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Next On Q, taxes, controvers and a possible run for governor.

We're going to spend the next half hour with Allegheny County Chief Executive Dan Onorato.

And you're invited to join the conversation On Q starts now.

Welcome to On Q I'm Tonia Caruso.

It's a brand new year, but it has not begun quietly for Allegheny County Chief Executive Dan Onorato.

We have a lot to talk about.

And a little bit later we'll be taking your calls as Dan Onorato joins us for the entire half hour.

Thank you for taking time out and joining us.

Glad to be here.

Okay.

We have to start with the drink tax.

Bar owners putting signs up all over the county.

Jim Mitchell wants to fight you.

I'll be it for charity.

Still other people are putting on the receipts.

This is the Dan Onorato tax.

Are you surprised that there is still this much reaction to this?

No, because I know where it's coming from.

I there's a there's there's a group of people out there that want to keep this going.

And there's also some, think political opponents that, get the benefit of keeping it going, but it doesn't change the facts.

And, I had to make the decision today.

Make the same decision I made back in October.

If I got to pick between property taxes or this drink tax to fund Port Authority, we're not raising property taxes.

And this is the only option Harrisburg gave us.

And if you look at every other transit agency in the United States they all have dedicated funding, most of them use a dedicated sales tax.

We don't have that option.

We were not given that option.

Harrisburg.

Remember, Allegheny County i a creature of state government.

We only can do what they tell us we're allowed to do.

And they gave us two options.

They said raise property taxes or raise the drink tax.

And we picked the drink tax, because my whole career as county executive is to hold a lot of property taxes.

I cut taxes my first year, I stopped a massive, tax increase with another reassessment.

As you know, we don't do reassessments anymore with a base year, and I just shifted $25 million off of property taxes from Port Authority back int our operating operating budget.

County council in particular.

They seemed upset.

They kind of felt like al the facts weren't on the table.

They did not know they voted for this drink tax thinking it was needed to bail out the Port Authority.

And then, in their view, many of the Republicans surprise, here cam this $19 million, close to $20 million from gaming revenues at the end of the year.

Were you up front with folks there?

Sure.

Again that's all political posturing.

You understand that three Republicans are trying to make hay with this.

They try to reopen the budget again.

The Republicans and the Democrats voted for me to try to go get the $42 million.

I got 19 million, 19.9 Almost 20 I was 20 or going to try to get 22 million next year of gaming money to pay back our airport debt the county owed.

They knew it.

And isn't it ironic?

Even after I went to council and spoken for an hour and a half, they still voted the council.

The body ten four not to reopen the budget and shut down the four, Republican that were trying to reopen it.

It was all political showmanshi and and I understand the game, but they knew it wasn't going anywhere.

And so they had to bite at the apple.

It was the exact same vote both times.

And council overwhelmingl said, we're not doing property taxes.

We're gonna do the drink tax report authority explain with the money.

Then people say, well, then that money was supposed to go to pay down the airport debt.

Instead, it was kind of absorbed into the general.

But it is going for airport debt.

There's there's $150 million that we lobby for, and we take a lot of pride in this.

We were supposed to get $100 million for airport debt.

We convince the state to increase the $250 million, because when the airport authority was created, the county gave the airport authority $42 million, but the county's 42 million was created by borrowing money.

The county borrowed 42 million.

So that airport debt is on our books, and the rest of the money's on the airport books.

So if you're going to write down debt has to include the debt at the airport and the debt at the county.

I mean, the residents of Allegheny Count are paying off that $42 million.

So this is a relief to them, and we want our $42 million back.

Jim Roddy tried it as county executive.

He couldn't get it.

County council both Democrats and Republicans voted to try to get it from the airport authority.

They couldn't get it.

I found a way with gamin to go to Harrisburg to include both $108 million right down at the airport Authority, and 42 million more of the airport debt that's on our books.

So we're taking the 42 million off our books first, and then the remainin will come off the airport books.

But it's all airport debt.

I want to go back to the drink tax for a moment, because we're talking about the moneys needed to bail out the Port Authority, and now there is a dedicated funding stream.

Yes.

Do are you still hoping, though, that more changes, recommendations that were made in the audit of the Por Authority are carried through?

Do you d you think they should be moving?

Absolutely.

And by the way, the dedicated funding is only half of the the solution.

We're not there yet.

We're not finished yet.

We need a competitive labor agreement.

We already starte with management restructuring.

Their cost become June.

The labor contract expires.

We need a new competitive labor agreement.

Or Port Authority will go bankrupt again.

So it is critical that we get that done.

So we're halfway home.

All of those other items are in the audit.

Most of those items were taken care of.

And we're on our way to dealing with the competitive labor agreement once the contract expires.

I think a lot of pride in the fact that I'm the only county official.

The county executive prior to me and county commissioners prior to him.

None of them would deal with this issue because it is dynamite, as yo can see what I'm going through.

But we're dealing with it.

We come up with dedicate funding to relieve property tax from funding this, and I'm going to now take on the competitive labor contract when it comes up in June.

And I've already taken on management.

This is an easy thing to do, and I could have stuck my head in the sand like my predecessors and waited and given it to somebody else.

We're not doing that.

We're going to fix this.

Have a couple more questions, but we want to remind folks at home we're going to open the phone lines.

Now, if you would like to join the conversation and talk with Allegheny County Chief Executive Dan on Erato, the number to call is (412)325-1377.

Do you think that some stat appointees should be on the Pat board?

Should be on the Port Authority board.

You know, if the state want to do that, that would be fine.

But that's not going to solve the problem.

There's been state of, officials on this board in the past.

And, regardless of how you mak up, the board is still a matter of getting a competitive labor agreement and putting the pressure on to get this done right.

And it's about leadership from the county, that has never been there before.

And if you look at my record over the last four years, six the ten offices we consolidated five, nine, one one centers, we consolidated into one.

People told me, don't even try that.

You had the you had the, public safety teams out there fighting you.

You had the Democratic Party saying, don't do the consolidation.

But we did what was right.

And now I'm doing Port Authority and we're going to get that done next two.

Okay.

I want to go back to property taxes because, a big ruling is expected from the state Supreme Court.

Yes.

And there's a very good chance that they could find that assessments on a base year is unconstitutional.

So if they do find that, is that a good thing, then, because ultimately it affects every county in the state.

And this is now everybody's problem.

It could be.

And the reason I sa could be a little caution here.

If the Supreme Court rules that the base is unconstitutional, it will the go back to the state legislature because their their law would be unconstitutional.

They would then have to create a new law regarding property taxes.

So depending on what that new law looks like, there could be uniformity.

There could be consistency.

This could be something good that all 67 counties would be identical.

If they don't.

And they leave it up to each individual county.

And that can be a matter of what each county does.

And I'm committing to make sure that Allegheny County stays competitive with all the counties that border us.

And we are not going to allow the judiciary to dictate taxin policies just for this county.

I don't believe it's uniform.

I don't believe it's fair, and I believe that's unconstitutional.

And so we're not going to b doing individual reassessments.

So if this is sent bac down to the state legislature, then does that mean are you required at all to send new assessments out again, or are we going to get, you know, horrifying 200 you know, 208 209 210 numbers.

I will do everything in my power as long as I'm chief executive.

That will never happen.

There's probably a few battles, and so far I'm in year five now, my first year of my second term, and we have not done a reassessment.

You know, I've kept Allegheny County competitive with Butler, Westmoreland, Beaver, Washington because they haven't reassessed for 40 years.

And we're going to keep this county competitive as it relates to property taxes.

Because one thing I learned, reassessment means backdoor ta increases for school districts, municipalities in the county.

And I'm not going to do that.

Lots of people.

And it's no secret connect your name with running for governor.

2010.

And I'm curious all of this, especially now the drink tax where folks are saying, remember this on Election Day in 2010?

Does any of this politically play into do you make any decisions based on thinking eventually you want to run for governor?

Well, if you would watch the media coverage as it relates to that issue.

If I was if I was thinking about running for governor, any political animal will say, don't touch it, because why would you need that kind of negative PR?

I don't operate that way.

2010 is a long way off.

It's an eternity in my business and in politics.

And my goal right now i to continue in my second term.

What we started in our first term with the economic revitalization of the region, in the downtown area and the surrounding suburbs.

If we keep moving southwestern Pennsylvania forward economically, I'll have a story to tell if I decide to run in 2010 as it relates to this issue, the drink tax and people saying they're waiting, that's fine.

That' what political seasons are for.

That's what races are for.

And I say, bring it on, because there's a whole story to tell here, and I'm ready to tell it in anybody that's going to come after me on that issue.

Well they better be able to explain why they want to use property taxes up on Port Authority and not this tax, because somebody is paying for it.

And I think the homeowners of Allegheny County understand what I'm trying to do here.

And I believe in them, and I believe that they'll understand what's going on.

Let's talk about bringing on our first caller, John from Baldwin.

Welcome.

Thank you for calling in And go ahead with your question.

Good evening.

Mr.. On Erato, could you explain to us why you didn't, straighte out the Port Authority financial problems first and then seek that dedicated funding?

Because then I think people would have been more likely and more willing to fund Port Authorit if they felt that the mess down there was sort of straightened out.

Well, it's a great question, and I wish I could, but it's all about timing.

The state budget was passed last year.

It when they did the transportation bill and a statewide, that was our only chance to get dedicated funding in June.

Unfortunately for us, Port Authority's contract doesn't expire till June of oh eight.

It was a three year contract, so I didn't have the luxury to flip it.

And you really can't change the terms of the contract while there is a legal contract, but that will come up.

But the call was right.

If I could have done it the other way, it would have been a lot easier sell.

But I do believe if I get it done and we get a competitive labor agreement, the voters in the homeowners will still understand what we did.

It might be a little more painful getting there, but when they see the whole picture, because this will be played out in the media, as you can imagine, I think they'll understand and then they'll appreciate what we're doing.

Let's take another call.

Adam from Lawrenceville.

Welcome to On Q. Go ahead with your question.

Yeah.

Thanks for taking my question.

My question is, has any thought been given to, a different kind of tax, to help, fill the hole in the Port Authority budget?

And I'm thinking specifically of a carbon based tax rather than the drink tax, which see to have no logical relationship to the purpose of the tax.

Well, you know, absolutely.

The answer your question is yes.

This is probably the most frustrating part of this argument for m is the misinformation out there is somehow that I want to d the drink tax, the fun transit.

That was not my first choice, and I'll be the first to admi it's not the best way to do it.

If you look at all the other transit agencies, 85% of the use a local dedicated sales tax because it's broad.

Everybody pays it.

It funds transit.

Harrisburg said no to us.

You know, that 1% sales tax we have in Allegheny County.

Yeah, I asked to use that.

It raises $160 million a year.

We need 30 million of that money to fund the fund.

Transit Harrisburg said no.

We had ten options in the House bill in Harrisburg.

The Senate stripped them all out.

So this caller's absolutely right.

Drink tax was not my first choice, but we got it.

I believe, for one reason.

The 10% drink tax and the car rental tax are identical to what Philadelphia has.

So they gave us what Philadelphia has.

That's why it survived.

It's not the perfect relationship.

But again, if it's the option other than property taxes, it's better than property taxes.

Was 10% too high.

Could you have settled for a lower amount?

Again Philadelphia has the 10%.

Philadelphia has the $2 car a rental.

That's why we got those.

I'm hearing that, I guess the opposition is saying the 10% will raise too much.

We know the good news is, at the end of this year, December 31st, we'r going to know if it's too much.

We always have the ability to go back into the budget and deal with it.

If it's too low, we got a hole in the budget, but we'll know at 12 months.

So you sat down recently with Jim Mitchell?

Yes.

One of your big critics.

And, you're making some sort of an announcement tomorrow.

Actually.

Tomorrow.

We actually had a very good meeting, but I've been sitting down with a lot of, restaurant or bar owners, both before the vote and after the vote.

And my argument to, the people that are sick, because I understand it.

If I was in their shoes, I'd be mad, too.

I wouldn't like this at all.

And I understand their arguments.

I'd make the same arguments.

But where I think their anger is misguided is a let's go to Harrisburg an talk about these other options.

I can't create them.

We're not allowed to do that here locally.

And together, maybe we can go up there.

So I've been meeting we're trying to do this.

If they want to continue to take it out just on me, that's fine.

That's your prerogative.

That's not going to change Harrisburg.

I think what we do is try to sit down and get some rational minds in the room and say, okay, what's the best thing to do here?

We can look at other agencies and we're not the only area in the United States that has transit.

There's a lot of transit agencies and they figure this out.

So that's an option that I'm willing to do.

And I'm gonna continue to talk with the owners.

Okay.

Let's take another call.

Pat from Oakland.

Thank you for calling in And go ahead with your question.

Hello, Dan.

I like to ask you two questions, okay.

One about the Arab market, the stadiums in the arena.

They're around everything off to quarter which comes out to 40% and 10%.

Is there anything we can do about that?

The second question I have is your opponent's against the sel the drink tax at different bars.

And that how are we going to be sure they're their report and everything.

Because I was in the business and I know there's ways of getting around that.

And that's what I have to say.

Okay.

On your first on your first question.

Rounding up.

No, there's nothing we can do about that.

It's up to each individual owner of their establishment if they want to round up higher.

And and then that's competition.

Whatever they charge, whether an effect on the demand and, and the marketplace will play out there if they want to go highe than the 10%.

That's number one.

Number two.

How do we know the reporting at all?

Well, the corporate establishments, like, let's say Fridays or Chili's, those places, most of their business is credit card is computerized.

It's very easy to calculate.

It's sort of the mom and pop location where a lot of it's cash, where you might have a harder time, but the regulations have been established.

This tax has been in place in Philadelphia, Clevelan and several other major cities.

The comptroller and the treasurer studied all those regulations that have put into place, mechanisms to collect it and to check it.

So I don't think that will be an issue overall long term.

Yeah.

Switching gears for just a little bit today, Martin Luther King Da and, lots of events taking place around our region and lots of discussio recently about African-Americans and where we are i our community and in our region.

And how would you assess things right now?

Well, we've come a long way since the day that Martin Luther Kin was assassinated as a country.

But, I think we can all agree there's still a lot of problem and there's a lot of disparity.

In the United States and even within our own city.

But, all of us to be part of this, inclusion and diversit and making sure that everybody participates in the economic improvement of our region, because that that will only benefit all of us.

You know, right now the mayor and I are talking with residents of the Hill district as we prepare to build a, a new arena for, the Penguins.

There's also 28 acres that will be developed where the old arena is, and they'll be development above Carver Roberts.

We want to make sure that development makes sense for everybody, the larger community, but also the residents of the Hill as we reconnect, the road grid to downtown.

And, and that development happens up into the hill and make it a win win that jobs are available for the residents, both from the Hill distric and outside the Hill district, that, the workforce, looks like what the county in the city looks like.

But there is diversity.

So they're the things you got to still work for and try to achieve as we move forward.

And a lot of gain have been made over the years, and there's more to go.

And I think if we keep working together, we will achieve those goals.

Are you confident that a good benefits agreement, everybody will be satisfied with something.

I never know if everybody can be satisfied, but what I am confident in, in is that there will be development this time on the 28 acres and above.

Crawford.

Roberts.

You won't see parking lots for 30 years.

We learned from, Three Rivers Stadium not to do that again.

And look, between Heinz Field and PNC Park development happening now because there's a timeline, a draw down period, or they lose the development rights.

Same thing exists for the Hill district.

You're going to see development now.

You're going to see a food store.

You're going to see a YMCA being buil because there's a lot of other, moving parts that are making this happen.

And there's a real, real belief and a real, commitment from all the parties to get this done.

Let's take another call.

Michael from Squirrel Hill.

Thank you for calling in tonight.

Good evening.

And, hi.

And how are you doing, Mike?

I was wondering, Dan I had an opportunity last week in the Squirrel Hill library to read up a little bit on, the former mayor, David Lawrence.

Yes.

And one of the things I came across was that David Lawrence had spent some, critical time rebuilding, if you will, the relationship in, I guess, the 50s and 60 between the city and Harrisburg.

Is that what's needed now?

Is it partly the the problem that we're having with a lot of this, financial stuff?

Well, actually, that's wha I've done in my first four years is build relationshi with our senators and our reps, because there was there was a pretty contentious between the mayor's office in Harrisburg for years.

Everybody knows about it, right?

And we've been very fortunate for example, remember, we got $150 million out of Harrisburg to write down the debt at the airport, 150 million.

We convinced the Harrisburg to, write down it, pay back our development fund at the county and the development fund of the city.

Harrisburg is building the arena.

We don't have a penny of a sales tax in the new arena for the Penguins.

And yet we have local sales tax both Heinz Field and PNC Park.

We found a way to do it.

And that's becaus of relationships we're building.

Dedicated funding while we even argue over drink tax.

We never had dedicated funding.

Harrisbur gave us something on this one.

We might disagree on what it is, but they're at least moving.

And a lot of this is because I work closel with both the R's and the D's.

I don't get everything I want, but they have some legitimate issues.

But we're getting a lot for this region.

We have over $1.2 billion of of state, our cap dollars, which are bond money for economic development, 1600 acres of brownfields and airport lan that we've cleaned and cleared.

And we have development going on mainly due to stat capital dollars that came here.

All of that is about relationships.

So that's very important for this region to survive.

So then moving ahead as you look at things, what do you assess right now as your greatest challenge.

What's what is our county's greatest challenge.

Is it property taxes.

Is it two things?

We've actually, the numbers are looking good for economic turnaround in this region.

One of our challenges is, i is explaining it to the public and getting everybody to start believing in ourselves again in southwestern Pennsylvania were so harsh on ourselves.

We ourselves, the media coverag can just show the real numbers.

I mean, young people are staying here at a much greater rate than other cities.

We actually have corporat headquarters coming back here.

We have thousands of jobs being created by our corporations that are expanding here.

I'm talking about US steel, Westinghouse, Med Red, American Eagle, Dick's Sporting Goods.

I can go on and on.

Major expansions here.

Number of jobs.

Highest in the history of the region that we've ever had here.

These are good news.

The biggest challenge is keeping that momentum going now for the next four years and keeping the economy moving forward as we're we're lookin at a national sort of problem.

But southwestern Pennsylvania is still steadily is growing.

And the keeping that going is going to be the challenge for all of us.

Speaking of growing and making us known, you're about to take a trip and tell me about this and kind of what the purpose is going overseas.

Well, it's a it's a mixture.

There's two different tracks going over in the, Pittsburg Symphony is going to be there, and promoting the region.

But I'm going for specific reasons on business.

I'm meeting with a few airlines to talk about direct flights back to Europe.

Meeting with the compan that's looking to buy Kennywood to make more investments in southwestern Pennsylvania.

And I'm meeting wit other businesses that are here.

Allegheny County and southwestern Pennsylvania has 112 European based companies employing thousands of individuals.

And so we'll be I'll be meetin some of those individuals, too.

But so it's really a cultural but really business exchange direct flights to Europe is going to be one of my key issues.

As you move forward and as you look at things, you know, this word comes up all the time.

Consolidation.

There was an even an article yesterday in the Post-Gazette that the jury's still out, and some people find really good things about it.

Some people find bad things.

What are your thoughts right now?

Well, what I was like know is that we have a lot of government, a lot of duplication, and a lot of, governments that can't afford to provide services consolidation, of duplicated services, a must.

We could we could agree to disagree about how to get there, but we have to do it.

And I'll give you a couple examples.

Consolidating the road officers or saving us a few million dollars a year.

We have 5 911 centers.

When I took office.

There's now one.

Every county our size has one.

Why we didn't need five.

We save $3 million a year b having one center versus three.

But first is five independent centers.

We took over the city court.

We took over the city's police fingerprinting.

The mayor and I signed a, agreement that the count will do purchasing for the city.

We have a joint telecommunication agreement.

That all makes sense because that's saving millions of dollars anywhere.

We can provide good service and eliminate duplicated functions so we don't pay for it twice.

It makes sense.

Let's take another call.

Chuck from Oakdale.

Thank you for calling On Q. Hello, this is Chuck from Oakdale, and I'd just like to, talk about, the fact that Hurricane Ivan, when it came that, Mister Runaround who stepped in and helped us, property owners in Oakdale and other areas by reducing the property assessments by 40%.

And I just received ne assessments on those properties.

They're barely back on their feet, and they've now not only gone up for a whole 40%, but they've now raised them even higher than before the flood.

I was just wondering why they didn't make an announcemen that they were going to do this.

And when I called in, they said it was just an error correction and they have to appeal it.

Well, I'll be honest with yo as first I heard it, what he's referring to, after Ivan hit back in 2004, we identified 4000 properties that had significant damage.

I mean, real damage.

Instead of having those people come down and fight an appeal to lower their assessments I did an administrative order.

Well, we lowered them, almost 50% because of the damage.

And that saved their propert taxes because they had no money.

They lost so much.

Now, some of the people that remodel their homes, once the homes remodel, they had to put it back to its regular value.

What he's referring to is maybe there was an administrative change made to put the values back.

There's a mistake.

I'll look into that in Oakdale.

But I know Oakdale was devastated.

I walked the streets with the mayor myself.

That whole town was underwater.

I'll see what he's referring to.

The first I heard of this.

Yeah.

So you, your staff, lots of stuff going on.

And what has kind of been the response in your office?

We know back to the drink tax bar owners are upset.

Home owners are often upset about property taxes.

What do you ge the most emails and calls about?

Well, in my four years in council the the one issue that that had the most emails and complaints was when the when people thought the Penguins were going to leave, I guess the fan base, the coverage, we were getting 2 to 300 emails a day.

Critical emails.

Get this done.

Don't let them leave.

That's not happening with the drink tax issues.

Matter of fact, the little response coming in is split.

You got bar owners that are upset, obviously, but you have property owners saying, listen, don't raise my property taxe to give it the Port Authority.

You they want relief.

So it's a mixed bag.

But I think but but it's a it's a quiet response compared to the penguin response.

It's not even close.

Right, right.

And so then I guess as you move forward, what do you want to tell people about what you plan to do?

Well, as we move forward, we're going to stay focused on cleaning the rest of the brownfields that have been contaminated, walled industrial sites.

We're going to build off the rest of the airport land so the development can happen there.

I'm going to continue to fight to keep property taxes down and to avoid, reassessments, going forward, t allow back to our tax increases.

We're going to fix Port Authority.

When I say that, I mean the cost structure, get a competitive labor agreement, fix some of the outrageous management costs, which we already did in March on the management side, and we're going to continue to streamline government, and we're goin to keep this area competitive.

So the companies want t stay here and can't expand here when they decide to.

Well, County Executive Dan Onorato, a lot going on.

Lots of controversy too.

We look forward to that, announcement tomorrow with Jim Mitchell.

Thank you for coming in tonight and spending the half hour with us.

We appreciate it.

And for more information about Allegheny County, you can log on to our website at wqed.org/OnQ for all of u here at On Q I'm Tonia Caruso.

Thanks for watching.

Have a good night.