Allegheny Institute Blog

Another Reason to Adopt Allegheny Institute Recommendations

noreply@blogger.com (Allegheny Institute) — Wed, 14 May 2008 13:23:00 +0000

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.

Drowning in Debt?

noreply@blogger.com (Allegheny Institute) — Mon, 12 May 2008 15:47:00 +0000

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.

Should URA Market the Promise?

noreply@blogger.com (Allegheny Institute) — Fri, 09 May 2008 15:10:00 +0000

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.

Should PAT Get Tax Overflow?

noreply@blogger.com (Allegheny Institute) — Tue, 06 May 2008 15:21:00 +0000

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.

Air Quality Report Gives Pittsburgh a Black Eye

noreply@blogger.com (Allegheny Institute) — Fri, 02 May 2008 14:11:00 +0000

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.

Planning Merger Needs More Planning

noreply@blogger.com (Allegheny Institute) — Thu, 01 May 2008 15:54:00 +0000

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.

The Drink Tax Overfloweth

noreply@blogger.com (Allegheny Institute) — Wed, 30 Apr 2008 16:00:00 +0000

Based on the first three months of collection, the new countywide levies on poured drinks and car rentals could exceed $30 million and might be closer to $35 million. That raises the question: if those projections are reached, what happens to the overage?

Recall that the reason the levies were enacted was to move the County’s annual subsidy to the Port Authority (in the range of $20-$25 million) from real estate taxes, since the executive told us that no County uses real estate taxes for mass transit, to new dedicated sources of funding. Act 44 allowed drink and car rental taxes, Council enacted them, and now they are sitting in a fund waiting on the outcome of the Port Authority contract negotiations.

Assuming the transit union agrees to concessions and reworks their contract to allow for changes to legacy costs, retirement age, and other benefits, the Executive said he would release the money. But does the subsidy go up to include everything from the drink/rental taxes, or just the historical level of subsidy? If it stays at $25 million or so, what happens to the rest of the money—does it stay in escrow and carry over to the next year? Or does the County have the ability to use it for general operating purposes?

Happy Days Ahead for State Retirees

noreply@blogger.com (Allegheny Institute) — Wed, 30 Apr 2008 14:48:00 +0000

A state House committee has passed legislation that would enact cost of living increases for state retirees that range from 2.7 percent to 25 percent. Why would legislators do this? Look no further than the old adage of the “squeaky wheel getting the grease”. One newspaper report notes pressure from retirees on lawmakers due to the level of returns the two statewide retirement systems (SERS and PSERS) are getting and the sponsor of the legislation noted retirees need for financial relief.

Where to begin? There are a lot of retirees in this state, union and non-union, that did not work for the state government and are feeling the pressure of mounting costs and the crushing tax burden that don’t have the luxury of leaning on the legislature for pension enhancements. These retirees will have to dip further into their pockets to pay for the enhancements through higher school property taxes or state income taxes. Remember that thanks to the last cost of living increase in the early part of this decade contribution rates for the school and state systems are projected to jump significantly. That could amount to steep tax hikes.

And what about the rest of the state? Taxpayers have been complaining about taxes and regulations and common sense reform that would grow investment here, yet we only get tepid change. Yet when the head of the retirees’ union queries “what's a better economic stimulus package than to give your former state employees a cost-of-living increase, which they're going to spend right here in Pennsylvania?,” few if any point out that such an action may end up costing Pennsylvanians in the future or the flippant nature of the comment. Consider that, according to the 2006 SERS financial statement, the last three cost of living adjustments for retirees (effective dates of July 1 in 1998, 2002, and 2003) added an additional $1.1 billion to actuarial liabilities of the system. Did this infusion of cash help stimulate PA’s economy?

County Revs Up Vehicle Policy

noreply@blogger.com (Allegheny Institute) — Tue, 29 Apr 2008 15:46:00 +0000

Hot on the heels of the City Council-Mayoral debate over what City-owned vehicles can be taken home and by whom, the County Council’s committee on Government Reform will try to establish its own policy by taking up a bill to define the use of County vehicles and their take home use. If passed, the bill will create a policy in which the County manager will take an annual count of the vehicles and their characteristics, and whether the vehicle is allowed to be taken home by an employee. The legislation would prohibit the vehicles for “any and all personal uses”.

Granted, there are significant differences from the City’s situation—the Act 47 team actually took the City’s fleet of 83 vehicles and prescribed the steps to remove their use by officials not performing public safety or public health functions and then the remainder with low mileage would be examined individually. The goal was to get the 83 down to 29. Only now is the City getting around to it and the number is well above the 29.

But in both cases, the language of the Act 47 team is apropos: that take home vehicle use was “a symbolically negative image to the City workforce and the public counter to the dire nature of the City’s finances and the need for permanent reform”. With the County’s financial picture not too rosy, and the presence of new taxes on drinks, the Council’s move, if enacted, might be an attempt to head off that perception.

Another Year, Same Old Attendance

noreply@blogger.com (Allegheny Institute) — Thu, 24 Apr 2008 15:37:00 +0000

The 2008 Pittsburgh Pirates’ campaign has begun as the team tries to make it to .500 and thus avoid tying the record of consecutive losing seasons in professional sports at sixteen years. The anemic attendance numbers at PNC Park thus far this season indicate that a lot of people might end up missing the possible tying of a record.

Through nine home games, attendance has averaged 14,337, lowest in the league and about 5 percent below the Florida Marlins, who are next to last. How far fortunes have fallen since the late 1990s when taxpayer subsidies for PNC Park were sold as a way to keep the Pirates here, make the team competitive, and boost attendance. One out of three isn’t too bad, we guess.

Here’s the problem as we noted out in our Issue Summary on attendance: aside from the opening year of the park (2001) and the boost from having the All-Star game here (2006), total attendance is not much different from where it was at Three Rivers Stadium. The taxpayers of the region were promised more than a one year boost in attendance and projections placed it closer to the 2 million level annually. More realistic numbers are in the 1.5 to 1.6 million range. PNC Park attendance has never risen higher than 17th in the league, and that happened in the park’s debut year.

Here’s the other problem: the teams languishing at the bottom of the barrel in attendance with the Pirates include Cleveland, Cincinnati, and Baltimore. Two of these cities built retro ballparks that inspired the push and design for PNC Park. In the case of Cleveland and Baltimore, those stadiums will be approaching the two decade mark in the next five years. Will those designs be seen as passé if attendance hovers in the bottom third of major league teams?

Clearly stadiums are not the big draw for attendance they were sold to the public to be. Poor play over time obviously takes a toll on attendance. But in Pittsburgh attendance was never all that good.

As that famous philosopher Yogi Berra would say, “if people do not want to go to the ballpark, you can’t stop them”

They Grow Deep on the Banks of the Allegheny

noreply@blogger.com (Allegheny Institute) — Wed, 23 Apr 2008 15:16:00 +0000

The North Shore Connector drilling machine was moving along at good clip until it hit what was described by varying newspaper accounts as “pieces of tree” and “tree pieces lodged in clay” or “wooden fill material” slowed the process down. The Authority views it as a temporary slowdown and things will be back to normal with the machine.

But it raises questions. How did a tree get down to that depth? Did it come down when the river was formed thousands of years ago? Was it debris left from a long ago flood? Is it a bridge piling from some old structure? Would fill material be that deep? Who knows. But it is clear that if there is one—whether a tree or a piling—it is likely that there will be more. The Authority hasn’t speculated on this possibility but it definitely could slow the digging machine down, and it can’t back out of the hole without disassembling the machine.

If the machine does hit another tree, rest assured that it will definitely make a sound.

Merger Opportunities Lost Drip by Drip

noreply@blogger.com (Allegheny Institute) — Mon, 21 Apr 2008 20:14:00 +0000

One of the points we have tried to hammer home following the release of the Advisory Committee’s report on merging the City and the County is that it becomes a real heavy-lifting task when the details are spelled out. How do you merge two departments when there are different labor contracts? How do you account for services that are not duplicative? And what about the independent entities that carry out vital public services but aren’t a part of the elected machinery of government?

Case in point: legislation is pending in a City Council committee to extend the life of the Pittsburgh Water and Sewer Authority until 2045 so that its life span coincides with debt it is about to issue this June. Now a region supposedly knee-deep with officials that won’t tolerate duplicative services would have to say something about this. While there is no County water authority per se, there is Alcosan, the sanitary authority, other water authorities in other parts of the county, as well as a heavy dose of the private sector involved in getting water to homes and businesses. Consider that the Water and Sewer Authority entered into a complicated financial transaction with the City of Pittsburgh in the mid 1990s to provide the City with some much needed cash. Department of Water employees were spun off into the authority and now the Authority pays the City a payment in lieu of taxes. Not the best example of governmental efficiency for sure.

But this begs the question—if the City and County were really committed to the merger and looking at all points possible, would the Authority be getting such a long term lease on its life span?

Could County Be Bottling the Drink Tax Revenue?

noreply@blogger.com (Allegheny Institute) — Wed, 16 Apr 2008 19:16:00 +0000

The Allegheny County Controller weighed in on finances recently with the issuance of the 2007 Comprehensive Annual Financial Report, the official financial record of the County. He says reliance on one-time revenues to avoid deficits and stagnant revenues in the future paint a gloomy picture of what has been going on and what lies ahead. The County will get money as a host county for the gaming facility and from the tourism fund for various projects (see our issue summary for details) but, barring a Supreme Court ruling nullifying the base year assessment plan, it is unlikely that any increases to property values or property tax revenue will be coming.

That brings us to the drink and car rental taxes. Recall that the reason these taxes were enacted was to shift support of the Port Authority from County property taxes to new sources of revenue. The Executive’s Order from November of 2007 says that the County is “legally required” to send support to the Authority, but that same order vows to withhold the money until the transit union agrees to concessions. As we mentioned in an April 15 Brief, the Authority has mentioned an “end around” in the form of borrowing $27 million to trigger state subsidies.

If the state permits the Port Authority to borrow its own local matching funds, and the labor stalemate continues into next year, will the Authority be able to borrow another $27 million to keep the state dollars flowing? Assuming the state money is forthcoming and the Authority can continue to operate, why would the union make concessions but simply offer to work under the terms of the old contract?

So what happens as the drink/car rental tax revenue the County is collecting if it isn’t remitted to the Authority and the Port Authority unions are able to avoid having to make concessions demanded by the Chief Executive? Money we were told was critical for mass transit will be accumulating in a restricted fund while the contract negotiations drag on endlessly. Having this money pile up and the union off the hook for making concessions because of the end around borrowing by the Authority will not sit well with bar owners and restaurant owners already white hot angry over the new taxes.

County Controller Wants Facts on Merger

noreply@blogger.com (Allegheny Institute) — Wed, 16 Apr 2008 13:57:00 +0000

Exercising his duty as the County’s elected “watchdog” of finances, the Controller yesterday raised some serious questions on the proposed City-County merger. “I think [voters] want to see concrete, hard facts in terms of financially what's going to happen as well as structurally what's going to happen.” Maybe the Controller is expecting too much: all the committee had was 17 months, decades worth of studies on merging services, and numerous case studies from other City-County mergers around the country.

The predictable response from the County Executive’s office is that “more details are coming”. Remember that the merger study committee wants to have this issue on the ballot as soon as possible. It has taken years just to get one unified 911 system—how can anyone possibly believe that the proposal will sail through the legislature in time for an up or down vote within the next three years?

Let’s be frank: we do not know what the merged entity will be called, how many representatives there will be, what they will be paid, what taxes will be levied and where, how the merged entity will interact with other independent municipalities, what the ironclad assurance that City debt and pension liability will remain with the former City, how union contracts will be merged, and what happens to the authorities.

All the committee has to hang their hat on is that a merger will unify leadership and help the region speak with one voice, specifically on economic development. And even that case is not very convincing based on their own research commissioned for the study.

The Controller is wise to point out that the devil is in the details. Pie in the sky musings about how nice a merger would be are simply not enough.

City Will Stay in Act 47, Wants More Help

noreply@blogger.com (Allegheny Institute) — Wed, 09 Apr 2008 14:24:00 +0000

As speculated in this blog on Monday, the state’s opinion on the City of Pittsburgh’s distressed status is one of “good job so far, but bad long term forecast” and the City is unlikely to emerge from Act 47. If it had, its tenure would have been the second shortest to the Borough of Ambridge, which came out after three years.

Originally those pushing for the removal of status wanted “clear and definable benchmarks as to what would be further required to have the status of distressed municipality removed” as stated in the resolution from this past November.

The public meeting instead became an opportunity for City officials to lobby the state for various remedies. The Mayor wants “debt and pension relief”; a City Council member wants to tax non-profits and help with pensions and debt too; yet another wants “regional revenue sharing” and mentioned pensions and debt. The controller likewise mentioned legacy costs.

As we pointed out back in 2003, Act 47 is tailored to small municipalities and not many of those had non-operating obligations to the degree Pittsburgh has—that’s part of the reason the state created the second oversight board, the ICA. But the Act 47 plan for Pittsburgh is not silent on these items: it points out that “the debt service on its outstanding bonds represents one of the single largest impediments to the City’s return to financial health and balanced budgets” and “the extremely weak funding status of the City pension funds threaten the ongoing stability of retiree benefits as well as the City’s finances”.

It is just that what the City is looking for—the state to assume responsibility for the pensions by folding them into the State Employees’ Retirement System or coming up with a new revenue source for these legacy costs—is quite different from the recommendations made by Act 47 (much of their proposed changes for pensions come from labor-management changes and debt paid down not by refinancing but by moving to pay as you go capital spending). The $10 million in gaming money the City is supposed to receive are to be applied toward legacy costs, and downsizing staffing levels to be more in line with better performing cities will help pension costs in the future. Changes to retiree health benefits like Scranton and Philadelphia have made would also help.

But if the City Council and the Mayor are expecting state taxpayers to bail out the City, they will be waiting for a long time. And for benchmarks? If the DCED secretary hasn’t crafted any yet, here are a few: the City should have to reduce per capita employment levels to national norms, reduce workers’ compensation costs, bring the pension funded ratio level up, and enact zero spending growth for the next five years. How does that sound?

Pittsburgh Schools Comes to Fiscal Crossroads

noreply@blogger.com (Allegheny Institute) — Tue, 08 Apr 2008 19:28:00 +0000

Though they have shuttered a considerable number of schools, costs for the Pittsburgh Public Schools are troublesome to the point that the chief finance officer for the district is recommending cuts to spending and a rightsizing of faculty numbers to align with dwindling enrollment. The board would be wise to go beyond the initial recommendations of subsequent 10 percent cuts in 2009 and 2010 and try to bring per pupil spending numbers in line with other districts around the county.

This school year the district’s general fund budget is $526 million. With enrollment around 29,000, per student spending translates to $18,159. Back to back cuts of 10 percent in the next two years would bring the budget to $426 million in 2010. With enrollment declining as it has over the past few years (about 5% annually), per student spending would fall to $17,727. Not the stuff of legends or districts trying to radically change their fortunes. For certain, in order to get per pupil spending to $12,500 or so the district would be looking at a general fund budget of around $370 million (a 30% drop from the 2008 level) or would have to grow enrollment to its early 1990s level of 40,000 students.

The recommendation for 10 percent annual drops should have started years ago, and one would think that the 2006 audit by the Council of Great Schools would have prodded officials on. That study had the data, but did not capitalize on the fact that Pittsburgh was spending about 60 percent more than the comparison districts, and we recommended 10 percent cuts until spending reached $12,500. Obviously the day of reckoning was just pushed further into the future, which is here.

Taking the Governor’s Temperature on the City-County Merger

noreply@blogger.com (Allegheny Institute) — Mon, 07 Apr 2008 15:30:00 +0000

Timing is everything as they say. Various opinions have been put forth on the proposed City-County merger from newspaper articles and editorials, elected officials, and our own Policy Brief today on the subject. It just so happens that tomorrow the state secretary of the Department of Community and Economic Development is coming to town to consider a petition by the City of Pittsburgh to be lifted out of Act 47 distressed status. What happens there may have a big impact on how for the merger idea goes. At the very least it might serve as a way to see how the Governor feels about the idea since the DCED is a cabinet and the secretary is an ally of the Governor.

Now the Mayor and the Chief Executive, with the findings of the Nordenberg study backing them, certainly aren’t leading with the idea that the merger is going to save a lot of money. They are hoping that voters of the County will think a singular voice advocating for the county and, perhaps, the region will lead to growth and vitality and that government can be streamlined.

But they’ve also got to sell the idea that the City’s mismanagement won’t dominate a merged government. They’ve stressed that debt and pensions won’t go beyond the City limits and that the City, or former City, will pay higher taxes to retire the obligations. That’s a hard one, and it will be interesting to see how the state hearing plays out tomorrow. We pointed out in 2003 that Act 47 was not really tailored to a City of 300,000 and, true to form, there have been times where the City seemed like it was telling its overseer what would happen. But the City was placed in distressed status, and now the state will determine if it should come out of it. City Council has asked that if the state does not lift Act 47 that it give the City some benchmarks or metrics of what has to happen to get out.

An objective observer would say “no way, the City has not nearly done enough” and they would be right. Along with the separate oversight board, the Act 47 team could have made the bold changes that the Mayor was just talking about would come from a merger. The City got tax reform, made changes to the fire department, but yet is still debating an Act 47 directive on take home cars. A lot of foot dragging and resistance have come from the City as the Act 47 plan has played out.

But the state obviously has caught wind of the proposed City-County merger and what a continuation in Act 47 would have on that prospect (the oversight board is supposed to be around until 2011). Not lifting the status would be stating the obvious—that the City is not yet ready to be out from under the state’s watch. Lifting it would be viewed as giving the City a pass to shine a favorable light on the merger’s prospects in the General Assembly that the City is in better fiscal health than it was four years ago.

So here’s a guess: the City stays in Act 47, gets a hearty pat on the back for the progress, is told there is more to do, and the spin that more time in Act 47 status should and won’t affect the recommendations of the merger committee will soon follow.

Not Buying It

noreply@blogger.com (Allegheny Institute) — Thu, 03 Apr 2008 18:42:00 +0000

After a long delay the Citizens Advisory Committee has released its report on a City-County merger. Not surprisingly, the report calls for a consolidation of the City government with County government in a way to eliminate service duplication, which would essentially mean one police force, one parks department, one public works department, etc. A full merger would entail the conversion of the County’s functions of human services and the jail and the City’s functions of fire fighting and refuse collection to a new government.

The buzz words of “zero-service duplication” is empty pandering since the City and County have dragged their feet on combining services for years and have only made small progress on 911, fingerprinting, and some purchasing. Let’s see if this report prods them on.

The biggest surprise is that the Mayor has signed off on the concept though the public record indicates he did not really believe in the concept unless it was a money saver. In July of 2007, for instance, the Mayor stated “how are [city residents] lives better off because of consolidation?” and in January of this year he asked “does it save taxpayer’s money? Does it provide a more efficient government?” At the time, the Mayor indicated that he wanted the City to expand its service reach to other municipalities.

But not happy with small changes—gosh, after four years of the City taking turns as being its own overseer despite an Act 47 team and an oversight board, who would have thought that would have happened?—the Mayor now has signed on as a full-backer of possibly being the last Mayor of the City of Pittsburgh, something he campaigned against in the last election. Funny how things change. The City and the County have done little in the way of being “bold, decisive or far-reaching”.

If the plan comes to fruition, the General Assembly will design a referendum question that will spell out the what, when, where, and how of the issue. But it is certain that the issues of the City’s debt and pension load will be a major obstacle to the consolidation.

Act 1 Data for Allegheny County

noreply@blogger.com (Allegheny Institute) — Wed, 02 Apr 2008 14:31:00 +0000

The PA Department of Education has released more data on where school districts are in relation to the requirements of Act 1 of 2006, the Special Session on Property Tax Reform. Act 1 stipulates that school districts can either 1) pass a resolution stating that their taxes will not increase faster than a state-crafted index (which varies from district to district) or 2) submit a preliminary budget to the state. If the budget plans a tax increase greater than the index, it can either work to reduce the impact of the tax, apply for an exception from the Education Department or the Court of Common Pleas, or put it on the ballot for an up or down decision by the electorate.

Here’s the data on Allegheny County’s 42 suburban school districts for the coming school year: 35 districts have passed a resolution subject to section 311 of the act. This means that taxes can’t surpass the index, which has gone up in all districts since the last school year. On average, the index was 4% in 2007-08 and 5% for 2008-09. They can increase taxes up to the limit, but can’t exceed it.

Four districts have secured exemptions from the Department of Education: Allegheny Valley, Deer Lakes, Mt. Lebanon, and Steel Valley. Last year 10 districts had exemptions and of that group only Mt. Lebanon and Steel Valley remain. There are 10 possible reasons for granting an exemption and of the four districts getting one this year the reasons were varied—health care in Allegheny Valley, revenue maintenance in Deer Lakes and Mt. Lebanon, and special education expenditures in Steel Valley. The PDE approved a total of $2.7 million in exceptions for these four districts. The increase in the index must have had an impact—seven districts that received an exemption last year have passed resolutions this year stating they will not exceed their index.

The status of three districts—South Fayette, Elizabeth Forward, and East Allegheny—are unclear. They are either seeking an exemption from the Courts, planning to put an increase on the ballot, or have worked their tax rate down to prevent a boost above the index.

The ultimate irony in all of this is that, thanks to the construction of the index, the poorest districts have the most leeway to increase taxes up to the top of the index. That’s really the last thing those districts need.

Government Parking Front and Center

noreply@blogger.com (Allegheny Institute) — Tue, 01 Apr 2008 16:09:00 +0000

A newspaper article today pointed out the lavish parking privileges given to City and County employees that work Downtown. Favorable locations, discounted rates, and forgiveness from the City’s parking tax are just some of the benefits. About 200 City workers and 340 County workers are taking part.

One City official noted that the perk is there to compensate for the low average salaries paid to City workers, even though the average private sector salary is below that of the City average. Great pension and health benefits are also present in government work, so the level of “extras” just keep piling up and up until, low and behold, there is a pension crisis present. Certainly the people getting the parking passes, including the top officials of both the City and the County, do not fall below the mean mark for salary. The fact that “seniority and job title” play into determining who gets the privilege belies the claim that the so-called low average salary prodded the parking privileges on.

For all the talk extolling the virtues of public transit to the City’s support of Flexcar—for which they removed parking meters and entered into a $10,000 contract—one would think that City and County workers would have options just like private sector workers commuting in and out of Downtown, whose time is likewise valuable.

When is Enough, Enough?

noreply@blogger.com (Allegheny Institute) — Fri, 28 Mar 2008 18:39:00 +0000

The oft-repeated claim that Pittsburgh needs more hotel rooms within the immediate vicinity of the convention center came back again this week. Look at how this issue has morphed: in 1997 when the region was debating the ½ percent sales tax increase, officials claimed that a new center had a lot of people interested in building hotels near the center. In 2001, a subsidy plan was hatched to build a hotel. In 2002, the SEA discussed building a hotel itself. Now gaming will provide $44 million for a hotel, but the tourism community is upset that the developer is only planning 300 rooms instead of 500 to reach a somewhat magical target number of 1,000 connected rooms.

Clearly, the arguments about what happened to the private interest, the fact that subsiding new hotel rooms only opens the door for more subsidies later, and the disadvantage a subsidy will have for other established hotels are being pushed aside. The state has stepped in and its assistance is viewed as sufficient to convince the developer that construction costs or the rate of return just don’t matter—all that does is securing the ever-so-important magic number of hotel rooms, a factor so important that planners did not bother to push for its inclusion when the center was being drawn up.

Pittsburgh is in fierce competition in the convention market (Philly is expanding its center with help from gaming money) and a shinier center with better amenities has barely nudged attendance above where it was in the waning days of the old center. In fact, bookings through 2015 are pitifully low. Will a 500 room hotel change these projections? We can only wait and see.

Pittsburgh Metro Population Numbers

noreply@blogger.com (Allegheny Institute) — Thu, 27 Mar 2008 16:05:00 +0000

The July 1, 2006 to July 1, 2007 estimates for the growth in U.S. metropolitan areas is in and Pittsburgh, the 22nd largest metro area at 2.355 million, experienced a net decline of 7,502 people (-0.3%) over the time frame. In terms of net population change in numbers, Pittsburgh was third from the bottom among the 100 largest metro areas. Only Cleveland, with a drop of 8,848 and Detroit, down 27,314, experienced a greater decline.

The data, available at http://www.census.gov/Press-Release/www/releases/archives/cb08-49table3.xls, shows other metros experiencing population losses are concentrated in the northeast and Midwest—Buffalo, Province, Youngstown, Dayton—but also included Miami and Virginia Beach.

Pittsburgh is, for the time being, firmly entrenched at its number 22 spot. The 23rd spot belongs to the Portland (OR) metro at 2.175 million. Based on the 06-07 changes, with Pittsburgh losing 7,500 and Portland gaining 41,000, in 2011 Portland would surpass the Pittsburgh metro in total population size. The gap between Pittsburgh and the 21st largest metro, Denver, has also become more pronounced. In 2006 Denver had 48,000 more people and in 2007 a gain by Denver and a loss by Pittsburgh widened the gap to 109,000.

And as of the July 2007 numbers there are 11 metros in the 2 million to 3 million range. Only Pittsburgh and Cleveland were net losers in that range.

Slight Tweaks to County’s Park Plan

noreply@blogger.com (Allegheny Institute) — Wed, 26 Mar 2008 19:05:00 +0000

We wrote in a previous Policy Brief about Allegheny County’s plan to explore private sector assistance in improving selected assets in the nearly 12,000 acres of parkland. To that end the County has produced the first two Requests for Proposal, one for the boathouse in North Park and the other for the Hartwood Stables. The successful bidders will be responsible for all maintenance and capital improvements at the sites and the proposals will be evaluated on how well plans mesh with the character and vision of the parks.

In announcing the plan the Executive stated “we’re never going to sell these parks” and the approach to allowing the private sector into the parks will be a gradual one. The County itself is maintaining all the advertising rights at the sites and will not entertain naming rights at the time. This is somewhat in contrast to the August 2007 Oglebay Foundation study on potential revenue options in the parks, including the pursuit of “non-traditional funding sources such as advertising, corporate sponsors, and other potential individual donors…”

Another complicating factor, in the case of the North Park Boathouse, is that the lake is scheduled for a major dredging operation to remove silt and sand. This project is slated to be completed in 2011. The RFP notes that “there will likely be some disruption of lake usage in and around the Boathouse during sediment removal operations” and the extent of that disruption is “not known at this time”. Hopefully such uncertainty will not drive away potential bidders.

Executive Does Not Oppose Council’s Airport Money Grab

noreply@blogger.com (Allegheny Institute) — Tue, 25 Mar 2008 15:03:00 +0000

County Council has passed Ordinance 3662-08, which directs the County to go after the Airport Authority for the balance of the County’s supposed $42 million investment in Pittsburgh International Airport, and the Executive has allowed it to become law without his signature. That $42 million has generated a significant amount of controversy since the County first took possession of a $19.9 million distribution from the gaming Tourism and Economic Development Fund.

To summarize: the gaming law set aside $150 million for “debt service, development, and economic development” at the airport. The public record indicates that the entire $150 million was to go for the close to $600 million debt held by the Authority for the airport. A late amendment in the Tourism Fund statute allowed that money to come directly to the County and the Executive, claiming that the recovery of the $42 million debt was something for which he has crusaded for many years, took the initial $19.9 million and used it to fill a 2007 budget deficit.

The ordinance acknowledges the receipt of the $19.9 million and now is after the balance of $22.6 million, plus interest, which at 5 percent since 1987 when the bonds were issued amounts to about $24.8 million. They have 90 days to “make arrangements satisfactorily [sic] to the Chief Executive and County Council”.

One would wonder if the Airport Authority would just inform Council that they can keep the next $44.5 million of the gaming money since, thanks to the legislative amendment, it will be coming to the County first. That would leave closer to $87 million for the retirement of airport debt held by the Authority, well below the $150 million envisioned.

The Executive’s letter describing his refusal to sign the ordinance and instead let it become law without his objection raises some issues, but none related to the issue of whether the $42 million is a debt, public investment, or other. He does note that the ordinance “could be viewed as an attempt by County Council to negotiate a contract” possibly “violating the plain text of the Home Rule Charter”. Why not veto the bill then? If it is a clear violation, then it is the responsibility of the Executive to check the power of Council. Perhaps the illusion that Council is endorsing the recovery of this supposed debt is more important that the Charter.

Now the ball is once again with the Authority. Their solicitor stated that the $42 million “is not a debt. It is clearly set out as an investment”. The ordinance references the Transfer Agreement labeling the bonds as “County Debt”, yet the Airport Authority’s books show no such debt.

As we speculated in previous pieces, since this bill has become law the Airport Authority will almost certainly challenge this in court. Or they will just let the County take its cut of the gaming money for the rest of the debt and interest without rocking any boats.

Council Slow Moving on Take Home Vehicle Policy

noreply@blogger.com (Allegheny Institute) — Tue, 18 Mar 2008 17:52:00 +0000

The City’s Act 47 plan described the existence of non-essential take-home vehicles thusly: “a symbolically negative image to the City workforce and the public counter to the dire nature of the City’s finances and the need for permanent reform”. That’s why the coordinator instructed the City to right-size the fleet and re-examine the policy on take-home vehicles for non-elected officials. There were 83 such vehicles in September of 2003. That number was to be reduced in two steps.

First, 31 vehicles would be eliminated by removing the 24-hour privileges for employees not designated as performing public health or safety functions. Second, a closer look would be taken at the remaining 52 vehicles since it was found that 41 of those traveled less than 8,000 miles per year. Unless their use could be justified, they would be reduced by another 23 vehicles, thus reducing the level of take-home vehicles to 29, a reduction of 54 vehicles or 65 percent.

But instead of 29 vehicles, the number remains close to 58 vehicles according to newspaper reports. That’s higher than the level the first cut was supposed to achieve, and Council is taking up the matter. If a proposed ordinance passes the Mayor and 7 department heads will continue to have 24-hour unrestricted use. Employees driving over 1,200 miles per month aren’t entitled to one, but can be assigned one subject to availability. The legislation spells out further regulations and restrictions, including those on personal vehicles used for City business.

This episode again raises the issue of determining who is in control—the Act 47 coordinator, who wanted the City to “immediately amend” the take-home vehicle policy (that would have been in 2004), or the City, who seems to be getting around to it four years after the directive. It also raises the questions on the City’s contract with Flexcar’s car sharing program, which included a payment of $10,000 “for use by designated users of the City of Pittsburgh” and was touted by the Act 47 team when they stated “automated vehicle sharing can help reduce fleet size, reduce costs, and improve utilization”. Where is the punishment from the foot-dragging and where is the evidence that the City’s support of car-sharing is paying dividends?