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Pittsburgh appeals 'jock tax' case to the state Supreme Court, stops collection

Kiley Koscinski
90.5 WESA

The City of Pittsburgh hopes to bring a legal dispute over its sports facility usage fee to the Pennsylvania Supreme Court. The city has stopped collecting the fee in the meantime, which could put new strains on an already tenuous financial picture.

“We believe that this tax is proper,” city solicitor Krysia Kubiak said.

The charge, widely known as the "jock tax," is a 3% levy on out-of-town athletes and performers who use city-owned venues. An appeals court ruled the tax unconstitutional last month, affirming a lower court's 2022 opinion.

The city filed paperwork in the appeal last week, but it's unclear when or if the supreme court will take up the matter. And with a precarious budget already on the horizon in 2025, the lost revenue is a headache facing Pittsburgh Mayor Ed Gainey.

The tax passed in 2016 to capture revenue generated at Acrisure Stadium, PPG Paints Arena and PNC Park. And it plays a modest role in the city's overall budget.

The city’s five-year financial plan estimates that the tax will bring in an average of $4.6 million per year. According to the city controller’s office, the tax has yielded between $3.3 million and $3.6 million between 2020 and 2022, with a spike up to nearly $6 million last year — a jump that experts partly attribute to Taylor Swift's appearances at Acrisure last summer.

Those are tiny sums in the context of a city whose operating budget runs well over half a billion dollars. “It’s a smaller drop in the bucket than some of the bigger ones, like the real estate revenue and earned income tax,” said Peter McDevitt, City Council’s budget director.

Still, there are hundreds of open refund claims stemming from the lawsuit, and if the city loses, more claims could be filed in the years ahead. With a three-year window to file a claim, it’s hard to know how much money the city could end up repaying if it loses its court fight.

And with slim budget margins ahead in 2025 and 2026, the uncertain fate of the jock tax is just one of a handful of challenges ahead. Federal pandemic aid dries up this year (all $335 million of the aid must be encumbered by the end of 2024) and plunging Downtown property reassessments have raised concern among members of City Council.

Despite those factors, McDevitt said he’s “not panicking" about the jock tax.

“This is just another challenge that we need to face,” he said. “We [won't] have enough revenue to pay for all of our operations and capital budget."

McDevitt argues there’s still time to figure out how to keep Pittsburgh in good financial standing.

“It’s not like we’re burying our head in the sand” about the expected lag in revenues, he said. “This was something that was discussed a lot throughout this [most recent] budget cycle.”

Court decision replay

In 2019, players unions from the three major sports leagues sued the city in Common Pleas Court. They argued that the fee was discriminatory because it treated out-of-town athletes and performers differently from those who live within the city. Such a distinction, they claimed, violated the state’s uniformity clause, which requires “all taxes shall be uniform, upon the same class of subjects.”

A Common Pleas judge sided with the athletes in 2022, and issued an injunction prohibiting the city from collecting the tax. But the city appealed that decision — a move that allowed them to continue collecting the tax for the time being.

City lawyers have argued that the 3% tax evens the playing field between out-of-town performers and those who live in the city, since residents pay a 1% income and 2% school tax. While only only one-third of the revenue generated by the earned income tax goes to the city, all the revenue from the jock tax ends up in city coffers.

Last month, a seven-judge Commonwealth Court panel affirmed the lower court ruling. “The City has failed to provide the requisite concrete justification for treating residents and nonresidents as distinguishable classes that may be subjected to different tax burdens,” the court wrote.

One dissenting member of the panel, President Judge Renee Cohn Jubelirer, wrote that because residents and nonresidents alike pay a 3% tax, the fee does not “in substance” violate the uniformity clause. Jubelirer wrote that the clause “has not always been a model of clarity, so disagreement is to be expected.”

Kubiak pointed to Jubelirer’s dissent as grounds for the city’s appeal. But even if the city ultimately wins the case, it's not clear when revenue from the tax might resume. Kubiak said the city could be “looking probably at least another year or year-and-a-half for a final decision.”

While the city is appealing that decision, it has stopped collecting the tax. The suspension is necessitated by the fact that the Supreme Court is under no timeline to decide whether to take up the case, let alone to issue a ruling in it.

If the state Supreme Court rules against the city or declines to hear the case — a move that would leave the lower court's decision intact — it’s unclear how refunds would get processed. The city did not make the finance department available for an interview.

Those refunds would not be automatic: Athletes and performers would have to file a claim to recover their money. But qualifying applicants who could file do so would include professional athletes from out-of-town and big music names like Lizzo, Kenny Chesney and Taylor Swift.

Kiley Koscinski