2011 is promising to be another banner year. I haven't even finished my magnum opus (latin for "overlong blog post") wrapping up the pension imbroglio (italian for "fucked-up mess"), and now there's this: Councilor Ricky Burgess is proposing that any future hike in city real-estate taxes be approved by voters first.
Burgess is billing the referendum proposal as a response to last week's council frenzy, in which city officials sought to stave off a state takeover of the city's pension fund. Council crafted a plan to earmark $735 million in parking-tax revenue to the fund over the next 31 years. Burgess warned the proposal was inadequate, and that unless the city leased its parking garages -- a plan that would have raised $400-plus million immediately -- it would one day end up raising taxes on lower-income residents.
During the debate, he promised to do whatever he could to protect those working-class residents. And this week, he's trying to deliver. In a statement sent out this morning, Burgess touted his referendum proposal as an effort to provide them with "Protection from the Consequences of Failed Public Policy Decisions!"
So far, though, the cure strikes me as worse than the disease.
For starters, Early Returns has already noted the obvious parallels with California, where a referendum requirement has made tax increases all but impossible. The result has been a level of government dysfunction even Pittsburghers might admire.
You'd think Burgess, of all people, would be sensitive to that danger. Just a week ago, he was warning that if council earmarked parking revenue, and the state took over the pension fund anyway, the city could end up with the worst of both worlds. A state takevoer would result in more tax money being diverted to the pension, for one thing. And finding that revenue would be made more complicated because council's $735 million promise would have tied its hands already. When it came time to pay the bills, Burgess argued, the city would have very little room to maneuver.
OK ... but, wouldn't precluding any future property-tax hike also hamstring the city?
Of the city's major sources of revenue (see page 12), the real-estate tax is the largest. And the city is already highly constrained in its ability to raise other taxes.
It's impossible to raise the 3rd- and 4th-largest revenue sources -- the payroll-preparation and parking taxes, respectively -- because those tax rates are capped by state law. The state has also capped the Local Services Tax, which generates more than $12 million a year. Other major revenue streams come from sources, like grant money and authority payments, that you can't really count on seeing increases from.
So if a referendum did take real-estate taxes off the table, the only major revenue source left is the wage tax. Which means that if the pinch comes -- either due to pensions or some other cause -- working-class folks who rent apartments would likely see their taxes increase.
That hardly seems fair. And it's not necessarily great politics either (though Burgess, to his credit, doesn't always seem too concerned by that consideration). Squirrel Hill and Shadyside have plenty of affluent homeowners who'd be happy for a chance to vote down a property-tax hike. Meanwhile, there's no shortage of working-class renters in Burgess' district who'd likely end up footing the bill instead. And they would have no recourse at all. On the face of it, it's hard to see why that is a blow for economic justice.
Maybe Burgess should extend his legislation so that every tax increase requires a referendum? I mean, if we're going to hamstring government, let's be thorough about it.
Burgess faces re-election this year, and I suppose it's natural to suspect this might be an effort to garner some votes. (Or to distract attention from embarrassing disclosures about his own overdue tax bills.) But if I was going to ascribe a cynical motive here, I'd assume this was a case of Burgess using legislation for dramatic purposes, as a way of highlighting his disagreements with rival council leaders.Burgess has on occasion supported grassroots causes that are highly inconvenient for those he disagrees with. I'm thinking mainly of his brief support last year of the long-moribund living-wage bill. I'm a living-wage supporter from way back: The bill would have guaranteed a basic wage high above the federal minimum for every job subsidized with city money. But Burgess' timing was odd: It came just as council was wrapping up a more limited prevailing wage bill ... and some of the effect, if not the intent, was to point up how limited were the impacts of a prevailing wage. (That measure targeted only a handful of specific industries.)
Then again, fears that Burgess was seeking to torpedo the prevailing-wage bill proved unfounded: He voted in favor of it. And more recently, Burgess has also raised interesting questions about whether federal CDBG money -- money intended for use in struggling neighborhoods -- was being channeled, directly or indirectly, to well-off communities that didn't need it.
Burgess' fellow councilors clearly feel that he's beating them over the head with this economic-justice stuff. Bruce Kraus blew up at Burgess over just that issue last week, and it's been a source of obvious friction between Burgess and Bill Peduto as well. As with the living wage bill, in fact, Burgess seems likely to be a minority of one here.
Personally, I think any hurt feelings on council pale in comparison to issues of economic justice. And I'm for the discussion of that issue, no matter what motives lay behind bringing it to the table.
But try as I might, I just can't see how Burgess' proposal is going to advance the cause.