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Drink tax challenge could go on ballot
Bar owners will seek referendum if court case fails
Thursday, February 21, 2008

A group of restaurateurs and bar owners who have filed suit against Allegheny County's 10 percent drink tax plans to seek a referendum against the tax if the court challenge fails.

"Our hope is that this tax will be eliminated soon. And if it isn't we have the resources to start a referendum to end this tax in November," said Chris Hoel, an attorney for Friends Against Counterproductive Taxation -- called FACT -- a lobbying group opposed to the levy.

Allegheny County Chief Executive Dan Onorato sought the drink tax and a $2-a-day tax on car rentals as a way to provide funding for the county's $30 million subsidy of the Port Authority.

The initial payment of the drink tax is due Monday.

FACT, which comprises several Pittsburgh restaurants and bars, is challenging the county's drink tax in court, claiming that it is unconstitutional.

Mr. Hoel said there has been little support for the tax since it was approved on Dec. 4.

"People continue to oppose this tax, which even Mr. Onorato acknowledged was a poor choice to fund mass transit," he said.

During a meeting last week with state legislators, bar owners and restaurateurs, Mr. Onorato said he would consider legalizing poker machines and other gambling devices in Allegheny County bars and taverns to create tax revenue that would allow the county to eliminate drink tax.

Now, two state legislators, Rep. Paul Costa, D-Wilkins, and Sen. Sean Logan, D-Monroeville, who attended the meeting, are drawing up legislation to offer Mr. Onorato an alternative to the drink tax.

Mr. Costa said the county would stand to bring in $45 million in annual revenue if video poker machines and similar games of chance are legalized in the county.

"We are trying to come up with another revenue source to raise $30 million for transportation so we can replace the 10 percent drink tax," Mr. Costa said.

Both Mr. Costa and Mr. Logan, however, said they are aware of the significant hurdles they must overcome. For one thing, there is a question of whether their proposal is legal.

That is one aspect even Mr. Onorato is not sure about, according to people who attended the meeting. They said that Mr. Onorato also cautioned the group that his proposal would be a long shot.

Mr. Onorato stuck to his position, however, saying he would not replace the levy unless he had another alternative. He has consistently said he would consider other options except raise property taxes.

During a visit to Pittsburgh yesterday, Gov. Ed Rendell said he would not be in favor of legalizing poker machines at this point.

"No, I've said that until we've had a chance to see how expanded slot machines work, we should take it easy. No table games, no anything else," Mr. Rendell said.

Legalizing poker machines for gambling would take money from the various slots venues throughout the state which paid $50 million for their licenses, Mr. Rendell said.

The Pennsylvania Gaming Control Board recently awarded Allegheny County and Pittsburgh police officials more than $500,000 in grants to step up operations against illegal gambling machines in bars, restaurants and taverns.

Ed Fasulo, vice president and general manager of the Majestic Star, the $450 million North Shore casino expected to open in 2009, said the 2004 act that legalized slots clearly prevents the expansion of gambling.

"My understanding is that there is a law in place already," he said. "We haven't taken a position on this matter, but we're going to abide by what the law says."

Harrisburg Bureau chief Tom Barnes and staff writer Mark Belko contributed. Karamagi Rujumba can be reached at krujumba@post-gazette.com or 412-263-1719
First published on February 21, 2008 at 12:00 am