Fred Testa sat anxiously in the back of a Dauphin County courtroom. On the stand, Judge Lawrence F. Clark was grilling an attorney for Susquehanna Area Regional Airport Authority. As attorney Timothy Neiman answered, Testa, director of aviation at Harrisburg International Airport, would whisper his own responses to the judges questions into a colleagues ear.

Testas concern during the Sept. 22 proceedings was understandable. The judge would use the oral arguments to decide the strength of SARAAs case. At stake: hundreds of thousands of dollars in tax payments.

Earlier this year, Middletown Area School District announced it would charge a 10 percent tax to people who pay to park in lots and garages within its boundaries. The tax is an attempt to offset funding cuts and stave off a property tax hike. Harrisburg International Airport has the biggest parking lot and garage in the district. SARAA has filed a lawsuit against the school district in opposition of the tax, citing a federal law that prohibits local governments from levying taxes aimed solely at airports.

“We are absolutely convinced the tax is illegal,” Testa said. “The thing is that the school district is using language that says, Hey, its for the kids. Just because its going to educate kids doesnt mean its OK.”

This suit is not about the possibility of discouraging people from parking at the airport, its about principles, Testa insisted. The airport is a public entity, funded by taxpayer dollars. Therefore, taxpayers should not have to pay an extra tax for services rendered at the airport.

Middletown school officials are just as emphatic when making their case. Superintendent Audrey Utley pointed out that the two biggest entities in the district that do not pay property taxes are Harrisburg International Airport and Penn State Harrisburg. Their combined real estate would be worth $2.5 million in tax receipts, according to the David Franklin, the districts business manager. The parking tax revenue would add up to about $700,000 if it were collected throughout 2006.

There are only four facilities that charge for parking in the entire school district; HIA, Penn State-Harrisburg, Middletown High School and Cramer Airport Parking. The high school and Penn State have started collecting the parking tax already. The school district has not yet imposed the tax on owner Stanford Cramer, since he is in direct competition with HIA. Cramer said he does not mind paying the tax. But HIAs revenue would account for more than 90 percent of the tax dollars.

One law SARAA is using to make its case is a called the Anti-Head Tax Act. The law prohibits state or local governments from levying a tax exclusively on airport business or on firms that have permits to do business at the airport.

Does the Middletown School District tax exclusively target the airport? That was a major point of dispute in last weeks oral arguments.

“We have Penn State. Its an established facility. Theyre not going away,” said Jeffrey Litts of Kegel Kelin Almy & Grimm in Lancaster, attorney for the school district. “The law says exclusive. Not almost exclusive. And that means all or nothing. The fact that SARAA is the biggest kid on the block does not change that.”

Neiman, of Rhoads & Sinon in Harrisburg, rebutted.

“This tax may not be exclusive in the way its been written. But if you really look behind it, it is exclusive in its effect,” Neiman said. “This is just a thinly veiled attempt to tax the airport exclusively, to try and get around this problem.”

Judge Clark is deciding the case. He seemed amused during the oral argument, noting that he rarely sees two attorneys so well prepared to do battle. He asked particularly difficult questions of Neiman, bringing up examples of other Pennsylvania airports that collect taxes, such as Philadelphia International Airport and Lehigh Valley International Airport.

“Are you seriously suggesting to us that other airport entities that if they thought they could attack this on a gross tax basis, they wouldnt?” Clark asked.

“I dont know,” Neiman responded. “Maybe they have special settlements. But I am asking you to consider this case on its merits, not the others.”

Testa had a fuller answer after the oral arguments wrapped up.

“We are not comparable to Pittsburgh and Philly,” he said. “There, the airport is a small portion of the tax revenues in the school district. But the law says you cannot impose a tax only on an airport. And if our airport were not here, would (the school district) still impose a tax? Of course not.”

Coming out of the argument, Levitt was confident that he had won and that the judge would rule in favor of the schools. If the judge orders the airport to start collecting a parking tax, HIA and the school district would have to figure out a way to collect the tax. The school district has worked out a deal with the other parking lots to pay them 2 percent of the tax as a collection fee. HIA has refused that option. The school district offered to put sawhorses over two lanes and contract with a company to send a representative over to the airport to collect the tax. That solution, Clark said, might cause major disruption at peak times in the lot. Clark appointed retired Judge Richard B. Wickersham to help the two parties find a collection compromise. There has still been no progress after a couple of months.

If the judge rules in favor of the school district, Testa said he does not know if the airport will appeal the decision. Neither has he decided whether the airport would add the tax to its current rates or lower rates, covering the tax itself. But he is certain of one thing.

“Itd be very easy for us to fold under the pressure like Penn State did. But were not going to,” Testa said. “We simply are not.”