Commenting on Attorney General Corbett's joining the lawsuit by twelve other AGs from around the country aimed at having Obamacare declared unconstitutional, Allegheny County's Chief Executive called the move "a taxpayer-funded political stunt with the goal of denying more people coverage and making affordable health care less accessible."

How utterly ironic. This from the Executive who: spent years thwarting rulings handed down by a local judge and the Supreme Court requiring the county to reassess properties, standing down only after facing a possible contempt citation; signed an illegal smoking ban bill into law only to have it thrown out by the courts; tried illegally to take money from the liquor tax for purposes forbidden by law-another action overturned by the courts; sponsored an illegal referendum question; surreptitiously grabbed gaming money late on the afternoon of New Year's Eve that was intended to help the airport lower its costs to carriers, etc.

Almost all of these actions have resulted in the expenditure of taxpayer funds, especially for legal costs for those involving the courts. And what could be more political than holding up needed corrections to errors in assessments simply to improve his political standing?  

And one might want to know who will get the bill for the "affordable health care insurance" that will now be available to virtually everyone under the recently passed health care bill?   

By this past Friday parties interested in the proposal to lease parking garages, lots, and meters had to submit a response to an RFQ.  Today's news accounts show that eleven bids were received.  The Mayor is very pleased, according to his spokeswoman with "not only by the number of responses, but, as you will see soon, the amount of expertise we've seen in the bidders."

Since the city on the cutting edge of leases and public-private partnerships of late has been Chicago, it is instructive to look at their level of response to a bid for a concession on parking meters.  In a 2009 Reason Foundation piece, the CFO for the City of Chicago described the meter bid as such:

• In March of 2008 the City received qualifications statements from ten bidders
• Of those ten, six were deemed qualified and offered an opportunity to bid on the concession package
• Two placed bids
• One bidder, who submitted the highest responsible bid, was selected

The City of Chicago eventually netted $1.157 billion for the meters. 

So while nearly a dozen bidders are showing their interest in Pittsburgh's garages, if Chicago's experience is any guide Pittsburgh won't be choosing between eleven bids this coming November. 

Westfall Township, a community of just over 2,800 people in northeastern Pennsylvania's Pike County, might be the tiny engine that could prompt some thinking about the process through which municipalities proceed to bankruptcy (debt readjustment is likely more appropriate) under Chapter 9 of the U.S. Code.

As we pointed out in earlier Policy Briefs and a full-length report, Chapter 9 filings are very rare and, under the national-state division of power in the U.S., under the discretion of the states.  Due to amendments passed in 1994, a state must specifically authorize its local governments to enter into Chapter 9.  If they grant permission, they are free to attach as many pre-conditions as they like.  In Pennsylvania the requirements are spelled out in Act 47, the fiscal distress statute.

Westfall Township faced a $20 million bill due to a developer and could not pay it.  They filed for Chapter 9 bankruptcy, four days later were placed into Act 47 status, and after going to court the bill was renegotiated to something more manageable ($6 million). 

The municipality's bankruptcy counsel pointed out that "filing for Chapter 9 should be the last resort for municipalities.  The ideal option is to negotiate with the creditors.  If that fails, the second alternative is to go through a financially distressed municipality proceeding under Pennsylvania's Act 47...if those options fail, or if there is an emergency, then Chapter 9 should be considered" (emphasis added).

Perhaps the General Assembly will look to this recent example and ponder whether there should be an alternative way to enter Chapter 9 if there is a sudden catastrophe or fiscal emergency that cannot wait for the Act 47 process to play out.  Then too, in light of the massive pension bill that is coming due for school districts in the near term it ought to be considered if school districts should have the right to pursue Chapter 9 filings (Act 47 applies to municipalities only, so school districts have no avenue by which to pursue debt adjustment under Chapter 9). 

For sure, the heading is a bit tongue in cheek.  In the latest press announcement, the Port Authority says through management efficiencies it has cut another $10 million from the cost of the North Shore Connector, bringing the total cost reductions since last May to $24 million. The estimate of the final cost of the project is now placed at $528.  Of course, that assumes no unexpected cost overruns on the remaining 30 percent of the project-a big assumption.

What the Port Authority assiduously avoids telling us is that the final cost is still nearly double the estimated cost. In February 2004, the price was said to be $363 million.  But then they cut the convention center leg and other elements of the project. These cuts were said to save $80 million.  Thus, the project cost should have been lowered to $280 million and that means the $528 million new final estimate is 89 percent above the original estimate of the project's cost.

Moreover, by dropping the convention center leg of the Connector a large and disproportionate fraction of the putative benefits of the project were lost. The per rider cost for a round trip on the North Shore Connector over its first 20 years will be $45, assuming the ridership forecast is accurate. It would be cheaper to provide limo service from the North Side to Downtown.

And so it goes with this ill-conceived money wasting boondoggle. 

Now comes Pittsburgh Mayor Ravenstahl with plans to "consider" imposing a two cents per ounce tax on sugar sweetened soft drinks. What a non-starter. Two cents will boost the retail cost of a two liter bottle by about $2.00.  Such an increase in price will drive sales down precipitously making the hoped for $26 million in new revenue a pipe dream.

The only real issue here is this: Who is advising the Mayor?

This certainly does not pass the smell test or the taste test.  Now we can see where some of the stalwart supporters of the Mayor and Pittsburgh policies come down on this outlandish idea.

This a key week for the debate over how the City will proceed with its garage plan:  City Council is expected to vote today on whether to hire its own consultant to study the options on the table (a lease, a revenue bond, a transfer of ownership to the pension fund) and by Friday interested parties in the lease proposal are to submit responses to a RFQ handled by the Parking Authority.

Three legal opinions on the proposed alternative of transferring ownership to the pension fund have come forth, and have argued that there are major problems with the plan.  Earlier this month we wrote a blog about questions that this alternative plan raised.

The legal objections?  That the Authority cannot give up ownership without first satisfying its debt, that state law on pensions would prohibit it ("operation of a private business is not an investment security and would be a clear violation of the restrictions of the Municipal Pension Recovery Act") and that owning real estate would violate the commitment to investment diversity for the City's Comprehensive Municipal Trust Fund (the CAFR says that an "allocation of 65% equity, 35% income with a variation of 10% above or below these targets for each classification"). 

Despite the objections the proponents for the alternative plan have indicated that they will continue to pursue the idea. 

Upon visiting the newly merged Central Valley School District-hailed as the first voluntary merger of independent school districts in the Commonwealth in anyone's memory-the PA Secretary of Education noted last September that  "No one really talks about the wastefulness behind the scenes in schools...Where there's waste is having seven or eight different people doing payroll in a county when it could be done by one."

Note that the Secretary made the same point at a hearing of the Senate Education Committee a month earlier (a hearing at which the Allegheny Institute testified).  So it would be interesting to hear how the Secretary would react to the news this morning that Central Valley High School will have not one, but two, principals: one to handle academic programs and one to handle student programs.  The superintendent of the district said that "they do not want to feel, nor do I want to see, a pecking order...they are both principals."

So which principal has the ultimate authority at the district?  It won't be clear until a problem arises.  But it is easy to see why merging governmental units is very difficult, especially with powerful public sector unions will resist consolidation and would strongly resist changes that would downsize the workforce.  Sounds like a compromise meant to satisfy competing interests.  But it certainly is a far cry from the talking points of merger proponents that claim consolidation will go a long way to wiping out duplicative functions (two police chiefs, two fire chiefs, two auditors, etc.).  The teachers and administrators in the merged district that did go as a result of the merger took buyouts to leave.  Imagine what an organizational chart of larger merged entities would look like. 

Councilman Burgess-along with his allies in the campaign for "living wage" bill-are still pushing hard for the legislation.  In a comment filled with irony, the Councilman said at a hearing that it is unfair for "government to profit from the misery of the people who work for us."

Perhaps it has never dawned on the Councilman that the "miserable" City workers (if there are such folks) could always look for other employment that pays better.  And perhaps the Councilman might consider the pain and misery his bill would cause already hard pressed City taxpayers who would have to reach deeper into their pockets to pay these "miserable" workers. Or maybe the City would have to layoff some workers or enter into fewer service contracts in order to save money to pay the higher wages of those workers fortunate to keep their jobs and other benefits.  How miserable would the laid off workers be?

There is no free lunch Councilman.  Where will you find the additional revenues or budget cuts to fund the living wage?  In a City that is struggling to find money to meet its already enormous personnel legacy costs, plans to increase spending even more without any idea of where the money will come from are the last thing the City needs.

We ask again: Where are the oversight board and Act 47 coordinators? They should make it clear that this bill is a non-starter as far as they are concerned.  The whole episode points to the lack of seriousness of City government and its overseers in solving the City's problems.

Who could have possibly found any long-lasting joy in the recent snowstorms that hit western Pennsylvania?  Tree companies would certainly answer in the affirmative.  In fact, several did in a news article this morning.  Among the quotes: "It was just awesome the way everything happened this year, monetary-wise...This year because of the storm, it was a blessing. It's really banged up here. Almost every yard has damage. We go from one property right to the next". 

Sure, the snowstorm and resultant tree damage was like manna from heaven.  Echoing themes laid out by economist Henry Hazlitt, we might even say "wow, how great for the tree companies, if not for the storm, how would they have made it through the winter?"  But being able to look "not merely at the immediate but at the longer effects of an act or policy" we have to realize that there are opportunity costs associated with the fallout from the storm. 

For private citizens needing to pay for cleanup, the money spent is money that cannot be spent on other goods and services thus affecting the well-being of other businesses.  The attention will be on the benefit to the tree companies, not the other businesses that will not get the benefit of a transaction. 

This is likewise true in the public sector, as the article notes that the City and the County spent a combined $4.6 million on storm cleanup, with about 6 percent of that going toward tree removal.  How do they intend to recover their costs?  By seeking a reimbursement from the PA Emergency Management Agency.  Numerous other communities will likewise do the same, and the money dedicated to reimbursement for this emergency will not be there for the next incident.  For that the government will have to compel more sources of revenue, a power that private businesses do not have. 

The real estate tax; the wage tax; the Local Services tax; the realty transfer tax; the parking tax; the poured alcohol tax; the gross receipts tax; the parking tax; the mechanical devices tax; the amusement tax...

You get the idea: there is a plethora of tax sources available to local government in Pennsylvania.  That's why it is always surprising to hear calls for even more sources of tax revenue, particularly when there is a call for layering more taxes upon the existing ones instead of phasing them out.

Just last week the PA League of Cities and Municipalities called for counties to get an additional 1 percent on the sales tax (except in Allegheny County and Philadelphia, which already have local add-ons) for "easing school property taxes (remember Act 1?) and helping county government and municipalities pay their expenses".

Or counties could get a poured alcohol tax like Allegheny County has or, failing those options, the state could just hand out revenue to offset the presence of tax-exempt property (which often generates much of the taxable activity that is captured by one of the many taxes listed above.

Maybe a better option-in light of the massive state budget shortfall, the looming problems with the two statewide pension systems, and the impact of legacy costs at the local level-would be to try and control the spending side of the equation with a spending cap that is tied to inflation and/or population, referenda on tax increases and creation of new tax sources, and a movement to a defined contribution system of pensions for new employees.  Otherwise there might not be enough room in the local tax code to list all of those tax sources.