- Jan 27, 2003
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US Airways seeking tax increases
Airline's plan to cut debt won't fly, lawmaker says
Saturday, September 20, 2003
By Mark Belko and Tom Barnes, Post-Gazette Staff Writers
The long-awaited US Airways proposal for maintaining its hub at Pittsburgh International Airport calls for increasing hotel, sales and car rental taxes to cut $500 million in debt.
But the plan appears to have no support from top state and Allegheny County leaders.
In a proposal to state and county negotiators Wednesday, US Airways officials called for increasing the taxes by varying percentages to raise $31 million a year to pay down the airport debt, which totals $673 million.
The exact percentages were not available yesterday.
"It's just stuff you might as well not even propose because it won't get off the ground," said state Rep. Tom Stevenson, a member of the Allegheny County Airport Authority board. "They've proposed stuff that is just untenable."
US Airways spokesman David Castelveter declined to comment on details of the airline's proposal but did say the solution "was one that would creatively bring down the airport debt."
The sales tax is now 7 percent in Allegheny and Philadelphia counties and 6 percent elsewhere in the state.
Car rentals in Pennsylvania are now subject to a 2 percent tax. There's also a $2 a day rental fee imposed statewide. Car renters also pay sales tax.
The tax on hotel rooms varies from county to county but is now 7 percent in Allegheny County. The sales tax also is added to hotel bills.
At a news conference yesterday, before details of the US Airways proposal became available, Gov. Ed Rendell appeared to rule out sales or other taxes for paying down the airport debt.
"We certainly are not going to wipe out the debt using direct tax dollars," he said. "First of all, that doesn't make sense. Second of all, I don't think it's the right thing for the citizens of Pennsylvania or the citizens of Pittsburgh."
Allegheny County Chief Executive Jim Roddey, while refusing to discuss the US Airways plan, also said he would not consider raising taxes.
"I would agree with the governor's statement. He said raising taxes was not an option for this project," he said.
Likewise, Stevenson, R-Mt. Lebanon, said he saw no support in the state Legislature for the plan.
"None of us is buying into US Airways' take-it-or-leave-it scenario," he said. "I don't think they'll bite off their nose to spite themselves. They need Pittsburgh to stay profitable. Their threats of leaving Pittsburgh are very hollow."
Robert Macey, another member of the Airport Authority board, said he's equally opposed to raising taxes.
"If it comes to taxes, I don't think we're going to get public support and I don't support it. I don't believe it should be put on the shoulders of the taxpayers," he said.
US Airways presented the proposal to state and county negotiators roughly three months after receiving from Rendell a $263.9 million plan to cut costs and make capital improvements at Pittsburgh and Philadelphia International airports.
In addition to using taxes to reduce the Pittsburgh debt, US Airways is calling for the same types of tax increases to reduce its rent at Philadelphia International Airport. The airline has asked for $140 million in rent relief.
The state presented its plan in response to US Airways canceling its leases at Pittsburgh International, effective Jan. 5, shortly before emerging from bankruptcy. It has threatened to close down its hub unless it gets the cost reductions it wants.
The airline said Wednesday that retiring $500 million in debt would require $31 million in new revenues annually -- a "small price to pay" compared to the economic activity the airport hub generates for the Pittsburgh region. US Airways did not specifically identify revenue sources for the $31 million in its public statements.
A US Airways-commissioned economic impact study released the same day said closing the hub would cost the region $1.8 billion a year and 17,100 jobs.
During the meeting, airline officials also compared the public subsidies it was seeking to the public investments made to build PNC Park, Heinz Field and the new David L. Lawrence Convention Center.
The $673 million in debt is mostly from construction of the midfield terminal, a project the airline approved and agreed to finance largely through rates and charges paid to the airport.
At his news conference, Rendell also said he won't help US Airways reduce the Pittsburgh airport debt until the airline makes a specific commitment about jobs.
"We may take steps to make the Pittsburgh airport and the Philadelphia airport become better airports [through capital improvements], but we sure as heck aren't going to reduce the debt levels that they are contractually obligated to pay without significant guarantees on jobs," he said.
"There are a lot of jobs at stake One of the problems is that US Airways refused to give us a job-level guarantee. We're certainly not going to do anything that would help them ... without job guarantees."
In August, US Airways Chief Executive Officer David Siegel irked Allegheny County and state officials by saying the airline "cannot make commitments to the state on employment levels or types."
Siegel has repeatedly said the airline must reduce its costs in Pittsburgh and, if it can't, it is "fully prepared to exit Pittsburgh."
As for job guarantees, Castelveter said, "It's difficult for anyone to make any kind of job guarantee knowing how fragile the marketplace is."
He said the economy has yet to fully recover, many businesses aren't growing and there is always the threat of additional terrorist attacks that make people afraid to fly.
"We certainly want to maintain our hub in Pittsburgh and we want to develop our regional jet hub in Pittsburgh," he said. "The only way to do that is by finding a creative solution to reduce the airport debt."
Rendell said he expects that the Pittsburgh airport "will get other airlines if [US Airways] leaves, but I don't think we'll ever have the level of activity with [them] staying and hubbing. So we are going to try to the best of our ability to give them help."
Rendell said his plan for capital improvements at the Pittsburgh and Philadelphia airports "is a good one, and I think they recognize that, but they are concentrating on reducing the level of debt. To the extent we can do that by creative financing, we are willing to help."
Rendell said that while he "hasn't always been pleased" with some of the statements Siegel has made, the negotiations to try to keep US Airways in Pittsburgh "have been a good-faith process."
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(Mark Belko can be reached at [email protected] or 412-263-1262. Tom Barnes can be reached at [email protected] or 717-787-4254.)
Airline's plan to cut debt won't fly, lawmaker says
Saturday, September 20, 2003
By Mark Belko and Tom Barnes, Post-Gazette Staff Writers
The long-awaited US Airways proposal for maintaining its hub at Pittsburgh International Airport calls for increasing hotel, sales and car rental taxes to cut $500 million in debt.
But the plan appears to have no support from top state and Allegheny County leaders.
In a proposal to state and county negotiators Wednesday, US Airways officials called for increasing the taxes by varying percentages to raise $31 million a year to pay down the airport debt, which totals $673 million.
The exact percentages were not available yesterday.
"It's just stuff you might as well not even propose because it won't get off the ground," said state Rep. Tom Stevenson, a member of the Allegheny County Airport Authority board. "They've proposed stuff that is just untenable."
US Airways spokesman David Castelveter declined to comment on details of the airline's proposal but did say the solution "was one that would creatively bring down the airport debt."
The sales tax is now 7 percent in Allegheny and Philadelphia counties and 6 percent elsewhere in the state.
Car rentals in Pennsylvania are now subject to a 2 percent tax. There's also a $2 a day rental fee imposed statewide. Car renters also pay sales tax.
The tax on hotel rooms varies from county to county but is now 7 percent in Allegheny County. The sales tax also is added to hotel bills.
At a news conference yesterday, before details of the US Airways proposal became available, Gov. Ed Rendell appeared to rule out sales or other taxes for paying down the airport debt.
"We certainly are not going to wipe out the debt using direct tax dollars," he said. "First of all, that doesn't make sense. Second of all, I don't think it's the right thing for the citizens of Pennsylvania or the citizens of Pittsburgh."
Allegheny County Chief Executive Jim Roddey, while refusing to discuss the US Airways plan, also said he would not consider raising taxes.
"I would agree with the governor's statement. He said raising taxes was not an option for this project," he said.
Likewise, Stevenson, R-Mt. Lebanon, said he saw no support in the state Legislature for the plan.
"None of us is buying into US Airways' take-it-or-leave-it scenario," he said. "I don't think they'll bite off their nose to spite themselves. They need Pittsburgh to stay profitable. Their threats of leaving Pittsburgh are very hollow."
Robert Macey, another member of the Airport Authority board, said he's equally opposed to raising taxes.
"If it comes to taxes, I don't think we're going to get public support and I don't support it. I don't believe it should be put on the shoulders of the taxpayers," he said.
US Airways presented the proposal to state and county negotiators roughly three months after receiving from Rendell a $263.9 million plan to cut costs and make capital improvements at Pittsburgh and Philadelphia International airports.
In addition to using taxes to reduce the Pittsburgh debt, US Airways is calling for the same types of tax increases to reduce its rent at Philadelphia International Airport. The airline has asked for $140 million in rent relief.
The state presented its plan in response to US Airways canceling its leases at Pittsburgh International, effective Jan. 5, shortly before emerging from bankruptcy. It has threatened to close down its hub unless it gets the cost reductions it wants.
The airline said Wednesday that retiring $500 million in debt would require $31 million in new revenues annually -- a "small price to pay" compared to the economic activity the airport hub generates for the Pittsburgh region. US Airways did not specifically identify revenue sources for the $31 million in its public statements.
A US Airways-commissioned economic impact study released the same day said closing the hub would cost the region $1.8 billion a year and 17,100 jobs.
During the meeting, airline officials also compared the public subsidies it was seeking to the public investments made to build PNC Park, Heinz Field and the new David L. Lawrence Convention Center.
The $673 million in debt is mostly from construction of the midfield terminal, a project the airline approved and agreed to finance largely through rates and charges paid to the airport.
At his news conference, Rendell also said he won't help US Airways reduce the Pittsburgh airport debt until the airline makes a specific commitment about jobs.
"We may take steps to make the Pittsburgh airport and the Philadelphia airport become better airports [through capital improvements], but we sure as heck aren't going to reduce the debt levels that they are contractually obligated to pay without significant guarantees on jobs," he said.
"There are a lot of jobs at stake One of the problems is that US Airways refused to give us a job-level guarantee. We're certainly not going to do anything that would help them ... without job guarantees."
In August, US Airways Chief Executive Officer David Siegel irked Allegheny County and state officials by saying the airline "cannot make commitments to the state on employment levels or types."
Siegel has repeatedly said the airline must reduce its costs in Pittsburgh and, if it can't, it is "fully prepared to exit Pittsburgh."
As for job guarantees, Castelveter said, "It's difficult for anyone to make any kind of job guarantee knowing how fragile the marketplace is."
He said the economy has yet to fully recover, many businesses aren't growing and there is always the threat of additional terrorist attacks that make people afraid to fly.
"We certainly want to maintain our hub in Pittsburgh and we want to develop our regional jet hub in Pittsburgh," he said. "The only way to do that is by finding a creative solution to reduce the airport debt."
Rendell said he expects that the Pittsburgh airport "will get other airlines if [US Airways] leaves, but I don't think we'll ever have the level of activity with [them] staying and hubbing. So we are going to try to the best of our ability to give them help."
Rendell said his plan for capital improvements at the Pittsburgh and Philadelphia airports "is a good one, and I think they recognize that, but they are concentrating on reducing the level of debt. To the extent we can do that by creative financing, we are willing to help."
Rendell said that while he "hasn't always been pleased" with some of the statements Siegel has made, the negotiations to try to keep US Airways in Pittsburgh "have been a good-faith process."
--------------------------------------------------------------------------------
(Mark Belko can be reached at [email protected] or 412-263-1262. Tom Barnes can be reached at [email protected] or 717-787-4254.)
>>
What worries me is that Dave will take the moving expenses away. It wouldn't surprise me. He's breaking a bunch of stuff in the contract. After all, we are dealing with lower-than-pondscum management. Arlen Specter was too kind to call Dave Siegel a soundrel, he's a *&^%$#@$%^&** of cr*p!
