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Drink tax passes -- but not without a fight

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Unless you've been on a pre-tax bender, you already know Allegheny County's contentious 10 percent levy on poured drinks passed county council on Dec. 4. The tax is slated to take effect Jan. 1.

Revenue from the tax is meant to bail out the foundering Allegheny County Port Authority. Also passed during the standing-room-only session of council was a $2-per-day tax on rental cars.

Pennsylvania already has the most-taxed alcohol of any state in the nation. Janet McClelland, of the Carlton restaurant, broke down the many layers of taxes piled on top of $10 worth of "raw materials" -- a bottle of wine -- to result in a $30 purchase. Among other fees she cited the lingering 18-percent Johnstown Flood Tax, and the 7-percent Allegheny County sales tax.

"This is outrageous," she said, brandishing posterboard illustrations of the bottle's increasing cost. For politicians, she says, the answer is, "Any time we're in trouble, let's go to the hospitality industry."

Patrick Conway of the Pennsylvania Restaurant Association said, "It is not fair to target a single industry. ... This will cost jobs."

"This is my second time ??? visit to these chambers," testified John Petrolias, owner of the Smithfield Café. "The last time, the county was attacking our industry, that was the smoking ban. We won there." Petrolias, in fact, was a plaintiff in a lawsuit that successfully overturned the countywide ban earlier this year. Now, Petrolias said, "wannabe governor" County Executive Dan Onorato was "trying to fill a hole created in the budget when they froze county assessments."

"We were urged to support this for working families," said Matt Drozd (R-Ross) who voted against the tax. "I'm going to oppose this in favor of our families. It's a direct tax, it's a tax on the people of Allegheny County. This is one more reason for people to cross a border and go to another county."

Council President Rich Fitzgerald (D-Squirrel Hill) voted for the tax. "If we don't pass this, there is no other budget," he said. "Dan Onorato has sent a signal to the world: We're going to keep property taxes low. It's a good place to invest." As he spoke, cries of "Horseshit!" and "Baloney!" rose from the audience. "There is a lot of hyperbole on both sides," Fitzgerald said. "Is there going to be an economic impact? Yes. Increasing the property tax will have more of an impact."

Before the vote -- and after 35 speakers representing the restaurant and rental-car industries passionately decried the new taxes -- at-large Republican Councilor Dave Fawcett, of Oakmont, sought a compromise. Fawcett's measure would blend a modest drink tax with a slight increase in property taxes.

"An increase in millage and a smaller drink tax is a better solution," Fawcett said. "Instead of 10 percent, the amendment I propose would be 5 percent. It raises significant funds with less pain. There can be no question that a drink tax will have a financial impact. A smaller tax will have a smaller impact."

Tom Baron, president of the Big Burrito Restaurant Group, called Fawcett's efforts "total baloney."

"I think it was just pure posturing because he knew that it didn't have a chance of being passed," Baron said after the meeting. "It was a feel-good measure for these guys to say they tried. What was really impressive in a negative way was how council didn't listen to the constituency. Everybody was against this tax."

Fawcett says his plan was an attempt at compromise -- something that others involved, including property owners and restaurateurs, seem unable to do.

"Anyone following county government the past three years would know that we were heading for a crisis because property taxes were frozen ... and a $30 million shortfall isn't something you can wave a wand over to fix," says Fawcett. "It's really too bad that people didn't work for a compromise.

"Everyone was playing hardball, and that led to someone being shut out. I still think that a very small [property-tax] increase and a 5 percent drink tax is far more preferable than the 10 percent drink tax we're going to have."

Baron says the tax will surely hurt a putative Onorato bid for governor: "He's just incited an entire industry. I truly think this tax passing for him is more damaging to him than if it had been rejected. It's going to bite him. We're not done, we have Plan B." When pressed for details, Baron said "it's not wise for us to divulge it" -- only that the restaurant industry has "plans" for reprisal.

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