Tuesday, April 05, 2005

Legislature expected to tweak new $52-a-year municipal tax

Legislature expected to tweak new $52-a-year municipal tax'We didn't dot the i's and cross the t's on this legislation,' said Rep. Mario Scavello, R-Monroe. 'We've opened up a Pandora's box with this thing.'

They need to "think again." Imagine that. They also includes my opponent. They should be moved to the private sector for doing such sillyness.

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Legislature expected to tweak new $52-a-year municipal tax

Tuesday, April 05, 2005
By Tom Barnes, Post-Gazette Harrisburg Bureau

HARRISBURG -- The state Legislature originally designed the new $52-a-year emergency and medical services tax as a way to help Pittsburgh dig out of its severe financial hole.

But before the tax was approved in a flurry of legislative business during the lame-duck session in November, the levy was broadened beyond just Pittsburgh so that any of the state's 2,657 municipalities could enact it.

And a lot of them have done so -- 320 to date, according to the Department of Community and Economic Development.

But state legislators are now upset with the way some municipal officials have implemented the new tax since it took effect Jan. 1.

Legislators don't like the fact that many towns are taking the whole $52 out of a worker's paycheck at one time, usually from the first paycheck of the year. This has caused some lower-paid workers to lose their entire first paycheck and even part of the second paycheck of the year.

"We didn't dot the i's and cross the t's on this legislation," said Rep. Mario Scavello, R-Monroe. "We've opened up a Pandora's box with this thing."

He wants to repeal the entire EMS tax, but most legislators say that's unlikely.

State Rep. Dan Frankel, D-Squirrel Hill, heard loud and clear from one of his constituents, whose entire first paycheck was swallowed up by the tax: his daughter Erica, who coaches basketball at the Jewish Community Center.

Frankel strongly supports the EMS tax, which replaced the previous $10-a-year occupational privilege tax, but he admitted some "tweaking" was in order.

The EMS levy is an important part of balancing the city's budget this year, since it will provide $13 million in revenue. But many legislators say they'll probably change things so municipalities can't force companies to deduct the whole $52 from a worker's paycheck at one time.

Rep. Steve Stetler, D-York, has introduced a bill mandating quarterly payments of $13. Other legislators think the tax should be deducted from a worker's paycheck at a rate of $1 a week.

"Fifty-two dollars is a big hit from a person's paycheck," Rep. Robert Freeman, D-Northampton, told the House Finance Committee yesterday.

But other legislators claimed that a $1 deduction made every week of the year would create a bookkeeping and accounting hardship for businesses, especially smaller firms that aren't fully computerized.

In some cases, where a worker has two or three part-time jobs, he faces a situation where each employer deducts $52 from his first paycheck, meaning he is severely over-paying. Some procedure should be worked out where a worker can designate his primary employer for tax purposes, legislators said.

Stetler was also upset that many towns aren't exempting workers who earn less than $12,000 a year. The Legislature's clear intent was to exempt lower-paid workers from the EMS tax, he said, but it neglected to actually say so in the law. Some towns are requiring workers who make as little as $1,000 a year to pay the tax.

"We thought the spirit of the law would prevail with municipalities, but we might have been a little naive," Stetler said.

So a minimum income level of $12,000 will likely be enacted by the time legislators leave on their summer break June 30.

The old $10 a year occupational privilege tax hadn't been increased since it was first enacted in 1965. Pittsburgh officials said some way was needed to get revenue from the 130,000 suburban workers who flow into the city each weekday and use city services such as police, fire and ambulance. Legislators from other towns said their central cities needed additional revenue for the same reason.

But legislators yesterday complained that the new tax is poorly named as the emergency and medical services tax. While many towns do use the $52 a year to defray the cost of police, fire and emergency medical services, the money also can be used to fix municipal roads or parks or even to reduce residents' other taxes, such as the property tax.

"In many cases the tax money doesn't even go for emergency services," Scavello complained. "The law is definitely flawed."

(Tom Barnes can be reached at 1-717-787-4254 or tbarnes@post-gazette.com.)