News

February 21, 2008

Wilkes Barre, Scranton mayors back bill

City leaders support effort to use liquor tax to offset tax-exempt properties.

By Andrew M. Seder aseder@timesleader.com
Times Leader Staff Writer
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Wilkes-Barre Mayor Thomas M. Leighton urged a state House committee Wednesday to move forward with a bill that would pump millions of dollars into the city and hundreds of other municipalities across the state.

Leighton and Scranton Mayor Christopher Doherty told the state House Committee on Local Government convened at City Hall about how a high percentage of tax-exempt properties is impacting their revenue streams.

The mayors detailed how their cities are regional hubs for county, state and federal governments, multiple colleges and hospitals, cultural and community institutions and other nonprofit entities that require city services but are exempt from paying property taxes.

House Bill 2018, co-sponsored by 45 state representatives from both parties, would help these municipalities make up some of the funding they are not collecting from non-taxpaying entities such as colleges, churches, government buildings and hospitals.

The revenue, under the proposed bill, would stem from the 1936 Johnstown Flood Tax. After the 1936 flood, the Legislature imposed an emergency tax on all alcohol sold in the state. What was to be a temporary 10-percent tax went to cleanup, recovery and assistance to flood victims. The tax was upped to 15 percent in 1963 and then to 18 percent in 1968. All liquors sold by the state Liquor Control Board are subject to this tax.

The nearly $240 million collected annually no longer goes to flood victims, instead going into the general fund for discretionary use by lawmakers.

State Rep. Eddie Day Pashinski, D-Wilkes-Barre, is a co-sponsor.

Leighton spoke about Wilkes-Barre’s recent resurgence and the downtown energy that’s been created by new businesses and the ongoing expansions of King’s College and Wilkes University. He mentioned Wilkes’ $8.19 million purchase in 2006 of 10 East South Street apartments, now University Towers, which is being converted it into student housing, as one example of taxable property coming off the tax rolls. Wilkes gave the city $61,000 last year in lieu of taxes.

The city is taking a $40,000 hit on the property, Leighton said, but tempered his remarks with praise for the schools and other non-profits that have helped turn around the downtown. He noted some non-profits make payments to the city in lieu of taxes each year.

Among them is King’s College, which gave the city $61,050 last year. King’s, like Wilkes, recently purchased properties that resulted in the transfer of taxable properties to tax-exempt status. King’s purchased the Margarita Apartments on North Main Street and converted the building into Alumni Hall in 2003.

The Rev. Thomas J. O’Hara, King’s president, said the college has given financial support to the city’s wireless initiative and streetlight project and is assessed as part of the Business Improvement District.

Todd Vonderheid, a former Luzerne County commissioner who represented 10,000 Friends of Pennsylvania at the hearing, said he sees the University Towers project from an economic development standpoint -- hundreds of young people walking the streets and spending money and making the downtown more vibrant.

“But to (Mayor Leighton), he’s looking at 40 grand,” Vonderheid said.

It’s that balance that shows the double-edged sword of being a regional hub. Residents from throughout the region head to the cities for medical and government services, education and employment opportunities and recreation and entertainment. But the taxpayers in those host municipalities shoulder the burden of providing services to those entities while not receiving property tax dollars.

“They’re all great assets, but they’re regional assets,” said state Rep. Robert L. Freeman, D-Easton, committee chairman and the bill’s primary sponsor.

Vonderheid commended the committee for making it clear the non-profit entities are not the bad guys in the story.

. “(The bill) and the philosophical belief behind it is ground breaking in Pennsylvania because it acknowledges that the benefit from many tax-exempt institutions is regional in nature and the cost to service those institutions should not be restricted to specific municipal boundaries or geographies.”

While suburban communities are bustling, Freeman said, the cities that many in those surrounding townships and boroughs rely upon for health care, government facilities and jobs are struggling to get by as more businesses and residents flock to the suburbs.

“Cities are the core of any community in any county,” Doherty said. “Regions are defined by their cities. What people think of those cities are what people think of that county.”

Freeman said boroughs and townships impacted by tax-exempt properties including national forests and parks would also benefit.

Doherty said the additional $1.4 million his city would be looking at is a good step but not the final answer.

Not every group or person that presented testimony Wednesday supported the bill, though all voiced support for the concept.

Among those concerned with the bill is the County Commissioners Association of Pennsylvania, which took issue with a provision requiring tax assessment offices to go above and beyond what they’re required to under the General County Assessment Law. But the association’s government relations manager, in a letter to the committee, said the association would be “happy to further discuss our issues.”

Who’d get help?

ABOUT THE BILL:

Wilkes-Barre, where 20.8 percent of the city’s assessed value is tax-exempt, would stand to gain $139,528 if the bill were in place now. In Nanticoke, where 22.6 percent of the city’s assessed value is tax-exempt, the city would receive $32,578. Dennison Township, where 30.9 percent of the township’s assessed value is tax-exempt, would receive $10,731. Luzerne Borough would receive $6,418. That town has 18.2 percent of its overall assessed value non-taxable. And Shickshinny Borough, where 30.8 percent of its assessed value is tax-exempt, would receive $3,731.

House Bill 2018 calls for municipalities in the state with a total assessed value of tax-exempt property equaling or exceeding 17 percent of the total value of its assessed property to share in the revenue from what has been about $240 million a year raised by the 18-percent liquor tax. About 500 would currently qualify, including five in Luzerne County.

Andrew M. Seder, a Times Leader staff writer, may be reached at 570-829-7269.

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