When it comes to budgeting, Mayor Luke Ravenstahl seems to be taking cues from former mayor Tom Murphy. Like Murphy, he has proposed a budget that relies heavily on revenue from taxes that don't yet exist, and may not be legal. And like Murphy, he's not about to apologize for it.
Ravenstahl's approach was on display before a Nov. 17 meeting of the Pittsburgh Intergovernmental Cooperation Authority, a state-appointed financial oversight panel. The mayor was defending his controversial "Fair Share" tax, which would charge a 1 percent tuition tax on students at colleges, trade schools and other educational programs.
In September, the ICA conditionally approved a financial plan that envisioned getting $15 million from nonprofits. But there were no specifics until Nov. 9, when Ravenstahl proposed the tuition tax to city council. A week later, ICA officials were quoted in the Pittsburgh Post-Gazette saying the tax raised "significant legal questions," and that Ravenstahl should focus on cutting costs instead.
In his Nov. 17 response, Ravenstahl didn't opt for the soft-shoe.
"Why has the ICA suddenly changed the rules of the game? It just doesn't add up," Ravenstahl charged. Of the ICA's five board members, he explained, four had ties to local colleges. Chairwoman Barbara McNees is a board member at Robert Morris University; Matthew Simon is a former president at Point Park; Grace Ann Geibel is the former president of Carlow University; and Curtis Aiken is a former University of Pittsburgh basketball star who now works on basketball radio broadcasts.
"Who does this board really serve?" Ravenstahl asked. "We're about to find out."
But ICA members aren't the only ones with reservations. At the Nov. 17 meeting, City Controller Michael Lamb warned that the tax wasn't legal -- and that schools were almost certain to challenge it.
"Even if I'm wrong" about the legal issues, Lamb said, "in all likelihood we won't be able to collect these taxes due to the protracted legal battles."
But if the mayor's plan is built on shaky assumptions, so are the proposed alternatives. In May, the ICA itself issued an "Amended Recovery Plan" that also had $16 million in phantom money. It projected $10 million coming from "additional spending efficiencies" or "additional revenues" -- which the ICA never spelled out. (The plan sought "to empower the city to [provide] its own solutions to financial challenges," the ICA asserted.) It also argued that nonprofits could make a "minimum, reasonable contribution" of $6 million a year to the city -- even though the nonprofits hadn't agreed to the sum.
Another plan, being shopped around by Lamb and City Councilor Bill Peduto, also seems hazy.
Lamb and Peduto provided reporters with a plan detailing nearly $15 million in savings and new revenue. Among the proposals: improved tax-collection procedures that would generate $5.5 million and an auction of city assets -- including memorabilia from the soon-to-be-replaced Mellon Arena -- for another $1.3 million
Lamb called the Mellon Arena revenue -- which would require approval from a joint city/county authority -- "the most speculative" proposal. And even if it worked, he and Peduto agreed, the proposals would be a one-year fix.
Ravenstahl rejects that approach. "If we're going to make cuts, then we're going to make real cuts," he told reporters. And if the tuition tax fails, he pledges to do just that.
His proposed cuts include: eliminating school crossing guards, a new class of police recruits and an additional 25 officers; closing four pools and a fire station in Greenfield; and increasing employee contributions to health benefits.
Each of those cuts will generate howls of protest, and Ravensthal is urging approval of his tax. If it's challenged in court, he insisted, "We will win."
That sounds like a gamble, but it may already be paying off. The ICA is on record saying nonprofits should pay more, and Ravenstahl's moves are increasing the pressure. The administration released a chart showing that at all seven city universities, tuition hikes in 2009 alone will cost students three or four times as much as his tax.
Peduto and Lamb also said they have heard from nonprofits, including universities, expressing a willingness to come back to the table. Those talks will take place "in the next day or two," Lamb said.
A tuition tax may not be a strong enough hand to win. But Ravenstahl may at least have found a way to get nonprofits to ante up.
