Supporters of the Port Authority of Allegheny County long have argued loudly and strenuously for a dedicated source of revenue for the transit agency, notwithstanding the authority's well documented history of excessive costs, inexcusably poor efficiency ratings and a track record of incredibly bad management and decision making on large capital projects.
As if dedicated funding would have somehow convinced Port Authority management to do a better job rather than making it even more lackadaisical in controlling costs and improving efficiency.
Despite having every reason not to do it, the Legislature has acquiesced and granted Allegheny County permission to levy two new taxes to generate mass-transit funding.
The new taxing power options for the county -- a 10 percent liquor drink tax and a fee on rental cars of up to $2 per day -- are an extremely bad idea on a number of fronts.
First of all, Allegheny County residents and businesses already are highly taxed, especially residents and businesses in the City of Pittsburgh. And make no mistake, Pittsburgh will feel a disproportionate impact of these new tax burdens. With property taxes in Allegheny County, particularly school taxes, well above surrounding counties as well as other parts of the nation, along with a 1 percent add-on sales tax (the Regional Asset District tax), any additional tax burden simply makes no sense.
Second, mass transit operations benefit a broad segment of county residents, either from providing transportation directly or through helping to reduce congestion on the county's roads. Therefore, if a county subsidy is absolutely necessary it should come from a broad-based tax such as a sales and use tax. Neither the drink tax nor car rental fee can meaningfully be described as broadly based. Indeed, the $2 per day fee levied by the state for public transit assistance is misguided. Further, while an extra 2 percent car rental tax in Philadelphia is used for the new stadiums rather than transit, one could make the case that is inappropriate as well.
Third, a primary motivation for asking the state to allow Allegheny County to levy new taxes for transit was to create revenue to fill an impending budget hole of perhaps as much as $30 million stemming from rapidly rising health-care costs -- costs that are themselves traceable to collective bargaining agreements that obviously did not position the county well in a period of escalating premiums.
Thus taxpayers, some of whom have little or no health insurance coverage or who pay handsomely for their policies, will be asked to foot the rapidly increasing bill for county employees.
If these new taxes were solely for the purpose of providing dedicated funding for transit, why not announce that Allegheny County's current contribution of around $25 million would be returned to taxpayers through a property tax rollback?
In light of these concerns, no new taxes for transit should be adopted by County Council unless and until the serious financial problems -- including massive legacy costs -- and operating efficiency issues at the Port Authority, as documented by the Governor's Task Force and the county controller, are dealt with.
Moreover, to honor the spirit of home rule, there should never be a new tax implemented without voter approval. County Council should place a referendum question on the ballot to seek that approval. The county's home rule charter has made referendums possible. It's time to let the citizens utilize this power to decide whether to levy new taxes.
Creating new taxes is a sure loser for Allegheny County, especially if there is no matching reduction in property taxes. It's too bad so much money from the local 1 percent sales tax is dedicated to sports teams. Maybe helping transit riders would have been a better way to spend these tax dollars, rather than subsidizing wealthy owners and rich players.
It's time for those in charge to find budget savings to offset the health-care cost run-up or renegotiate the provisions in the labor contracts. Allegheny County's population is shrinking. Why isn't spending?
Jake Haulk is president of the Allegheny Institute for Public Policy. Frank Gamrat is a senior research associate there.
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