Wednesday, June 10, 2009

Act 47 = Higher Taxes?

The most important thing going on in the city of Pittsburgh right now is the Act 47 plan which will determine how we fare financially for the next 5 years.

Of course, it's also the thing the city has the least control over.

Kinda frustrating.

State overseers give us a 300 page book detailing all the things we can and can not do. City Council has until June 30 to approve it. If council doesn't approve it, they need the approval of the state overseers to change it.

But the main problem (as I've ranted previously) is that many of these guidelines involve changes to state law, and the state lawmakers have repeatedly spoken against any new taxes:

State Rep. Dan Frankel, D-Squirrel Hill, said there will "need to be some adjustments to the Act 47 plan," but that legislative approval for such changes "will be a difficult challenge."

"I don't think it's rhetoric, I think it's a proposal legislators should be vetting," said Sen. Sean Logan, D-Plum. "We need to take another look at the city's finances." Logan said the city must demonstrate it has shed as much fat from its budget as possible before it can make a compelling case for additional tax money.

"If he thinks taxes are the first option, he's delusional, in this economy," said state Sen. Jane Orie, R-McCandless. "If you think other legislators across the state are going to agree to raise the city of Pittsburgh's occupational tax to $145, you're out of touch."

And what happened last time?

"The suburbs don't want to carry the burden for what's happened in the past in the city of Pittsburgh," said Sen. Wayne Fontana, D-Brookline.

That sentiment pushed state lawmakers in 2004 to strip the first five-year recovery plan of provisions that would have taxed city nonprofits and pegged the EMS -- then known as the occupation tax -- at $145, said Councilman Bill Peduto, the council finance committee chairman.

Such dramatic tax increases failed then, and they're likely to fail this time, he said. City Council has scheduled the first of two public meetings about the recovery plan for 1:30 p.m. today. A vote on it could happen by the end of June.

So, if just like last time, the state refuses to give the city the ability to raise taxes on parking, commuters, and non-profits, who does that leave paying the taxes?

City residents. Welcome to Taxburgh. The question we need to ask Harrisburg: Are the commuters really that much more hard up than the residents of the city? And are they really only getting $52 in benefit from working in the city? I understand the sentiment to punish the people who made the mistakes to get the city into this mess, but a lot of those people now live in the suburbs. And a lot of city residents (including myself) only moved to Pittsburgh in the last few years. So give us a break.

And where's the mayor? On vacation. I'm glad I'm not an elected councilor right now. That's because unless a miracle happens in Harrisburg (or we can sell off the parking garages), the plan calls for default tax increases in the city over the next 5 years. And you can bet after 5 years of taxes, we'll have a whole new set of councilors.


East Busway Blogger said...

I understand that Pittsburgh has not always been smart with its money, but to absolve the suburbs of any finacnial burden when their residents that commute to work every day put a burden on the City of Pittsburgh, to me, is ridiculous.

Selfish is the first word that comes to mind.

Bram Reichbaum said...

"And where's the mayor? On vacation. I'm glad I'm not an elected councilor right now. That's because unless a miracle happens in Harrisburg (or we can sell off the parking garages), the plan calls for default tax increases in the city over the next 5 years. And you can bet after 5 years of taxes, we'll have a whole new set of councilors."

And you've just hit upon the political beauty of Luke's position. Present the state's plan and keep walking. Say, "It wasn't me." Pressure the Council to pass it or face murky extreme consequences, and let the five most ultimately responsible Council members (likely Luke's greatest adversaries) absorb the blame for having screwed the employees and residents and "not having come up with any alternatives".

Incidentally, if I've become as good a student of this government as I think I have, on Friday June 26th at about 4:30 PM there will come an announcement that there has been a Tentative Understanding reached for the sale of the parking lots to Some Entity, details to be worked out later. That should buy us a handful of years without major onerous tax increases until Round 3, although there will doubtless be strings attached to the deal that we'll find out about in late July.

EdHeath said...

We have been patting ourselves on the back because Pittsburgh is weathering the recession better than most cities. Now suddenly we are up in arms because we are reminded that the City is essentially in bankruptcy, and the first State plan only kept us on life support for the last five year's (which Chris Briem points out may have actually been worse for us in the long run).

I do think that UPMC and Highmark could afford to pay some business taxes, since the State regulators won't actually regulate these not for profit, supposedly regulated businesses. I am less in favor of the Universities paying taxes (although they do either own a lot of land or charge a lot for tuition), and I think taxing small non-profits would just make the City more of a cesspool.

But since some huge fraction of the people who work downtown live in the suburbs (maybe 2/3's?), I think raising the Local Services Tax to $145 is quite reasonable. And I can see exactly why State Legislators are against it.

We have entered the silly season, a season of grandstanding and hyperbolic passions. I didn't pay much attention five years ago, but my memory, enhanced by occasional retrospectives, is that it was a lot like what is starting to go on now. The Mayor has already started flip flopping, like he did then, only now it looks like he may have gone from Ringling Brothers quality flipping to Cirque Du Soleil (however it is spelled).

Bram Reichbaum said...

Now I admit, the Council's rhetorical reliance on "vacations" and "beaches" on that day was unfortunate ... that was a slick but a wrong and stupid message. The ISSUE was we didn't know our chief executive's position on this controversial Recovery Plan until late that afternoon -- after the Council's "implorations".

Those implorations probably don't matter as much anymore, but I still hope Luke attends the meeting. It'd be nice to see him down in the trenches, throwing the odd well-deserved elbow, working out problems.