capital needs, required by its recovery plan under state Act 47. The balance would become a dedicated, annual payment to the Carnegie Library system, which faces a budget deficit that has prompted plans to close four city libraries, merge two others, and move yet another. (ibid)

Of the four, this one was never my favorite -- perhaps because it was the easiest political lift. It won't overjoy our universities, yet it will fail to engage our hospitals, medical centers, insurers and most other nonprofits. The pain will be nicely segregated from "average" Pittsburghers. This will be interpreted as what it is, a tax on students: a transient, ill-informed, half-engaged "them" (including their unwitting parents) who most voters probably will be happy to see taxed. Just as they were content to see them get "handled" after the G20.

Shrewd? Absolutely, terribly, perfectly. Fair? I'm not certain we will be having that discussion.

Meanwhile, the non-profits as a group will be left unfettered, making the recent anticipation of divergent viewpoints between Mayor Ravenstahl and County Executive Onorato or a gold rush by the both of them very moot. Neither want to address the elephant in the region, period.

INFO:

*-UPDATE: It's too bad ledes like this never quite make it to print:

Calling it "The Fair Share Tax," Pittsburgh Mayor Luke Ravenstahl today said that if Pittsburgh City Council agrees to slap a 1 percent levy on college tuition bills, "our financial recovery will be complete." (P-G, Rich Lord)

Also, your journey to the Dark Side.

University of Pittsburgh students would pay $135 a year, he said. "That's less than one-tenth of what Councilman [William] Peduto pays in property and wage taxes." (ibid)

Yes. He owns a house, and has a job.

Health Care / Stoopak Amendment Thread

I have a feeling the Comet is about to get crammed with County Services Equity Bill AKA Tax The Piss Out Of UPMC Bill posts -- so I'm opening this space to mark the passage of the Historic and Far From Perfect Health Care bill. My thoughts: nobody fears the Democratic "base" and there are probably more than one or two structural reasons for that.

ONORATO VETOES SERVICES EQUITY BILL

The one which was just passed by County Council by a 14-0 margin.

"While the bill ostensibly imposes a 'fee' for general county services, it appears to be an attempt to circumvent commonwealth law and impose real estate taxes on otherwise exempt real property in a non-uniform matter," Onorato wrote in a letter to council. (Trib, Bill Zlatos)

Mr. Onorato is, first and foremost, a legal scholar.

New and necessary city legislation which Mayor Ravenstahl will submit on Monday will almost certainly perform an identical function. That makes this especially interesting.

The County Executive is kowtowing to some significant presumed gubernatorial campaign supporters by offering this legalish rational as a political fig leaf. It is time for the Council to carve out a bit of its own unique space. County Council can allow Mr. Onorato to act out his display while still politely overriding his veto, staying the course with respect to this long overdue legislation. The powerhouse of our region's economy must be allowed to become a part of our economy, or we will forever be foundering like this.

McCullough, Councillors Provide Easy Fodder *

It was time to make the sale of a building official, and Allegheny County Councilman Charles McCullough (R-Hilarity) proposed an amendment to the bill:

Council members, who later admitted that they had not read the two-page amendment, approved the "rainy day fund" in a 13-1 vote, with only Joan Cleary, D-Brentwood, opposed.

Upon examination of the amendment, however, members learned that it provided restrictions on how the fund could be appropriated and raised the number of votes such expenditures would require. (P-G, Dan Majors)

Yeah, those 2-page documents can be a real bear.

Some council members said they had been lied to and that Mr. McCullough had "pulled a fast one." During the course of the discussion, there was shouting, interruptions, profanity, insults and, at one point, the throwing of a copy of the amendment to the floor. (ibid)

Squee!



Congratulations Pittsburgh City Council, looks like you won yesterday's daily Dignity Prize in a squeaker!
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*-Er, UPDATE: Obviously we are just kidding our good friends at County Council over such minor, endearing foibles! In actuality they are all more than alright, and today would be a good day to let them know you feel that way regarding the passage of the service equity bill -- personally via telephone or e-mail or even through a letter to the editor. We wouldn't want them to get them "incensed" all over again!