Funding Regional Assets – A 10 year review by David Donahue

Rob Jones is currently the Chairman of the Local Government Academy's Board of Directors. At the time of the 2004 Road to Excellence Conference, he was Vice Chairman of LGA"s Board and Senior Manager of External Affairs at Dominion. Jones moderated a panel on intergovernmental revenue trends, tax-sharing, and public-private partnerships. David Donahue (right) was named the first Executive Director of the Allegheny Regional Asset District (ARAD) in 1995. Authorized by state law, The District distributes dedicated public funds to libraries, parks, cultural and regional attractions, and sports facilities in Pittsburgh and Allegheny County, Pa. Donahue gave a ten year review of the ARAD as they were celebrating their tenth anniversary. Donahue said that ARAD is an example of fiscal regionalism.

According to Donahue, these fiscal regionalism entities are government without being government because although they spend public money, they do not provide service. They provide for a distribution of the benefits of growth to neighboring municipalities where growth occurs. Fiscal regionalism entities minimize fiscal mercantilism, which encourages development other than tax-producing development, Donahue explained. These entities prevent free-riding so that all people who benefit share in the cost. True tax-base sharing agreements are very rare, and fiscal regionalism can incorporate some of the benefits of these agreements into the region. The entities help avoid the wins and losses associated with annexation laws and they try to level the playing field as far as wealth and service disparities. Before the ARAD was created, Pittsburgh was paying 56% of the bill for regional assets like museums, stadiums, libraries, the zoo, etc. when it only had 25% of the county’s tax base. A sales tax increase of 1% took place in 1994, where about 75% is paid by the residents of Allegheny County and 25% is paid by nonresidents. The pot is divided every month, where 50% is allocated among regional assets, 25% goes to the County, and 25% is distributed among the rest of the municipalities. The municipal distribution formula measures municipal tax burden relative to other municipalities. Donahue mentioned that the ARAD reduces reliance on property tax and other taxes and all that benefit and use regional assets pay into it. Finally, ARAD promotes cooperation and private initiative, and makes available more private funding and state funds like intergovernmental aid. Donahue closed by recommending a clear communications plan between stakeholders before the agreement is made.