Requiring Referendum on Property Tax Increases a Good Idea

Pittsburgh City Councilman Ricky Burgess introduced a bill yesterday requiring that city voters approve future property tax increases, the Pittsburgh Post-Gazette reported. With city property taxes in 2010 estimated at $127,118,000 or 28 percent of Pittsburgh’s 2010 operating budget, Burgess’s proposal targets the City’s main method of raising revenue and would, if enacted, give city residents a great deal of control over the City’s budget.

This is especially true considering the fact that most of the other major revenue sources in the City’s budget cannot be raised by City Council. As Pittsburgh City Paper’s Chris Potter wrote

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.

In this way, if Burgess’s proposal became law, the only major revenue source City Council would be able to increase without taxpayer approval would be the Earned Income Tax which, at a little more than $68,000,000 in 2010, represents only about 15 percent of the City’s 2010 budget. In introducing his proposal, Burgess said that its purpose was to protect Pittsburgh’s most vulnerable residents from future property tax increases but, considering that the City’s most vulnerable residents probably are those who cannot afford to own homes in the first place, Burgess’s proposal is of little value in protecting the disadvantaged.

That being said, in providing city voters with the power to nullify property tax increases, Burgess’s proposal could at least temper the expansionary tendencies of a city government whose budget steadily increases every year even as city population decreases. Of course, in searching for income over the past year, City Council and the Mayor’s Office have sought to create new taxes on everything from tuition to hospital admission to sugary beverages. Clearly, Burgess’s proposal would do nothing to prevent the city from creating such new taxes.

Although Burgess’s proposal is incapable of protecting city residents from the desperate inventiveness of a cash-hungry government, it would be a positive step toward forcing city government to recognize that Pittsburgh has a spending problem and not a revenue problem.

Of course, I could be underestimating the usefulness of Burgess’s proposal since its revelation has led local proponents of big government to denounce it as a political stunt to distract attention away from Burgess’s own tax problems and as the first step toward California-style insolvency. None other than Councilman Doug Shields, Councilman Patrick Dowd, the Post-Gazette’s Early Returns blog and City Papers’ Chris Potter are in opposition to Burgess’s proposal.

But as Nathan Benefield of the Commonwealth Foundation explained in the Tribune-Review, forcing property tax increases to be approved by voters does not automatically mean that every tax increase will be voted down. “Voters will reject [the tax increase] if they perceive it as wasteful spending. If there’s a real need for it and local government can justify it, voters will support that,” Benefield said.

For whatever reason Burgess made his proposal and no matter how often his opponents raise the specter of California, Burgess’s idea is a good one that empowers city residents to limit the growth of city government. Although it has little chance of passing City Council, Burgess’s proposal could appear on the May 17 primary ballot if 4,600 city residents sign a petition by May 8 to put it there.