Harrisburg, a city beleaguered by debt, needs every dollar it can scrape up, so City Council last week tripled the penalties for late payment of the city's mercantile tax, and the mayor has signed a contract with an outside company to go after those late payments in return for a commission.
But because Harrisburg is also a city beleaguered by an unintended penchant for the absurd, that new revenue will not be collected until a state appellate court determines, if there's any difference between selling a live horse and a dead buffalo.
Harrisburg City Controller Dan Miller
The buffalo — roaming no longer, but rather stuffed and stored in a warehouse — is part of a collection of wild west "artifacts" amassed by former Mayor Stephen R. Reed for a museum he imagined but failed to realize — paid for out of a "special projects fund" fed in part by a side business in municipal tax liens operated out of the Harrisburg Authority at the time.
Reed is long gone from city government; the side business has been discontinued, but the artifacts remain — along with the unpayable debt incurred during the Reed era.
City officials and the state receiver appointed to help them dig out of that debt want to auction off the buffalo and other wild west items, and there's a contract to do so, but the auction can't go forward until the city controller, Dan Miller, signs the contract.
For nearly a year, Miller has refused to do so because City Council has not approved — or budgeted for — the commission to be paid the auctioneer.
Miller points to other city revenue streams — specifically the Earned Income Tax — where a third party collects the revenue and the city budget specifically accounts for the commission paid for that service.
Miller's attorney, Benjamin Dunlap of Nauman Smith Shissler & Hall, said city code states the controller "shall ascertain whether the expenditure is within the appropriation made by council."
"In other words, his job is to look at whether or not the expenditure has been budgeted," said Dunlap. "It's a black and white decision. There's no discretion involved. It either has or it hasn't. And in this case it has not."
No signature from Miller.
Mayor Linda Thompson sued Miller in April, contending City Council doesn't have to approve or budget for the commission.
Harrisburg Mayor Linda Thompson
Thompson argued that because the auctioneer would take the money off the top, nothing is being paid out of the city's treasury, so "the administration does not need to do a budget appropriation in order to enter into this contract."
Even though they do so with the Earned Income Tax.
It helps to know that Thompson and Miller are running against each other in the next election for mayor.
So Thompson requested a judge order Miller to sign the artifacts auction contract.
And that's where the live horse comes in.
During oral arguments in the case, Common Pleas Court Judge Bernard Coates said he was "not really interested" in how the city handles things like the Earned Income Tax; instead, he posed a question to Miller's attorney about selling a horse.
Coates said, "I figured if you have a horse and you're going to auction it, somebody's going to buy it for $10,000 or an amount of money. And there's going to be a fee that you're going to pay the auctioneer, 20 percent, 30 percent, whatever it is — do you have to pay the auctioneer before you do that?"
In other words, do you have to account for the commission before the auction?
Miller's attorney replied, "What the City Council is really approving here is the percentage that the auctioneer is getting based on the expected sales."
According to Dunlap, "It's a legal fiction to say there's no payment out of city funds."
"These items belong to the city," said Dunlap, "and the gross amount they're worth belongs to the city." Paying a fee to sell them accounts as a cost to the city. That cost must be approved and budgeted.
What's more, the city acknowledges it eventually will account for the commission payments just as Miller suggests.
Dunlap said city solicitor Jason Hess "admitted that they'll true up the books after the fact."
Dunlap told the judge, "They're basically saying trust us."
"But we've all seen what happens," said Dunlop. "We've seen in the city what happens when elected officials don't do their job and what can happen to the city's finances."
Miller said that under the procedure envisioned by the mayor, she could approve and move forward with a contract that pays a commission of 90 percent, and City Council would have no recourse.
"Just let the City Council budget it; that's all I care about," said Miller.
Late last year, the judge stuck with his horse analogy and ordered Miller to sign.
Miller and Dunlap appealed that decision to Commonwealth Court.
And that's why third-party collection of the new mercantile tax penalties won't begin until the the horse/buffalo question is settled.
When Thompson sued Miller, the contract to collect the mercantile taxes was just a proposal, and the language of that proposal — that any commission payments would be subject to "availability of funds" — was used by Miller's attorney as an example of the standard and correct way of handling commission contracts.
That proposal is now a real contract, but like the auction contract, its commission provisions have not been approved or budgeted for by City Council.
So the mercantile tax collection contract sits unsigned in the same legal basket as the auction contract.
Everyone, including Miller, says the auction of the artifacts should go forward.
"I want these artifacts sold as much as anyone - it's a ridiculous waste," said Miller.
The final absurdity?
City Council could fix the issue at any time, simply by approving the contracts and allocating the contra-expense line item in the budget.
It doesn't have to wait until the next budget cycle.
"This is a minor technical thing," said Miller. "It shouldn't be any big deal. We do it all the time."
The mayor might not like that because it would acknowledge a City Council power to review actual terms of a contract, but given City Council's historic interest in clawing whatever scraps of power out of the executive that it could, why doesn't it?
In fact, Councilman Brad Koplinski said he proposed exactly such a measure last year — before the judge heard arguments in Thompson's case against Miller.
Brad Koplinski
But Koplinski's proposal had to go through the city solicitor, who also was writing the legal arguments against Miller on behalf of the mayor.
The city solicitor rewrote Koplinski's proposal, he said.
When the solicitor was done, the proposal did not approve the contract and the contra-expense line item; instead, it paralleled the legal argument in the mayor's lawsuit. It said the commission expense was "implied" in City Council's original decision to move forward with an auction and it commanded Miller to sign the contract.
Even so, Koplinski offered it to City Council, but did not put it up for a vote because Council President Wanda Williams said she wanted a hearing on it first.
That hearing has never convened.
Williams said that's because the resolution would not have solved the issue.
"We have to wait for the outcome of the legal case," she said.
Commonwealth Court President Judge Dan Pellegrini will hear oral arguments on live horse vs. dead buffalo Tuesday morning at 10.