Allegheny County Controller Chelsa Wagner today announced that the County will recover more than $2 million in transit funds as a result of her recent audit that discovered underpayment of rental car taxes at the Pittsburgh International Airport. After initially identifying $743,107 owed to the County by the Hertz Corporation in January, Wagner’s auditors dug further, extending their inquiry back to 2008, to determine that Hertz owes at least an additional $1.5 million. As Vehicle Rental Tax collections are required to be used for public transit, and are appropriated by County Council, Wagner has requested a meeting with County Council and the Port Authority to discuss the newfound revenue being used to restore transit services to Baldwin, which lost bus service in 2011 when the Port Authority cut four bus routes as a result of a 15 percent cut in services to reduce costs.
“Since the drink tax and car rental tax were instituted in 2008, by law, they are to support public transit,” Wagner said. “As our initial audit and expanded inquiry will bring in more than $2 million to Allegheny County, it is imperative that we act immediately to put these funds to proper use. Restoring the Baldwin bus service will drastically improve the lives of people who relied on the service and have been cut off since it was cut in 2011. I’m proud of my office’s diligence in recovering these funds for taxpayers and I’m thankful for Hertz’s cooperation.”
According to County and State law, a two-dollar Vehicle Rental Tax is to be collected per day, per each rented vehicle, by all rental car companies in Allegheny County, including locations at the Airport, then remitted to the County Treasurer’s Office on a monthly basis.
Wagner’s initial inquiry, released in January, found that Hertz collected the fee but failed to remit $435,577 to the County. As a result, Hertz is also responsible for $307,530 in penalties and interest, for a total of $743,107. Hertz paid the amount, in full, in January but is appealing the penalties and interest portion and seeking the reimbursement of that money. They have argued it was a clerical error and not an act of refusal to pay.
Wagner has argued that the penalties and interest need to be applied fairly to everyone. “County taxpayers don’t get a break from local government or the IRS when there is a clerical error. While it is Hertz’s right to appeal and offer their argument, as Controller, I must ensure that everyone is treated fairly. With taxes, as with everything in government, our residents must know there is a level playing field.”
After releasing the results of the initial inquiry, Wagner sought review of records dating back to the inception of the Vehicle Rental Tax in January 2008, to determine if additional money is owed to the County.
In 2012, Wagner began doing audits of car rental companies at Pittsburgh International Airport, in agreement with the County Treasurer, becoming the first controller to perform such audits. The car rental tax was enacted, along with the drink tax, in 2008. The Controller’s office audits rental car companies regularly.
“This recovery is a direct result of the work that we have done to ensure that the Controller is focusing on the most important assets and largest cost drivers of County government. Our focus on these funds and the Port Authority has a direct impact on the lives of County residents. ”
As the Controller’s Office proceeded with the additional recovery, they encountered some delays, as Hertz sought to withhold information dating back to 2008. However, last week, Wagner and her solicitor, Ira Weiss, sent a letter informing Hertz that if the records dating back to 2008 were not received, the Controller’s Office would enact an estimated assessment, as allowed by law, in order to ensure that the recovery did not delay planning for use of the funds. As a result, Hertz is now providing the final set of records, for the period of January 2008 through January 2009, by this Friday, April 10.
Wagner emphasized the importance of identifying these funds for County lawmakers and Port Authority Board members without further delay, so they may be equipped to respond to residents’ calls for restoration of service and plan accordingly, and is hopeful that the Port Authority will be able to consider these anticipated funds at their next Board meeting on April 24, 2015.
Calculation of Total Estimated Amount Owed:
PREVIOUS AUDIT PERIOD
May 2010 – June 2011
Amount unpaid: $435,577
Penalties & interest: $307,530
Total amount owed: $743,107
ADDITIONAL AUDIT PERIOD 1
February 2009 – April 2010
Amount unpaid: $437,402
Penalties & interest: $300,000
Total amount owed: $737,402
ADDITIONAL AUDIT PERIOD 2
January 2008 – January 2009
Amount unpaid: $403,391
Penalties & interest: $300,000
Total amount owed: $703,391
Total estimated amount owed: $2,183,900
“This unbudgeted revenue stream affords the opportunity to take a step back and see how we can really make an impact in improving transit services for those in need,” Wagner said. “Baldwin residents have been cut off from bus services for four years, many having to walk more than a mile through the South Hills to the nearest bus stop. With the passage of the State Transportation bill and this recovery, we now have the tools to restore this critical County service for the residents that need it most.”