Municipal leaders ask state for more revenue sources Read more: http://www.post-gazette.com/pg/10067/1041162-100.stm#ixzz0hrqEikZa

HARRISBURG -- City and municipal officials from around the state came here today to urge the Legislature to grant them new revenue-raising options to pay for municipal services, such as reimbursing them for tax-exempt property within their borders.

"We are not asking for a handout," said Reading Mayor Tom McMahon, whose city, like 18 others in the state, including Pittsburgh, is now under Act 47 protection from the state because of its financial problems.

The Pennsylvania League of Cities and Municipalities suggested four new ways that could be used for raising revenue, some of which already apply to larger counties such as Philadelphia and Allegheny.

They include:

• enabling legislation to permit counties to adopt a 1 percent "county option" sales tax, which would be in addition to the 6 percent state sales tax. Philadelphia now has an extra 2 percent sales tax and Allegheny has an extra 1 percent tax.

Mr. McMahon said that for the other 65 counties, the extra tax revenue would be split between easing school property taxes and helping county government and municipalities pay their expenses.

• if the sales tax base is expanded, as Gov. Ed Rendell is calling for, some of the additional revenue should go to local governments rather than have it all go to the state. Mr. Rendell has proposed lifting the sales tax exemptions for 74 different products and services.

• giving the other 65 counties a 10 percent tax on the price of poured alcoholic drinks, such as Allegheny and Philadelphia now have. Allegheny's was at 10 percent but now is cut to 7 percent.

• giving counties some revenue to reimburse them for the taxes they lose by not being able to apply the property tax to tax-exempt institutions like as universities and hospitals. Some cities, such as Pittsburgh, have more than one-third of their property as tax exempt.

Two other options, increasing the local services tax on workers employed in a city from $52 a year to $144 a year, and extending the payroll-preparation tax to nonprofit groups, weren't discussed by the cities group.

Mr. McMahon admitted it could be difficult to persuade legislators to take tax-raising steps in an election year like 2010, but he said many municipalities are having trouble paying for police, fire, garbage collection and other services, so the Legislature needs to help them.