Sunday, December 06, 2009

Making the City Solvent Requires State Support, Not Taxes on Students

At a time when our highest priority should be an aggressive regional effort to create new businesses and jobs, our university leaders and government officials are instead spending time, energy, and money battling over whether students in the City of Pittsburgh should pay taxes on their tuition bills. Mayor Ravenstahl has dubbed it a “Fair Share Tax,” claiming that students need to do more to help with the costs of City services.

Issues of “fairness” arise because the City of Pittsburgh plays a unique role in the economy and quality of life of the Pittsburgh Region. One out of every four jobs in the region is located in the City of Pittsburgh, making the City by far the largest employment center in southwestern Pennsylvania, as well as home to the cutting-edge research that will likely create many of the jobs of the future. The City is also home to the majority of the region’s arts, education, and sports facilities and events, making it the center of culture and entertainment for the region’s residents and an attractive destination for tourists and visitors from around the world.

As a result, hundreds of thousands of people come in to the City of Pittsburgh each year for jobs, shopping, education, and entertainment. They depend on City police, fire, and emergency medical services to keep them safe, and they use streets and highways maintained by the City to get to and from their destinations. Yet those City services are supported primarily by property taxes and income taxes paid by the residents of the City, not by the commuters and visitors who benefit from the City’s jobs and entertainment attractions.

In fact, over 70% of the people who work at a job located in the City of Pittsburgh don’t live in the City. That’s one of the highest percentages of any major city in the country. In Philadelphia, only 42% of the people who work in the City don’t live there. In cities like Charlotte, Chicago, Indianapolis, Milwaukee, and San Francisco, fewer than 60% of the jobs are filled by suburban commuters.

The reason so many people who work in the City of Pittsburgh live somewhere else is because Pittsburgh, with only 55.6 square miles of land area, is one of the smallest major cities in the nation. In most regions, places as close as Ben Avon, Edgewood, Fox Chapel, Mt. Lebanon, and Upper St. Clair would be part of the City, not separate municipalities.

What’s unfair is that the City of Pittsburgh provides public services for nearly 200,000 non-resident workers every weekday, but these commuters pay all of their property and income taxes to their home municipalities. Although other municipalities in the region appear to be fiscally stronger than the City of Pittsburgh, many would likely have trouble balancing their own budgets without the income their residents earn at jobs in the City of Pittsburgh. For example, over 50% of the employed residents of Fox Chapel work at a job in the City of Pittsburgh, and over 40% of those living in Mt. Lebanon work in Pittsburgh.

In contrast, most college students aren’t commuters, but residents of the City of Pittsburgh. In fact, more than 1 out of every 7 residents of the City of Pittsburgh is in college or graduate school. Many of them own homes and pay property taxes to the City, while others rent apartments and enable their landlords to pay property taxes. Many of them work while attending school to help pay tuition as well as living expenses, and as residents, they pay income taxes to the City on their earnings. Pittsburgh would be a much smaller City and economically worse off if the students weren’t here, and increasing the cost of attending school in the City won’t encourage them to stay.

The City is proposing a tax on students not because it’s a good idea, but because the Commonwealth of Pennsylvania has forced it to try and support public services that benefit a region of over 2.4 million people with a tax base dependent on 310,000 residents. If we’re going to continue to have a region composed of over 500 small municipalities and a small central city, we need a different way of funding them.

The only way to avoid things like City tuition taxes and County drink taxes is for the Governor and Pennsylvania General Assembly to modernize local government tax structures and create revenue-sharing programs that enable regional public services to be supported by everyone who benefits from them. When gubernatorial and legislative candidates come to you asking for support in next year’s elections, ask them for a commitment to fix a badly broken system of funding local government.

(A shorter version of this post appeared as the Regional Insights column in the Sunday, December 6 Pittsburgh Post-Gazette.)


Blogger Mark Rauterkus said...

The only way isn't another bailout. That's been tried before. It failed.

There are many ways.

The best way to make Pgh work again is to spend less money. The fix needs to be internal, not from somewhere else.

6:17 PM  
Blogger Dean Jackson said...

Mark, what should we spend less money on, exactly? Schools? Roads? Police? Libraries?

Having the enormous number of wealthy suburban commuters pay for the services they use isn't a bailout. It's sensible and sane policy.

3:38 PM  
Anonymous Anonymous said...

the city of pgh has thought up every conceivable tax to drive more people out into the suburbs if not the entire region. maybe thats why the city of pgh struggles to retain residents esp young ones! (take a walk down 5th ave after lunch hour)Q:why does pgh still have more firemen per capita than any major city east of the miss? A: is that needed in a bankrupt city? in order to retain corps, the city of pgh doles out 20year tax abatements then blames commuters for coming into the city? wow great strategy! wait? the occ tax has been raised. the parking tax in '06 was raised. plus, the 10% drink tax (maybe a bankrupt city like pgh DOESNT need america's highest paid bus drivers) & the amusement tax/one of the highest on the east coast! REMEMBER! the city of pgh gets 90% of the RAD tax funding! so its ALREADY being subsidized by commuters and visitors. gee, maybe its time to look at the pay and benes of the govt unions and CUT their salaries instead of raising taxes on a city with an ever aging population.

4:38 PM  
Anonymous Anonymous said...

ps..."state support"? i thought thats what ACT 47 was about? (it sure ruined pittsburgh's bond rating) what are the results? why is the state still needed?

9:22 AM  

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