Mayor Luke Ravenstahl intends to move forward with a student tuition tax, despite the objections… Mayor Luke Ravenstahl intends to move forward with a student tuition tax, despite the objections of state representatives and local universities.

The Intergovernmental Cooperation Authority, a group of five people appointed by Gov. Ed Rendell to oversee Pittsburgh’s finances, rejected Ravenstahl’s proposed budget Tuesday morning. The budget includes a proposal to tax all Pittsburgh college students students 1 percent of their tuition, which is $135 a year for students in Pitt’s School of Arts and Sciences. The tax, known as the Fair Share Tax Act, is expected to bring in $16.2 million for Pittsburgh, city controller Michael Lamb said.

If the city goes forward with the proposal, as Ravenstahl said he intends to do, it could face a lawsuit or a loss in state funding.

Legal advisers for The Pittsburgh Council on Higher Education, a group of 10 colleges and universities in Pittsburgh, think the tax is illegal, said Mary Hines, the group’s chair and president of Carlow University. Pitt is a part of the council.

“We have differing opinions on the legality of the tax, and we’re willing to test it in court if he continues to pursue it,” Hines said of Ravenstahl.

Hines said she didn’t think a lawsuit threatening the tax could be good for the city’s 2010 budget, regardless of whether it holds up in court.

“[Ravenstahl]’s not going to see money from the tuition tax anytime soon,” she said.

But Ravenstahl isn’t just seeing resistance from local colleges and universities.

Lamb wrote a letter to the ICA board that stated that he thought the tax was not reasonable.

“I’m not confident that [the tax] will win in court, and even if it does, I don’t think the city will be able to collect the tax in 2010,” Lamb said.

Lamb and Councilman Bill Peduto, who is chairman of Pittsburgh City Council’s finance committee, introduced a plan that included a series of cuts in spending and increased revenue that totaled close to $15 million without levying a student tuition tax.

The plan did not include any service cuts or reductions but focused on the streamlining of city government and measures, such as collecting delinquent taxes, merging some functions with Allegheny County and auctioning off property from Mellon Arena to bring in additional money.

Peduto said his enrollment in Pitt’s Graduate School of Public and International Affairs hasn’t affected his opinion on the Fair Share Tax.

“[Being a student] doesn’t affect my opinion, because, unlike some students, I have a full time job, and I can afford to pay a little extra,” he said.

Ravenstahl said in press conference that he will continue to pursue the tax because he thinks it will win in court.

He said he thought the Intergovernmental Cooperation Authority’s decision to reject his proposal might have been convoluted by the fact that four of its members have ties to universities in the city and that only two board members are residents.

“I just don’t know if the voices of Pittsburgh’s residents are being heard,” he said.

Ravenstahl said he thinks the student tuition tax is necessary to assure future revenue for the city and to avoid service cuts, particularly in the Public Safety Department, which includes the police force.

“[Service cuts] are not a threat — they are a reality of our situation,” he said.

But a lawsuit might just be the beginning of Ravenstahl’s worries, should City Council approve his proposed student tax.

The Intergovernmental Cooperation Authority has 20 days to approve or reject Pittsburgh’s budget after it is enacted in January. If the ICA doesn’t approve the budget, the board has the power to withhold some state funding from the city. The ICA has not withheld funds from the city since 2004, when Pittsburgh was labeled as a city in “financial distress.” That was the same year the ICA was established.