Monday, December 21, 2009

Ravenstahl Caves on Tuition Tax

From this mornings Pittsburgh Post-Gazette, via The Pittsburgh Comet,
Pittsburgh Mayor Luke Ravenstahl has asked city council to shelve his proposed tuition tax, saying instead that a broad-based "New Pittsburgh Coalition" will work to solve the city's pension problem.

The mayor is willing to cancel the tuition tax vote that could have occurred today in spite of the fact that he can't claim to have landed the $15 million-a-year needed to right the pension fund, nor the $5 million compromise demand he made earlier this month. "This is a leap of faith for all of us," he conceded, but if successful, it will bring the needed funds -- hopefully in time for the 2011 budget, when the city will otherwise face a dire fiscal situation.
Ravenstahl, it appears, has played his hand very poorly. I think most observers saw the tuition tax as means to leverage more money out of the city's universities. Ravenstahl should not  have caved on the tax without a binding commitment from those schools to pony more money in lieu of taxes.


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1 comment:

moralhazrd said...

I have mixed feelings on this. On the one hand, you tax things you want to reduce. I don't think we want to reduce participation in higher education. In addition, what's the point of having tax exempt status to encourage services that have positive externalities, if you are just going to force them to provide PILOT.

There are two underlying fundamental problems. We provide the tax benefit, but then we want to make sure that the external benefits are being provided. That's complicated accounting.

Even if we could do that however, the benefits are often spread widely, while with a service like higher education, the costs associated with the students are incurred locally. That's even more of a problem in a place like State College, that has far fewer alternatives to funding than Pittsburgh.

I think we need to look for more creative solutions that address these complications.