Allegheny Institute Blog

This morning we learn that the Port Authority is opposed to private bus companies offering service from local hotels to the casino on the North shore—assuming the thing ever gets built. What we are forced to realize once again is that the Port Authority is the de facto monopoly provider of transit services in Allegheny County and must grant a permit to any company wishing to carry folks on a bus within the County.

That is why there is no private service available to provide competition, which in turn is a major reason the Authority is one of the most expensive, least efficient providers of mass transit services in the nation. And all that is perfectly fine with the unions who have used the monopoly status of the Authority as well as their own monopoly power to extract outrageous compensation packages and work rules.

A year ago the Allegheny Institute recommended that the Legislature remove the Port Authority’s monopoly control over mass transit in Allegheny County. That move alone would open up competitive opportunities and have a dramatic effect on the union’s ability to hold the public hostage with their favored status. It would force Authority management to be much more creative and cost conscious. All good things.

Unfortunately, what we have also learned is that the Democrat controlled House and Governor’s office will never allow such an important policy change to happen. Thus, Pennsylvanians are forced to face a stark reality. Unions run the show politically to the public’s detriment and there is little indication that is about to change. Too bad. Maybe the ongoing loss of population in the County will eventually send a message that real reforms are needed but even that must be viewed as a slim hope.

Reacting to the Pittsburgh Water and Sewer Authority’s $13.1 million payment in lieu of taxes to the City, the Controller queried “Is this an attempt to transfer the costs of city government from taxpayers on to ratepayers?”

Talk about how things go in cycles. The Authority was basically devised to transfer the costs from the City to the ratepayers. Consider that in 1995 the City entered into a long-term lease with the authority formally called a Cooperation Agreement and System Lease. As part of the agreement, the City transferred all Water Department employees, along with their workers’ comp and compensated absences, to the Authority. The City did, however, retain the employees in its municipal pension plan. The system lease agreement mandated minimum lease payments, plus interest, and the Authority can buy the water system in 2025 for $1. That was all executed to give the City upfront cash and make the employment numbers for the City look smaller by getting those employees off of the City’s books and onto the Authority’s.

Now we have an authority that just had its existence extended to 2045 and its additional debt, while not considered by the Controller’s audit as City debt, adds to what is termed “overlapping debt” that affects City residents, totaling $1.6 billion before the new bond issue.

The Controller’s audit shows that the Authority’s operating expenses have increased 65 percent since 1997 while gross revenues have gone up 62 percent. Those expenses are likely to go up due to the Federal government’s decree on improving water and sewer infrastructure. That means more pressure on ratepayers, who, along with their City tax load, become even more burdened.

The Pittsburgh Promise—a college scholarship program to help students attending public or charter schools in the City who meet grade point average requirements—has many levers operating the machine. The program was initially promoted by the Mayor and school Superintendent, given seed funding by the hospital system UPMC, administered under the auspices of a foundation, with its own board and an executive director.

So should the Urban Redevelopment Authority—a city authority whose five members are appointed by the Mayor and which characterizes itself as the “developer of last resort” in the City—take the reins by integrating the Promise into a cohesive marketing plan with its housing programs? On the one hand, backers of the move would say they should. After all, schools are an important public service and the Promise, if it is fulfilled, could change the fortunes of the City by keeping and attracting residents with children who will attend college and could use the aid. They might be tempted to move into the City if the URA promotes their residential programs (low mortgages, abatements, etc.) in conjunction with educational aid. The URA’s website shows ten programs related to home ownership and rehabilitation.

But on the other hand, is it the responsibility of an authority, an agency which sits off of the main organizational structure of City government, and one that has been in charge of redevelopment to allow its mission to creep further into education? Then too, the chair of the URA stated “there are several initiatives and several programs that are real economic generators that, quite frankly, we just don't promote enough as things to entice people to move in as residents or business or keep people here.” Yet a look at the most recent Annual Report of the agency shows it spent $23.6 million (21% of total) on housing development. If the Authority’s initiatives aren’t being promoted, it sure does not look like it.

Rather, the declining quality of the schools has probably carried heavier weight than the incentive programs. The Promise will not change that. Only true educational reforms like school choice will entice families back into the City.

We’ve written at length in our Briefs and on this blog about the twists and turns surrounding the new taxes on poured drinks and car rentals authorized in Act 44 to provide dedicated funding to the Port Authority. These taxes would swap places with the $20-25 million or so from property taxes that the County had historically sent to the Authority for a local match. Then the Executive said that the match from the new taxes would not go to PAT until they changed standard operating procedures like being able to retire at 50 and getting health care well into retirement. With the union contract set to expire on June 30th and the authority’s fiscal year starting the day after, the PAT board has floated plans to borrow the local match as a way of protecting itself against the Executive withholding the funds.

Since the taxes are sitting in escrow and the Executive has said that he won’t allow the transit system to be shut down, the union isn’t as boxed in as the Executive would have us believe. In fact, early projections on the drink tax are running ahead of targets and the first quarter of collections are so high that, if sustained, the drink tax will come in at 28% above the budgeted amount.

So what to do? County Council will debate legislation tonight that proposes to cut the rate on the drink tax from 10 percent to 5 percent. No change is proposed to the current $2 per day rate on a vehicle rental.

Here’s another interesting part. The ordinance proposes that “in the event that [drink/rental] tax revenues are generated in excess of those required to meet the statutory matching fund requirement” they will be used for “the purpose of funding other operating or capital needs of the Port Authority”.

That’s quite a change from how this process has shaped up thus far. The rate cut provides relief to those unhappy about the drink tax, but why offer to just hand all the money generated from the tax to the Port Authority, especially when its powerful union may not concede any ground on its contract? With their ability to walk out and shut the system down, pressure will come to bear on the PAT board, management, and County officials to get the buses and trolley running again. This could mean that the new contract ends up a lot like the current contract, and since the Executive’s order states that the County is “legally required” to send a local match, this new legislative language would offer a higher reward to keep PAT operating as is.

Rest assured that if the Act 44 taxes produce more money than is needed for the local PAT match that a lot of people will be clamoring for any dollars they can grab.

This is the type of headline that media outlets love: “Pittsburgh has the worst air in the country”. Print, radio and TV news outlets have been running this headline since the American Lung Association’s State of the Air report showed Pittsburgh moving ahead of Los Angeles in terms of sooty air. But instead of taking the time to show how misleading this report is, and thus save Pittsburgh’s reputation, they are accomplices in a smear campaign.

The reality is the ranking is based on only one of twelve air monitoring meters in Allegheny County—a meter that sits in a valley near a steel mill. Yet this one meter is being used by the American Lung Association to sully the reputation of an entire region. But the ALA is not about to let facts get in the way of promoting their propaganda.

There are twelve meters scattered throughout Allegheny County, one in both Beaver and Westmoreland Counties, and two in Washington County. However, the ALA report includes an eight county area which includes more than 2.2 million people. But as the Allegheny County Health Department notes, there are only 25,000 people living near the offending meter. But to read the headlines, all 2.2 million people are at risk.

If all the meter readings in the area were averaged together, they would be more than acceptable. But the response from the policy leader from the ALA says “we don’t average them together because you don’t breathe average air.” It’s also not fair to lump in an entire region because of one meter. Is it possible that other cities benefit because the ALA only measures a “clean” monitor instead of a “dirty” one? Would the ALA consider using a different monitor for future Allegheny County readings or do they relish using the high reading meter so they can continue their fear mongering?

The ALA’s methodology is very weak and only succeeds as a smear tactic. Pittsburgh’s air quality has improved by leaps and bounds since the mid twentieth century. Furthermore the media, following the “if it bleeds it leads” mentality has been an unwitting accomplice to the ALA’s propaganda. Too bad faulty research and media hype has set back the effort to polish up the steel city’s image.

Who knows why it fell apart, but the City’s attempt to get a one-stop shop for permits (housed in various departments like Building Inspection, Planning, Public Works, and the Water and Sewer Authority) has succeeded in getting furniture and an office but no personnel. The Mayor characterizes the reorganization as “more dead than alive” and with the development czar on paid leave, Council members seemingly against moving the function of planning to the URA, and various options on the table for moving some employees to the Finance Department, it looks like the Mayor might be correct.

There are several lessons here if anyone wants to look for them. This reorganization was City only, not City-County, not City-municipal, and seemed to make sense, yet did not get done. Imagine the hard work involved in moving the levers between the City and Allegheny County departments where they overlap. It is hard, but not without merit. And where are the City’s overseers on this one? If this would make the City more friendly to business, it should not be on life support.