A few years ago, 2009 to be exact, the County's tangled web of relations between itself and UPMC, the County's role as the body that assesses property value and certifies that parcels exempt from real estate taxation really should be, the County's role as promoter of economic development and leaning heavily on "eds and meds", and the County's role as viewing itself as needing to intervene in matters such as UPMC's decision to shutter the hospital in Braddock all intersected at one Council meeting, one that we wrote about then.  That's because on the same night that County Council decided it wanted to explore what UPMC owned and whether everything was deserving to be exempt (presumably as a tactic to scare UPMC into changing its mind) it had to decide whether the County-acting through its related Hospital Development Authority-would issue $1 billion in bonds on behalf of UPMC.

The issue of the Authority acting as a debt issuing vehicle rose again in 2011 when the UPMC-Highmark battle was at its apex.  Again, we wrote about that debate and the $330 million borrowing request that, in case the County wanted to exert influence by not issuing the debt, another state level authority stood ready.  The County did not issue the bonds.   

So why bring these instances up?  Because at the end of 2012 County Council held a hearing on UPMC which it promised would be the first of many on finding out if property owners classified as charitable and exempt really deserved all their exemptions.  As an article today pointed out, the classification system the County has on exempt property is a mess, but tomorrow night the Council will take up business deciding whether its Higher Education Building Authority should issue over $80 million in debt for two private universities in the City of Pittsburgh and, after that, whether the Authority needs a new lease on "municipal" life, which amounts to fifty years additional.  The County does not pledge its revenues or the state's by issuing the bonds but it has the opportunity to make plenty in fees and payments.  That's the decision point it has to deal with when deciding if it wants its instrumentalities to help the institutions it is trying to get to act a certain way. 

Earlier in 2012, Allegheny County released preliminary assessed value changes for its cities and towns showing how property values had changed, in aggregate, for 2013.  The range ran from a 75% increase in Rankin (with values rising from $14 million to $24 million) to a 5% decline in Pitcarin, the only municipality that saw aggregate property values fall in the County.

With appeals taking place and certified values reflecting those changes as of their December 20^th release, we see that five municipalities (Turtle Creek, East Pittsburgh, West Homestead, Sewickley Hills, and Pitcarin) saw their certified values come in higher than their preliminary numbers.  Nine municipalities saw no change.  The remaining 114 municipalities saw certified values fall from preliminary numbers.  A good many of these (86) saw rather small decreases (5 percentage points or less).  Sizeable reductions from preliminary numbers to certified numbers came in these communities: Dravosburg (86% to 34%), Neville (96% to 56%), Versailles (43% to 17%), Sewickley Heights (61% to 37%), and Harmar (56% to 41%). 

Municipalities have until the end of January to set millage rates for 2013 tax bills that comply with the Act 71 requirements on revenue neutral rates and rate hikes following the establishment of those revenue neutral rates. 

Prior to Christmas and New Year's Day, back on December 20^th, Allegheny County certified assessed values for 2013.  It will take until the end of January for local governments operating on a calendar year for their fiscal year to finalize millage rates for 2013 tax bills.  School districts, with the exception of the Pittsburgh Public Schools, operate on a July-June fiscal year but with Act 1 governing budget development that process will begin rather soon.

Appeals of initial values have adjusted the aggregate changes for the County, municipalities, and school districts.  As reported after the certification, the County as a whole will see values rise 32%, from $64.1 billion to $84.5 billion.  Earlier in 2012 it was projected that the County would rise to $86.8 billion, a 35% increase.

A quick look at values sorted by school district (there are 43 in Allegheny County) shows a few with what could be considered sizeable drops in the initial projections of assessment changes.  Pittsburgh (Pittsburgh and Mt. Oliver) was initially projected to increase 55%; now it will rise 48% under certified numbers; Cornell (Coraopolis and Neville) was initially set to rise 42%; now values are expected to rise 26.7% (in initial 2012 numbers Neville Township was projected to rise 95%, and now the certified numbers show the municipality's values climbing 56%); Wilkinsburg, Allegheny Valley, McKeesport Area, and Quaker Valley are others that will see somewhat significant drops in what was originally projected to be their assessed value increases. 

Only one district, Steel Valley (Homestead, Munhall, and West Homestead) saw even the slightest uptick in values from initial to certified, rising from 25.4% early in 2012 to 25.5% in the certified numbers. 

The Turnpike Commission says it is planning to build a 12.5 mile extension of the Southern Expressway at a "projected" cost of $633 million. Projected being the operative word.  The final actual cost could end up if unexpected contingencies arise during construction.  Of course, if there were no prevailing wage requirements, the project could cost a lot less.

Here's the rub. Funding sources have not been fully identified although borrowing is likely to be a major component.  Amazingly, the Turnpike spokesperson says no toll revenue will be used to repay any borrowing.  What then is the revenue source to repay loans? Is the Turnpike expecting it will not have to pay its debts? Is the Turnpike counting on state or Federal grants to cover its debt costs?

When a toll road is built, it is built on the assumption that tolls will cover most of the cost. If tolls are not projected to be adequate to cover the cost of construction and maintenance, then the Turnpike will have to shift revenue from other parts of the Turnpike system to cover the costs.  An extension costing $633 million would have to generate about $25 to $30 million at a minimum to repay debt and operate and maintain the road. At a toll of $5 per vehicle, the road would have to carry 6 million vehicles per year or 16,400 per day.  The existing Southern Expressway is carrying about 5,000 per day. Can we reasonably expect to triple that number any time soon on the extension?  And if a big share of the extension traffic is movement within the extension boundaries congestion might not be reduced appreciably on the Parkway or I-79.

The Turnpike is heavily burdened by existing and future debt as it is forced by legislation to borrow $450 million per year to turn over to PennDOT.  The result is escalating main line Turnpike fees. Of course, the state desperately needs the Turnpike revenue to fund maintenance and operations on state highways now and even with those funds does not have enough to cover needed bridge and highway repairs and upgrades. How would the state possibly be able to divert hundreds of millions to a new road?

As someone wisely observed when looking at situation like this, "something about this does not feel right."  Let's hope the Turnpike planners come with better answers to key questions.

Building the extension by the Turnpike is on its face a good idea but only if the road will pay for itself.  The Turnpike is no position to acquire a lot of additional debt beyond what is currently mandated to do.  On the other hand, the extension might be built by PennDOT but only after a full and plausible explanation of how benefits will exceed costs with benefits heavily dependent on new tax revenue to the state and local governments arising from net expansion of economic activity in the area attributable to the road.

Wages and health care: those are the two "biggies" for Allegheny County as it negotiates with collective bargaining units representing more than 5,100 of the County's more than 7,000 employees.  Both the County and at least one union leader are in agreement on the importance of wages and health care, and for good reason: personnel and fringe benefits are typically the largest share of expense for government.  Based on the County's 2013 financial plan and the statement of revenues and expenditures personnel and fringe benefits represent 53% of the general fund, 46% of all funds (general, debt service, liquid fuel, and transit support). 

One of the bargaining units with whom the County is negotiating represents personnel who do a lot of the County's road work (spreading rock salt and asphalt) which is housed in the Public Works Department (a good portion of that Department is being spun off into a new department called Facilities Management).  Based on Public Works' 2013 budget of $19 million, $13.1 million is tied to personnel cost and the remaining $5.9 million is identified by the County as non-personnel (services, supplies, materials, repairs and maintenance, and minor equipment).  Note that Public Works has almost 70% of its departmental budget into personnel and fringes, higher than the County as a whole.

One of the "Strategic Goals" for the Department is for "Continuous Improvement" and within that goal is an emphasis for the Department to "practice greater fiscal constraint".  It's not clear exactly how the fiscal constraint is to be practiced, but one way would be to be judicious with labor agreements, including the one that would be executed with the aforementioned union representing the road workers. 

Upon seeing the County's initial offer of annual 2 and 2 ½ % raises over the four year contract the union head said it was  "...hard to swallow that the county‘s best offer is less than what the city gave under Act 47 (state supervision)."

Pardon us, but we did not know that a local government had to be under state watch to be restrained with its spending on labor contracts.  Perhaps the County has learned something from watching the events at the City-County building and does not want to jump into the same fiscal boat. Overly generous contracts and above the norm legacy costs are what got the City into Act 47 and state oversight-is the County supposed to follow suit?  Will they?

A clearer example of hubris and sense of entitlement could not be found than the Steelers' justification for having the public underwrite the cost of expansion and upgrades at Heinz Field.

"This state- of- the- art expansion assures that Heinz Field would remain the first-class facility our fans expect and deserve."   Is this what we have come to?  Fans deserve to have the public subsidize a stadium that is already a tax exempt structure and is occupied by a team that has been massively enriched by the public's underwriting most of the cost of construction?

For goodness sake, why should fans expect or deserve a first class facility at the expense of the public? When is enough enough?   And how is adding seating capacity creating a first class facility for fans? Will they be really good seats for viewing games? Or will they simply add to Steelers' revenue?

This is a prime example of what is wrong with today's culture and perforce our economy. The notion that fans of professional sports teams deserve a "first class" facility in which to watch games and the public should subsidize that facility is simply outrageous. One can only marvel that the world has come to this. 

The Steelers' have been enriched enormously by the taxpayer investment in Heinz Field and the rights they received regarding development on the North Shore.  The stadium pays no property tax and the Steelers' rent payment is de minimus considering the value of the stadium.

Why is there so little gratitude on the part of the Steelers'? Is there no limit to their willingness to keep asking taxpayers for more money?  If the Steelers' want to expand the stadium, let the expansion pay for itself.

Or how about this. The Sports and Exhibition Authority will agree to pay for the expansion if the Steelers' sign an ironclad agreement to pay sufficient additional rent necessary to cover the borrowing costs needed to build it.  What could be more fair?  But in the world of Steelerdom fair is apparently what they say it is-no more, no less.

A news article described the achievements of several schools in the Pittsburgh School District under one of the incentive programs created under the current bargaining agreement between the District and the Pittsburgh Federation of Teachers.  As our 2010 report on pay for performance noted, the Students and Teachers Achieving Results, or STAR, incentive program would allow for teacher bonuses of up to $6,000 and staff (represented by the PFT) bonuses of up to $2,000 if the school falls within the top 15% of all Pennsylvania schools on student achievement.  The contract stated that if eight schools did not get in the top 15% the threshold would be lowered to the top 25% of all schools so that the goal of a minimum of eight would be met.  The article noted that ten schools were named STAR schools by the District.

When the District applied for money from the Gates Foundation with its proposal titled "Empowering Effective Teachers in the Pittsburgh Public Schools" it posited the following: "the plan will correlate teacher compensation with demonstrated student achievement...this is an important step for Pittsburgh, as nearly all of PPS teacher compensation is driven by salary schedule, which is based on factors that research demonstrates are not linked to student achievement: teachers' educational achievement and years of service". 

On the PPS' Empowering Effective Teachers website page it states "For too long, teachers have gone unrecognized for their individual strengths and contributions to student learning. School districts have been unable to measure differences in teacher effectiveness or use this information to help teachers improve. Until now." 

What of the teachers at one school that achieved the bonuses?  One said "The monetary incentive isn‘t what I‘m coming here for every day" (but probably was not turned down). Another said "It doesn‘t take just one player to win the game. It‘s the team working together".  (as often as teachers say that students need to come to school ready to learn, will the bonus money be shared with parents?) Note that while the STAR bonuses go to only the schools that achieve, there is no differentiation between teachers within the schools that might have done more for the achievement.  The teacher who might have greater "individual strengths"-in the words of the EET webpage-gets the same bonus as another at the school.  That's what comes as a result of the District wanting pay for performance but deferring to the teachers' union since implementing the vision was subject to collective bargaining (as noted in the Gates Foundation proposal). 

The PFT president pointed out in the article that teachers who did not get the STAR bonus could "earn an extra $10,000 yearly by working a longer school week and year, assuming more responsibilities as they climb the career ladder."  In other words, the teachers that read the article or heard the news through the grapevine should not feel slighted, they can earn money by taking on other duties as they go up the salary scale, which is what the PPS said was one of the factors that does not do anything for student achievement based on what was written in the EET proposal. 

But the topper came from the Superintendent who said "We don‘t want teachers in competition with each other because when that happens, kids lose in that kind of culture, and other undesirable things happen...teachers can start jockeying for particular children." So much for individual strengths and differences in teacher effectiveness-based on this statement the Superintendent feels teachers will "cherry pick" students to boost their bonuses.  That sounds like the argument public school defenders make about charter or private school enrollment, not about their own teachers.  Note again this is not the head of the teachers union-this is the chief executive officer of the District saying that.   It has long been understood that principals assign students to classes; but more to the point, does the Superintendent actually believe this?

Lamenting the inability of the Bethel Park School District to get a contract with teachers for the last two and half years, the superintendent says she has been silent until now because she is in a  " peculiar position of advising the Board and leading the staff."

Hold the phone. Does the Board not hire superintendents to manage the schools on behalf of the residents and taxpayers of the district?  That being the case, the superintendent is honor bound to work for the board and taxpayers.  Staff members do not pay her salary, they answer to her as the board's appointed agent in charge.

Clearly, she has the obligation to advise the board on what it should do vis-à-vis the teachers' contract but her obligation has to be first and foremost to the board. She can be an advocate for programs that improve education or management procedures that improve cost effectiveness. At the same time, she is not, and should never consider herself, to be a spokesperson for the union's interests. The union has enough power on its side in the bargaining process including the right to strike and the state's idiotic no layoffs for financial reasons provisions.

If the talks are at an impasse, and compensation costs cannot be lowered under the terms of the old contract, the superintendent should offer suggestions about programs to cut-one of two criteria the state permits for reducing staff. Alternatively, if teachers will not agree to slight increases in class size to save their jobs, then the onus must be on their union for staff that lose their jobs because of intransigence.

The Bethel Park board should question whether the superintendent understands her role.

And we are not talking Mayan calendar here.  In our seemingly never ending reassessment story, the Judge overseeing the process has given the County that date to get total assessed values as a result of the reassessment to municipalities.  The municipalities, which all run on a calendar year for fiscal purposes, will then have until the end of January to finalize their budgets (some are already done).  As appeals come in, those that affect a given municipality will be forwarded on so that millage rates can be accurately calculated to comply with requirements under Act 71. 

The PA Supreme Court rendered its decision on the County's base year in April of 2009 and gave the County Court of Common Pleas the charge of determining a "reasonable time frame".  Most reports this year as the process went on put December 17^th as the day cities and towns would get the numbers from the County, but that is now four days later.  An official from the appeals board stated that 90% of the residential appeals would be done by the 21^st.

Note that school districts, with the exception of Pittsburgh Public Schools, will start their budget process in early 2013 under the Act 1 requirements. 

If Indiana County sticks to what has been announced as the start of a three-year reassessment process that will produce new values for 2016, it will leave the small fraternity of counties belonging to the "pre-1969" club.  Those counties, according to the State Tax Equalization Board and our research, have not done a reassessment since 1969 or earlier.  Indiana County did change its predetermined ratio (the ratio of a property's assessment to its market value, used for taxation purposes) in 2006, but its last true comprehensive reassessment was done before the Apollo 11 moon landing. 

Is there anything from Allegheny County's experience that could guide Indiana County?

Some officials from Allegheny County might say that while Indiana is voluntarily going forward Allegheny was forced by the courts to reassess.  Recall, however, that Allegheny County Council did pass an ordinance in 2002 that said new values would go into effect in 2006.  Fear about new values led to various plans before deciding no new assessment would be the best assessment.  Indiana will have a good dose of "sticker shock" with such old values.

The more education on the assessment the better, especially when it comes to state law requirements on windfalls.   New laws are on the books dealing with what happens following a reassessment.  In Allegheny County, since it is the only county of the second class, this is Act 71 of 2005.  Indiana County, a county of the sixth class (population ranges of 45,000 to 89,999), has to follow the requirements of Act 93 of 2010.  All school districts in the state fall under Act 1 of 2006. The difference between the two is that once a revenue neutral rate is established if the taxing body wants to get more tax revenue in Allegheny County the limit is 5% whereas in Indiana (and all counties other than first [Philadelphia] and second [Allegheny] class) it is 10%. 

Taxpayers have to be attentive as well.  Note that just as Allegheny County did in 2011 and as Butler County announced it would do last week Indiana County is planning a millage rate hike.  That means everyone's taxes will go up.  In a reassessment it is possible that some people's taxes may go down.  Taxpayers need to understand that, and county government can help.