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December 10, 2009

Council delays tuition tax vote

The ongoing student tuition tax chess match between local universities and city politicians continues as Pittsburgh City Council yesterday decided to delay voting on the proposal to allow behind-the-scenes negotiations to continue.

Local university officials, who with one voice oppose taxing students, have met privately in recent days with members of City Council and Mayor Luke Ravenstahl to pursue alternatives to the student tuition tax, first tendered by the mayor in his initial budget proposal issued Nov. 9. Ravenstahl proposed a so-called “fair share tax” of 1 percent on city higher education students’ tuition as a way to fill a $15 million gap in the city’s 2010 budget due to underfunded city legacy obligations. For in-state Pitt undergraduates, that would represent about a $135 annual fee at the current tuition rate.

The state-appointed Intergovernmental Cooperation Authority, which oversees the city’s finances, rejected the mayor’s proposal on the grounds that the new tax did not have prior legislative authority. The city has to have a balanced budget in place by Dec. 31.

Ravenstahl has pulled the tuition tax proposal from his revised 2010 budget, but continues to pursue separate passage by City Council of the tuition tax proposal for future budgets.

The tax proposal initially was set for the first of two required votes on Dec. 2, but that was postponed until Dec. 9 at the request of the universities, and further postponed yesterday at the request of the mayor, who said he had engaged in productive talks with local university presidents. Council members voted 5-3 to delay action until Dec. 16, according to the city clerk’s office.

All nine City Council members have weighed in on the tuition tax, with a bare majority, 5-4, saying they will support it reluctantly unless viable alternative funding streams are approved.

Council member Ricky Burgess, who favors the tax, said passing it provides leverage to force the universities into discussions of alternatives to the tuition tax. “We can [amend] it so the bill doesn’t go into effect until July 1, and that will give everybody six months to negotiate alternatives,” Burgess said at the Dec. 2 council meeting.

Pitt and the nine other member institutions of the Pittsburgh Council on Higher Education have opposed the tax as illegal under state law, and have argued that pursuing voluntary contributions from the city’s nonprofits and/or developing “other funding streams” is the appropriate alternative to taxing students.

In a Dec. 2 letter to the mayor, Chancellor Mark Nordenberg argued against the tuition tax as “an undue burden on a single, particularly vulnerable, group.”

Stating first that he was not speaking for any other group, Nordenberg wrote, “It is my sense that leaders from [the higher education, broader nonprofit and business community groups] would welcome the opportunity to become actively engaged in a unified approach to secure the revenues essential to meet these long-standing obligations, whether through an increase to the local services tax or in some other way.”

(The local services tax is $52 a year for those employed within the city’s boundaries.)

The chancellor warned, however, that “it is impossible for us to become involved in the joint pursuit of such alternatives as long as the ‘tuition tax’ is being advanced through the legislative processes of the city. Instead, as long as that proposal is being pursued, all of our energies necessarily will be directed toward defeating it and protecting our students. … Please remove that proposal from the council’s agenda so that others can join forces with you.”

Pitt also has launched an anti-tuition tax marketing campaign featuring testimonials from Pitt students about what they already contribute to the city’s coffers, as well as Internet banner ads denouncing the tuition tax.

In addition, Pitt’s Graduate and Professional Student Assembly has posted an online petition on its web site ( for those who wish to protest the tax. As of Dec. 9, the petition had registered 2,292 online “signatures.”

To date, City Council, the mayor and the universities have not budged from their respective positions, which likely will prompt a legal battle if the tuition tax proposal is enacted, Pitt officials have said.

Meanwhile, on Monday state Rep. Paul Costa (D-34) introduced legislation to prohibit taxing tuition statewide. Costa’s bill has 30 co-sponsors.

“My first proposal would prohibit the tuition tax outright,” Costa wrote to colleagues in the Pennsylvania House Nov. 20.

“The second portion of the package would require that any increased taxing legislation considered by municipalities must pass by a two-thirds vote rather than by a simple majority.”

Reacting to Costa’s proposal, Ravenstahl said on Dec. 7, “We intend to, of course, vehemently oppose Rep. Costa’s bill, and will ask the residents of the city to do so as well.”

On another commonwealth front, state Sen. Wayne Fontana (D-42) and state Rep. Tim Solobay (D-48) plan to introduce legislation designed to allow cities and municipalities to draw revenue from tax-exempt properties.

The legislation, which is expected to be introduced this month, proposes to give municipalities the option of continuing agreements with tax-exempt property owners for voluntary contributions, or to impose a fee based on the total square footage of their properties.

Last month, a similar proposal initially passed by Allegheny County Council to assess an “essential services fee” on county tax-exempt properties was vetoed by Allegheny County Chief Executive Dan Onorato, whose counter proposal is to seek voluntary contributions from the county’s nonprofits beginning with the county’s 2011 budget.

—Peter Hart

Filed under: Feature,Volume 42 Issue 8

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