Thursday, August 07, 2003

News in da 'Burgh

Citing a tax system that is decades out of date, Mayor Tom Murphy of Pittsburgh moved yesterday to announce some 700 layoffs in the city workforce (102 police, all school crossing guards, plus others) the immediate closing of most of the city swimming pools, several senior centers and all recreation centers. Also certain other city-wide events scheduled for the fall will be cancelled. This will save the city about $6,500,000 of its $60,000,000 deficit, and it isn't too clear yet where the remaining 90% is going to come from.

The problem with the tax system is that since the 1960's, when it was last overhauled, Pittsburgh has suffered from serious suburban flight. The city itself now has fewer than 500,000 residents, although the Metro area is still around 1.5 million, most of whom go into the city at some point during the year. Pretty much a classic rust belt scenario.

The mayor has proposed one increased tax and two new ones. He wants an increase in the occupation tax paid by everyone who works in the city. Right now it is $10/year, and he wants to raise it to $100/year. He wants to slap a 10% tax on liquor by the drink that is served within the city (I'm not sure if this would apply to wine in restaurants) and he wants to institute a payroll tax on all employers in the city, in an attempt to get some money from organizations that are otherwise tax exempt -- Universities, Government, Hospitals, etc. Pittsburgh does seem to have a large number of these.

Unfortunately, it seems that Pittsburgh is not actually allowed to change its tax system unilaterally. All tax increases have to be approved by the legislature in Harrisburg. They are in complete denial at the moment, and will not allow any new taxes to be passed anywhere, apparently in a desperate attempt to make voters like them. Even more oddly, they won't even go back in session to disburse an additional $900,000,000 that the Federal Government has given to the state to ease local deficits. Many details are at the Post-Gazette in this story.