By KRIS MAHER

PITTSBURGH -- Facing big unfunded pension liabilities for city workers, Pittsburgh is proposing what appears to be a one-of-a-kind 1% tuition tax on local university and college students, who claim the tax is illegal and unfair.

More than 100 students filled Pittsburgh City Council chambers Monday morning, many bearing signs like "No Taxation Without Representation" to protest the tax, which, if passed this week, could become effective next year.

"This is going to be a double taxation of students in the city," said Daniel Jimenez, 27 years old, a Ph.D. student in neuroscience at the University of Pittsburgh, who pays property taxes on a home he bought in 2004.

The tuition tax, which would raise an estimated $16 million, threatens to drive a wedge between the city and its universities, which have been credited with fueling much of Pittsburgh's economic transformation from an industrial city to an education and medical-services center.

The cash-strapped city, which has 85,000 students at its 10 universities and colleges, including top-ranked engineering school Carnegie Mellon University, says it needs the tax to help cover a $600 million pension-fund shortfall and keep several branches of the Carnegie Library system open.

The "Post Secondary Education Privilege Tax" or "Fair Share Tax" is justified, the city argues, because the students use city services -- roads, police and fire protection -- and should pay for them. Moreover, the city contends that the tuition tax, which would range from $27 for students attending Community College of Allegheny County to $400 for those attending Carnegie Mellon, amounts to a small charge for services.

"This is really not a difficult thing for folks to pay when they're receiving services" from police and fire departments, among others, said Yarone Zober, chief of staff for Pittsburgh Mayor Luke Ravenstahl, who proposed the tax Nov. 9.

University presidents and students say they already inject millions into the city's economy, and that the tax could hurt future enrollment. The Pittsburgh Council on Higher Education, representing the 10 schools, says 46,000 of the 85,000 students live in the city and pay commuter, parking and entertainment taxes.

Mary Hines, chair of the council and president of Carlow University, claims the tax is really aimed at forcing the universities to pay more into a public-service fund. In recent years, the universities have contributed several million dollars on a voluntary basis to help shore up the city's finances. The council is lobbying state lawmakers to prohibit the taxation of students statewide, and also plans to challenge the tax, if passed, in courts.

Douglas Smith, a Pittsburgh-based partner with Jackson Lewis LLP, said he doubted whether the city could tax students simply because they attended school in the city. "I think there's a real question about whether mere presence is enough to levy a tax," he said. He also questioned whether a CMU student could be taxed more than a community-college student for the same service.

Joseph C. Bright, a Philadelphia tax attorney retained by the city, said there was no question the city could impose the tax. "The state has delegated broad taxing authority to lots of municipalities in Pennsylvania," he said. Generally, cities are only prohibited from taxing anything that the commonwealth already taxes, such as alcohol, he said.

Cities across the country are grappling with rising costs and lower revenues from income and property taxes. For the most part, they are reluctant to raise income or property taxes, fearing it would drive more people beyond city limits, further compounding their fiscal troubles.

One of the problems facing Pittsburgh, and other municipalities with a large presence of nonprofit institutions, is that much of the property within city limits is tax-exempt. Pittsburgh officials say about 40% of its property is tax-exempt.

Ms. Hines, of the higher education council, said the 10 schools, though exempt from property taxes, paid more than $20 million in 2008 in other taxes, including on water use and on tickets to college football games.

Doesn't the school itself already pay taxes for the services the students use?

Since students are typically considered non-residents of their college cities doesn't this amount to taxation without representation?

Since students are typically considered non-residents of their college cities doesn't this amount to taxation without representation?