Pennsylvania's Supreme Court will weigh in on Pittsburgh's 'jock tax'

Pennsylvania’s highest court will weigh in on the legality of Pittsburgh’s tax on out-of-town athletes and performers. In an order issued Monday, the state Supreme Court said it would hear arguments about whether lower courts misinterpreted a constitutional requirement that taxes be levied uniformly.

An appeals court this winter upheld a Common Pleas Judge’s ruling that struck down the city’s Non-Resident Sports Facility Usage Fee — the so-called “jock tax.” The tax is a 3% levy on the income earned by out-of-town athletes and performers when they use city-owned venues. The city appealed that ruling in February.

Pittsburgh officials say the tax evens the playing field between visiting players and home-team athletes: Those who live within the city pay taxes of 3% of their earnings to the city and its school district.

The city’s appeal argues that judges failed to properly apply earlier precedents to the matter. And on Monday, the state Supreme Court said it would hear the city’s appeal on that basis, while rejecting other arguments the city made.

Mayor Ed Gainey issued a statement Tuesday that said he was “pleased that the Supreme Court has agreed to hear our case. … We believe that this tax is constitutional and will continue to collect it as we prepare to present our arguments to Pennsylvania’s Supreme Court.”

Common Pleas Court Judge Christine Ward had previously issued an injunction to halt collection of the tax, but the city has argued that it can collect the tax while its appeal is pending.

Lawyers who spoke privately with WESA said they were puzzled by that claim, but Stephen Kidder, a lawyer for the athletes, did not contest it Tuesday night.

“We look forward to the opportunity to demonstrate to the Pennsylvania Supreme Court that both the Commonwealth Court and the Court of Common Pleas correctly decided this issue,” he said.

Monday’s court order initially caused some confusion, with some media outlets, and one local official, interpreting the order as a blanket refusal to take up the issue.

City Controller Rachael Heisler has voiced concern about city finances and the fate of the “jock tax,” and on Tuesday afternoon posted a statement on social media that the city needed to be “honest” about its fiscal situation. But later in the day, she said that the post had relied “in part on news reports” and that she “was not correct relaying inaccurate reports about the complete dismissal of the appeal.”

Still, Heisler argued the city should prepare for a future without the tax: “I remain concerned about whether the city can continue to rely on revenue” from the jock tax, she said.

Gainey said Tuesday his administration is “doing all that we can to ensure the financial strength and security of our city.”

The city’s five-year financial plan estimates that the tax will bring in an average of $4.6 million per year. That’s a small sum in the context of an overall operating budget that runs well over half a billion dollars annually. But the impact could snowball if the city loses its legal battle: Those who’ve paid the tax would be eligible for refunds, and would have a three-year window to file a claim.

The uncertainty surrounding the jock tax is just one financial headache facing the city. Plunging property reassessments, especially among commercial properties Downtown, and the end of federal COVID aid also mean lean years ahead, and potentially a hotly debated budget season this fall.