Herron: Ravenstahl’s misguided taxes

After introducing his proposed 2010 budget for Pittsburgh last month, Mayor Luke Ravenstahl said… After introducing his proposed 2010 budget for Pittsburgh last month, Mayor Luke Ravenstahl said he was “not wedded to anything and would welcome [college and hospital officials’] support or thoughts or insights on how to raise $15 million.” The $15 million is required to help fund the city’s $899 million in pension fund obligations. “Cynical political deals and irresponsible fiscal management have put the pension fund in its current predicament,” according to an article in the Philadelphia Inquirer.

Like many politicians in a bind, Ravenstahl’s reflex has been to search the city’s books, find where he can draw revenues through taxes and then find justification for raising those taxes.

Ravenstahl has asked college and hospital officials for their input, because that’s where he hopes to find the $15 million he needs. Hospitals would be required to pay $25 per inpatient admission, while undergraduate university students would be burdened with a fee of $100 per year simply for being students.

Consider this: the city, state and federal governments collect revenues through taxes. Some of those revenues are used to help students pay for college. Pittsburgh would be taxing those same students already receiving government aid. We will be taxed twice but receive benefits only once.

And there are those who think government is efficient.

What makes this tax even more odd is that students are exempt from the city’s emergency services tax — a $52 annual fee levied on Pittsburgh residents who make more than $12,000 a year. The fact that students are exempt from this tax, but not from the proposed $100 fee, is puzzling.

Analysts and media outlets have hailed Pittsburgh as a “recession-proof” city. It has been touted as such mainly because the majority of its industry — health care and education — typically provide jobs regardless of economic climate. So it’s comically ironic that, if there are industries we should tax to mend a dysfunctional city treasury, they would be the two most integral.

I have some unsolicited advice for the mayor’s office. Instead of spending a quarter of a million dollars on silly things such as 250 trash cans with the mayor’s namesake on them, perhaps use that money to close the $15 million deficit.

Or we can examine the Ravenstahl administration’s haphazard ways of awarding of development contracts.

In a 2008 auction for the contract to oversee construction at the Pittsburgh Technology Center, the Urban Redevelopment Authority granted the contract to McTish, Kunkel & Associates, the firm with the highest bid, instead of awarding a contract to the lowest responsible bidder as they are required by state law to do, according to the Pittsburgh Tribune-Review. The URA’s contracting practices are now under investigation by City Controller Michael Lamb.

Financial shenanigans have tainted the Ravenstahl administration for nearly its entire duration.

One year ago, Ravenstahl promised that each awarded contract would “require a justification form that indicates the reasons why the contractor was awarded the contract.”

Of the initial 113 contracts awarded after Ravenstahl made the pledge, only two were justified on the city’s website. In addition, while the city currently has a $100 million surplus, which was acquired by not building any debt, future spending in 2011 and 2012 will eliminate the surplus.

That is why Ravenstahl’s suggestion for taxing Pittsburgh’s most vibrant industries is frustrating and distressing.

To the mayor, the tax is an easy solution to a troublesome problem; to Pittsburgh, it’s a penalty on its most burgeoning and indispensible industries.

Ravenstahl, addressing the hospitals and universities, declared, “You need to contribute to the city more than you are today.”

According to economic analyst Harold Miller, “One-fifth of the jobs in the Pittsburgh region … are in the two most recession-resistant sectors: health care and higher education.”

Apparently UPMC and Pitt have not created enough jobs. Furthermore, less immediate benefits have also fallen short of the mark.

According to Chancellor Mark Nordenberg, “[Research] expenditures alone support more than 23,000 local jobs and represent a return of more than $3.60 for every dollar of Pitt’s state appropriation.”

UPMC, meanwhile, has promised to contribute $100 million to the Pittsburgh Promise, a program designed to aid Pittsburgh high school graduates in their pursuit of higher education.

Ravenstahl will not always have his youth and vigor. At some point, he will need to become a true leader.

He will need to learn that not every problem can be remedied with an easy solution. If he fails to do so, the future of Pittsburgh might not be as bright as our youthful mayor believes.

E-mail Mason at mph20@pitt.edu.