Allegheny Institute Blog

Over the weekend a newspaper report detailed the new contract negotiated by the Westmoreland County Transit Authority with a private operator to handle transit service for the next five years. The Authority expects to lower its operating expenses over the next couple of years as a result of the contract.

Now why is it that the Westmoreland County Authority has not been upheld as a model for contracting out transit service as a way to save money and bring about efficiencies? Consider that the Authority has always been a non-operating one and has not had to increase fares since 1992. That’s quite a contrast to what has happened with the Port Authority since 1992 with on-again, off-again proposals of fare hikes and service cuts. Also recall that was the year PAT drivers went on strike and shut the system down.

Imagine what would happen if the Port Authority board and management decided to embrace our idea of allowing private operators to bid on the routes PAT plans to abandon. That would at least give the opportunity for a trial run.

But we are not holding our breath. Not only would the PAT union rally against it, we would not be surprised at all to see other public sector unions in the County jump to their side. Yet, in neighboring Westmoreland County there is no such agitation from other County unions. Maybe they know something we don’t.

Let April 23, 2007 be remembered as the day when the impetus to “do something” prevailed in Mt. Lebanon. By a 4-1 vote, the Municipal Commission opted to agree to a tax increment finance deal for upscale condos. Even though there were claims that the assistance would help with infrastructure at the site, there is little evidence that the money would actually be devoted to such infrastructure. Instead, as we have pointed out before, much of the TIF-supported debt would be eaten up by fees and a “public park” that is little more than a landscaped front door for the development and, amazingly, to actually pay for the property acquisition by the developer.

Some on the Commission sounded like they were simply fed up with dealing with the project, which “has been gathering weeds for the last seven to eight years”. If there had been a little more ingenuity and openness to letting the private sector develop the site instead of keeping it in the hands of a Parking Authority there might have been development a long time ago. The Commission, the Parking Authority, and the Economic Development Council sat on this land waiting for the “right project” instead of selling it at auction.

But now the project will move forward. When things don’t pan out as promised, maybe Mt. Lebanon taxpayers will finally get the picture of who is running their government.

Our last blog entry noted the breakout of referendum questions on Act 1 that are coming up next month. Those referendum questions will decide whether taxpayers in a school district want to swap a higher income tax rate for a cut on their school property tax bill.

That’s just one part of Act 1—there is also an expansion of the rent rebate program, gaming money, and taxpayer control of school taxes and spending by being able to vote on taxes in they exceed the district’s index.

That does not mean that schools can’t increase taxes as they can do it at a rate lower than the index. Or, if the situation justifies it, they can apply for one or more referendum exceptions that allow the district to exceed the index without going to the voters.

For the 2007-08 school year, 210 districts, or 42 percent statewide, were granted exceptions by the Department of Education. The most common reason for the exception (188 out of the 644 total) was for retirement contributions. Other most common reasons were special education expenditures (144) and grandfathered school construction debt (104).

In Allegheny County, ten districts (23 percent) applied for and were granted referendum exceptions for the upcoming school year.

With built in referendum exceptions and the ability for districts to increase taxes up to the index, it remains to be seen whether year-over-year school spending will eat away at the yet to be delivered savings.

Next month the voters in Pennsylvania (except for those in Philadelphia, Pittsburgh, and Scranton) will decide if they want to place more of a tax burden on their income as a tradeoff for lower school taxes. They will do this under the auspices of Act 1 of 2006.

The Pennsylvania School Board Association (PSBA) has released a preliminary survey on the status of the ballot questions. In plain language, the choices are “all over the place”. First, districts are choosing whether they want to either increase their earned income tax or eliminate the earned income tax and replace it with a personal income tax (the latter having a broader base including interest and dividends). Then, depending on the tax and its rate, an estimate of how much of a property tax reduction is produced.

Obviously, the question of “to pass or not to pass” comes down to what the taxpayer will pay under a higher tax on income and how much they plan to get back on their school taxes.

Statewide, 461 of the 498 eligible districts responded to the PSBA survey. The overwhelming majority (409 or 88%) are going the route of a higher earned income tax. Only 52 are opting for eliminating the earned income tax in favor of a personal income tax.

In Allegheny County the 42 eligible districts (all of which are currently levying an earned income tax of 0.5%) are split this way: 34, or 81 percent for a higher earned income tax, 8 or 19 percent for a personal income tax. Half of those districts going for an increase in the earned income tax are proposing a 1 percentage point hike to 1.5 percent. If all the referenda questions pass, tax relief will range from a low of $115 in Duquesne to $1,014 in Upper St. Clair.

Here’s the opinion of the PSBA study: “if all the ballot questions pass, the complexity of local tax collection will increase significantly”. Their prediction is for about 20 percent of the referenda to pass statewide, which, coincidentally, is roughly the same percentage of school districts that opted into the original voluntary tax relief and spending control proposal created by the state a few years ago.

By now the news is widespread: since 2000, the seven-county Pittsburgh metro area lost 60,000 residents, second only to the hurricane ravaged New Orleans metro. The news is nothing new as previous year-over-year estimates of population have shown that the metro is declining in population. In fact, we have known that the City of Pittsburgh reached its peak population in 1950 and has been on the decline ever since then, long before the shuttering of the steel industry.

The Pittsburgh metro’s population loss in percentage terms (2.5%) puts us in the same company of Youngstown and Buffalo.

It is interesting to look at the metros that were similar in size to Pittsburgh in 2000, when the metro had 2.4 million people—San Diego (2.8m), St. Louis (2.7m), Baltimore (2.6m), Tampa (2.4m), Denver (2.2m), and Cleveland (2.1m). Over the six year time frame, all but Pittsburgh and Cleveland increased their metro area populations. Goes to show how emulating the “Cleveland miracle” of stadium and downtown revitalization was a great strategy. Cleveland only managed to lose 34,000 people to Pittsburgh’s 60,000 over the six years.

The metro areas that were smaller than Pittsburgh in 2000, Tampa and Denver, are now bigger than Pittsburgh. The gap between Pittsburgh and San Diego, St. Louis, and Baltimore has grown even more since 2000.

Though it has been known what the problems are, there is little attempt to take them head on. Officials just take the approach of attacking the branches instead of the roots. And our man-made policy disasters show no sign of being reversed. So don’t be surprised when the next round of data shows a smaller metro area again.

Last week we wrote that a referendum question to make the Sheriff an appointed position was thwarted by a decision by a Court of Common Pleas judge. We argued that an appeal would have a good chance against the case law on the matter, but the County has opted to not pursue one. In short, the case law has interpreted the home rule statute to mean that a county or municipality must wait five years between each change in its form of government.

The County has instead reluctantly accepted the decision and will wait for the legally-interpreted five year waiting period for proposing another change to County government.

So there is some time for a serious examination and to plot a course for the next referendum. The Sheriff’s office ought to be made appointed and consolidated with the County police. The County ought to also look at the need for maintaining an elected Treasurer, which we have previously argued should be made an appointed position. The functions of that office could be combined with the Budget and Finance office.

That would leave the County with an elected Executive, County Council, Controller, and District Attorney.

Can there be a more egregious case of government ineptitude combined with excuse making that would test the patience of Job?

The Duquesne School District is back in the news. The state board appointed to fix the problem is still crying poor and needs help. This is in a school district that currently spends $21,400 per pupil and is receiving $12 million in state assistance for 750 students. Or said another way, Duquesne gets $16,000 per pupil from the state while Mt. Lebanon gets $2,200 per student from the state. Indeed, Mt. Lebanon will spend a total of $12,500 per student next school year. And, Mt. Lebanon has the best SAT scores in Allegheny County. So much for correlating spending with achievement.

Meanwhile, Duquesne students continue to post some of the lowest scores of any school district in the state and probably in the nation. What’s worse, this outrageous spending and dreadful academic performance pattern is not new; it goes back many years. Indeed, it was so bad the state took over the system to turn it around. However, those efforts have been have been disastrously unproductive.

It is time to face the harsh reality. This school district, with its incredible costs, stunningly bad academic record and its ongoing loss of students has to be shut down. It is unfair to the students and to the taxpayers of Pennsylvania to allow this fiasco to continue.

Give each parent a voucher for $10,000 for each child and let them find an education for their children. The results cannot be any worse than they are now and will undoubtedly improve dramatically for students who really want to learn and have supportive parents. At the same time the total cost will fall to around $8 million per year, $10 million if we include enough to pay off debt. That’s half what is being spent currently.

The time has come to quit talking about fixing this mess and do something useful for a change. For heaven’s sake and for the sake of the kids’ education, shut it down!