Friday, September 07, 2012

The real RAD debate is forgotten

Some may not think about it much any longer, but what is the Regional Asset District?  No real 'region' in it.  The RAD is a semi-autonomous entity that collects a 1% supplemental sales tax only on eligible purchases only in Allegheny County. Nowhere else in the region is impacted; so region with a small 'r' I guess. The RAD itself and the tax has not been around all that long having been implemented following a contentious public debate in the early 1990s.  The tax itself went into effect in 1994 based on enabling legislation that first passed in Harrisburg and then with the support of a majority of the county commissioners that ran county government here at the time. 

The whole idea of the RAD however was a culmination of a decades long process that started long before it finally came into being.  For more on that history read: Pittsburgh: a regional city with a local tax base, though I would argue it all connects to earlier debates on local public finance and debates in the 1950's that lead to to the creation of the city's earned income (or wage) tax and also to some of the earlier attempts at the creation of an Allegheny County Home Rule Charter.... before the version that finally came into being later in the 1990's only after the RAD was created.

Back when it when the new tax was being debated it was big news.  The core of the debate was what would happen to retail firms and sales in Allegheny County.  Would everyone flood out of the county to make their routine and large purchases.  Would retail biz in the county collapse as a result of the extra tax that could be escaped by a short ride in most any direction?  It was a very real question and very much expected by many.  

What really gets me a bit is that around here there is just no follow up to anything.  Lots of debate at the time looking at what the future impact of what the RAD would be, but nobody every bothers to look back once there is real data to look at.  So what happened?  Did Allegheny County become a retail wasteland because of the RAD tax?  It is not that hard a thing to check.

Before looking some pesky data we now have, what do we know about what happened to the retail sector within Allegheny County in the decade following the implementation of the RAD sales tax?  Maybe a few new retail confabs have come into existence and thrived.  Waterfront, South Side Works, Pittsburgh Mills, virtually all of the retail paroxysm otherwise known as Robinson..  Folks new to the region may not even realize that just a few years ago most all of that was completely undeveloped land.  Like all of it. No mall, nothing.  Sure seems like retail has just withered in the years following the implementation of the RAD tax. Back before the RAD there was regular discussion about how under-retailed the county was.  I don't hear that much any longer. 

For those who want to argue the point.  Argue with the data.   Here is the total value of retail sales by county within the Pittsburgh MSA.  This data is from the Census Bureau's quinquennial Economic Census if you want to check the numbers.  I pulled the values for 1992, just before the RAD was implemented, and for 2007 which is the latest available. Note that the values are nominal values and there has been inflation over 15 years. So I calculated the growth in total retail sales by county, but also added up the cumulative sales and change for the 6 suburban counties.  Given the prognostications on what impact the RAD tax would have to have, you would at the very least expect Allegheny County to trail growth in the suburban counties.  When you add in the fundamental fact that population in the suburban counties has fared a lot better than the decline for Allegheny County over that period you would expect Allegheny County's retail sector to trail the suburbs by much more. You would expect a lot of retail sales to follow patterns in residential migration... RAD tax or not.  
But...  that's why we bother to count:

Retail Industry Total Sales ($1,000s)
                            1992 2007   Increase

$10,833,966 $20,075,411 85.3%
Armstrong  $373,232 $532,139 42.6%
Beaver  $954,144 $1,555,258 63.0%
Butler  $1,051,177 $2,527,258 140.4%
Fayette  $1,039,489 $1,535,518 47.7%
Washington  $1,271,702 $2,283,225 79.5%
Westmoreland  $2,424,364 $4,154,689 71.4%
6 county subtotal                        $7,114,108   $12,588,087 76.9%







Anonymous Sean said...

What happened in Butler? Is that growth all Cranberry?

Friday, September 07, 2012 10:32:00 AM  
Blogger C. Briem said...

Population growth in Butler is not all Cranberry, but it is mostly southern Butler county. For retail sales I bet it is mostly Cranberry and environs. In fact that might make good fodder for a post on a slow day.

Friday, September 07, 2012 11:06:00 AM  
Blogger Bram Reichbaum said...

This comment has been removed by the author.

Friday, September 07, 2012 2:40:00 PM  
Anonymous BrianTH said...

In their own way, the gross numbers are also telling: $9.2 billion increase in Allegheny County, $5.5 billion in the other counties combined. Incidentally, that helps put Butler in perspective--definitely a success story among the outlying counties, but still only a $1.5 billion increase.

I might also suggest that RAD spending is likely helping Allegheny County retail: for example, regional assets like the stadiums very likely draw additional retail spending into Allegheny County (I'm generally skeptical about the overall economic benefits of publicly-funded urban stadiums, but they can do that much at least).

That, of course, is a point often lost in speculative discussions of tax affects on economic activity: all things being equal higher taxes may be a marginal drag, but all things are not necessarily equal since those revenues may be spent on something helpful.

Saturday, September 08, 2012 8:37:00 AM  
Blogger Bram Reichbaum said...

So how about we eliminate the singled-out, loathsome drink tax and broaden the base by raising the County sales tax? Retail is not showing signs of any inhibition, and human services are also a civic asset of some importance. If you want to stop following the shell game.

Your spam-avoidance software at first demanded that I produce an umlot. It's pretty intense.

Monday, September 10, 2012 12:20:00 AM  
Anonymous BrianTH said...

Not buying the argument that drunks are a major component of transit ridership?

I guess I would wonder if a transit-specific sales tax would be less controversial than a transit-specific drink tax--although the former could probably raise a lot more money while still seeming quite small.

If wonks ruled the County, even better might be some combination of a carbon tax and congestion charges.

Monday, September 10, 2012 9:33:00 AM  
Anonymous MH said...

Not buying the argument that drunks are a major component of transit ridership?

Late at night, I'm usually the only drunk on the 61c.

Monday, September 10, 2012 11:10:00 AM  
Blogger Bram Reichbaum said...

That's a correct inference BrianTH, the argument just doesn't resonate with me. Many Inebriated-Americans walk and too many Inebriated-Americans drive, and I'm not sure maintained or modestly expanded public transit will actually change that. What's the use of having an awesome whip if you're not driving people for a night out in it?

Monday, September 10, 2012 4:40:00 PM  

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