Feb. 23, 2009 - VisitPittsburgh President and CEO Joseph McGrath makes nearly twice as much as Gov. Ed Rendell and three times as much as Pittsburgh Mayor Luke Ravenstahl.

McGrath -- who pitches Pittsburgh nationally and internationally and hosts those who bring conventions here -- insists he's worth the $308,000 he collected in 2007 even while conceding he made far more than Rendell, who pulled in $164,396 that year. Ravenstahl earned $101,396.

"But nobody provides me a house like they provide the governor," McGrath said. "Nobody provides me with a pantry full of food and a maid and a driver and security and on and on, and campaign funds that I can draw on to go to the Super Bowl. I have a salary, and I have to earn about 20 percent of that by performing and becoming No. 2 in the country."

McGrath's compensation and VisitPittsburgh's spending -- along with that of scores of other tax-funded nonprofits -- are under a microscope as the state works to plug a $2.3 billion budget deficit.

McGrath visited Harrisburg last week to lobby for next year's grants and the $2.3 million VisitPittsburgh was promised last summer, but has yet to receive.

"I have my begging clothes with holes in the knees," he said, grinning.

McGrath, hired in 1990, acknowledged VisitPittsburgh is competing with human service agencies in the scramble for state cash.

McGrath said VisitPittsburgh raises tax revenue for the state. He said the agency helped bring the U.S. Open to Oakmont Country Club in 2007, Major League Baseball's All Star Game to PNC Park in 2006 and the 2005 BassMaster Classic to Pittsburgh's three rivers.

If agency funding is slashed, convention and tourism revenue will shrink, and taxpayers will have to ante up even more for social services, McGrath warned.

How much money VisitPittsburgh generates is open to interpretation.

McGrath said every state tax dollar invested in VisitPittsburgh yields a $478 return in money spent in the region and $55 in state tax revenue.

The number is based on a study VisitPittsburgh paid Tripp Umbach, a Downtown-based accounting firm, to conduct. Tripp Umbach relied on statistics generated by a state report that suggested VisitPittsburgh's efforts were responsible for $1.1 billion in tourism spending in 2006.

"This is their number, not ours," McGrath said.

"It's laughable," said Duquesne University economist Matthew Marlin.

"If I spend $100 in Pittsburgh when visiting, a lot of that leaves here. If I'm going out to dinner, part of the tab goes to the veal farm in Ohio, or the vineyard in California. If I buy a sweatshirt that says 'Pittsburgh Steelers,' it was probably made in China or Honduras. The money I spend here doesn't all stay here," Marlin said.

Officials at the state Department of Community and Economic Development were hesitant to put a number on the return on investment for tourism dollars.

"It's not an exact science, but our best estimate is more like $100 to $130 (returned per dollar invested)," said agency spokesman Steve Weitzman.

"Our bottom line -- literally -- is that tourism promotion is a net revenue generator. It doesn't compete with priority programs; it helps pay for them by producing more in tax receipts than it costs in tax dollars," Weitzman said.

But tourism isn't always linked to promotions, Marlin said.

"We didn't spend anything to get the AFC Championship game, and look at all the money it brought in," he said.

Matthew Brouillette, executive director of the Commonwealth Foundation, a free market think tank, suggested the tourism industry -- not taxpayers -- should be funding VisitPittsburgh.

McGrath said the problem is the industry is a collection of small businesses and cultural organizations that lack money to pitch the region nationally or internationally.

He said VisitPittsburgh hosts organizations such as the Public Relations Society of America's travel writers division to try to change the city's image. In 2007, the organization spent $202,000 hosting such groups.

"Not only is it marketing, we get the public relations, we change the image. ... We affect the whole economy, which affects the revenue stream to the state," McGrath said.

Call VisitPittsburgh and you'll hear a recording boasting how last year Frommer's, the international travel adviser, named Pittsburgh among its top destinations in 2008, or how the New York Times raved about the city.

Last month, McGrath and an associate traveled to Tampa to attend the Super Bowl, schmooze the national press at a Steelers bar, entertain clients who have multimillion-dollar businesses they could bring to Pittsburgh, and hand out three crates of Terrible Towels at press events.

In 2007, records show they spent $197,593 on travel.

"It's tax-supported because we generate this kind of return. It's a fantastic investment. If you would give me $100 to $1 ... I'll empty my wallet and give you every penny I own," McGrath said.

Senate Majority Whip Jane Orie, R-McCandless, is a skeptic.

"We're holding budget hearings. Everyone must be accountable and provide performance audits. The bottom line is, when we're looking at Medicaid cuts and things that affect people's welfare, everything is on the table," Orie said.

Orie said six-figure salaries for nonprofit executives who rely on public money raise red flags.

"Sometimes you'll hear people say we have to hire the best to succeed, but to me these are public entities. You don't go into public service to make money," she said.

Debra Erdley can be reached at [email protected] or 412-320-7996.

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