Yesterday’s blog focused on the ICA, an authority created under special legislation for cities of the second class in Pennsylvania (Pittsburgh is the only one). According to the most recent available fact sheet on authorities in Pennsylvania, there were close to 2,400 authorities, but 859 of these were inactive. It is not clear how the numbers have changed since then, but the most recent DCED edition of its report on authorities states “Today, it is estimated that Pennsylvania has more than 1,500 active authorities”. Based on a quick count of pension plans in Allegheny County and the data that formed our 2015 report there are close to 50 authorities in the County.
Locally one municipality is thinking that it might be able to do away with a related sewer authority due to a long-term lease, while another thinks that it may need to create one to handle parking.
…Or, if those charged with appointing members don’t appoint them, how can you stop them? (apologies to the late Mr. Berra)
With the resignation of a board member, as well as no appointments by two of the officials who have appointments, the oversight board does not have a quorum in order to conduct business. Act 11 of 2004, section 28202 d states that “a majority of the board shall constitute a quorum for the purpose of conducting the business of the board…” and two of five does not a majority make.
While the recently resigned member’s appointing official indicates there will be a replacement quickly, the other two vacancies have gone on much longer. Section 20202 b states “whenever a vacancy occurs among the appointed members of the board, whether prior to or on the expiration of a term, the appointing authority who originally appointed the board member whose seat has become vacant shall appoint a successor member within 30 days of the vacancy”.
So how does this get resolved? Does the ICA sue the appointing officials to compel them to make appointments? What if a third member gets appointed but can’t make board meetings in the next two months as the City’s budget and five year forecast are to be deliberated? Section 28209 g says that if the authority does not take any action on the financial plan within 30 days it is deemed approved, unless there is a written request by two members of the board for a meeting and a vote and neither take place, then the financial plan is disapproved.
It ain’t over til, well…
There is a new study out that chronicles some of the obstacles to pension reform and lists what states have done in the period 2010-13 for various aspects of reform. These include increases to employee contribution rates, decreases to COLAs, reduction to multipliers, increases in retirement age, prohibiting spiking, and switching to defined contribution plans. Interestingly Pennsylvania is listed as having made no changes on any of these aspects, even though a 2010 law did make some changes for new hires in the two statewide systems.
As one can see from this week’s taxpayer Q and A and from media coverage this week, Allegheny County will take up the matter of adding a $5 fee on top of the price of the state’s vehicle registration to fund transportation projects within the County. The state’s Act 89 legislation gave all counties in the state the option to enact the fee. It is a “do it or don’t do it option” as the county auto fee is either $0 or $5–there is no option to place a $2.50 fee, for instance.
PENNDOT is dutifully tracking the counties that have enacted the fee, but to date there has not been a lot of counties that have adopted it. Blair County and Cumberland County have released estimates of what they expect the fee to generate, as has Allegheny County, though the latter obviously has not enacted it yet.
While there is a dust-up between the City and the oversight board over money that comes via the “host fee” the Rivers Casino provides to the City (but by law is intercepted by the oversight board and to be directed toward specific uses-see page 9 of our 2013 report) moneys from casinos across the state for economic development purposes are continuing to come into Allegheny County for the airport, convention center, hockey arena, and retirement of old debts.
At then end of 2015 a total of $344 million had been distributed to the various parties in the County as authorized by the gaming law, and that represents about 53% of the total amount authorized.
As part of the City’s budget process under state oversight it has to prepare its annual operating budget and capital budget along with a five year forecast of operating revenues and expenditures. This year’s forecast takes the City through the end of this decade to 2020.
Two critical events that the City has known about and we have written about for some time now are within sight of the coming five year period. In 2018, the City’s infusion of value plan for its pension funding continues and ramps up as the $13 million it is currently dedicating from parking tax revenue doubles to $26 million. Parking tax revenue is projected to grow about $1 million annually and would be at $56 million in 2018 based on the current forecast. At this point there is supposed to be one more rate hike by the Parking Authority in 2017. The expenditure category of “pension and OPEB” is forecast to increase $22 million from 2017 to 2018.
Second is the “debt cliff” where the City’s debt service payment falls in 2017 to 2018 from $74.4 million to $45.3 million and debt service as a percentage of expenditures is to fall from 13% to 9%. While debt service in 2020 is projected to be $41.6 million less than in 2015, pension and OPEB and health benefits are expected to rise $45 million.
When the Allegheny County Airport Authority hired its new CEO back in January of this year, they did so with the goal of improving flights and service from Pittsburgh International Airport. And they paid handsomely for this hire. In a newspaper interview, she stated that “she hopes to attract more West Coast destinations, more international and regional flights…”
Since then some direct flights to vacation destinations were added on discount airlines on a seasonal basis. Flights to Toronto have begun as well as a business-orientated carrier which started offering specialty flights amid small jets to Indianapolis and Milwaukee with the promise of adding more destinations as demand is warranted. These flights are based on traveler demand and represent a small fraction of PIT’s origination and destination traffic.
But the focus from the new CEO has been on international flights. They have focused on the Middle East (Qatar) and this week, she is in South Africa attending the World Routes conference to pitch other international destinations from PIT. However, while on this junket, Delta Airlines has pulled the plug on domestic flights to Cincinnati, while other direct flights via an American Airlines’ regional carrier to St. Louis, and Hartford have also recently been scuttled. The Cincinnati flight was offered six days a week and according to reports averaged less than 25 passengers per flight. While a spokesperson blamed this loss on a pilot shortage, the numbers are more indicative of a lack of demand.
As we have said in past research, until the local business economy begins to strengthen which should subsequently increase the demand for travel, the problems at PIT will continue. PIT should not be chasing flights, international or domestic. If the passenger demand is there, these flights will be chasing PIT.
Based on the recommendation of its recovery coordinator, the City of Clairton might be leaving Act 47 status behind. Consider that since the City was declared distressed on January 19th, 1988, twenty four other municipalities have entered Act 47, and seven have since been released from distressed status.
“The factors that led to the determination of distress in 1988 have been alleviated“, according to the rescission report. Note that is also what the coordinators for Pittsburgh said in November of 2012 but the Department of Community and Economic Development opted to keep the City in Act 47, so we will have to see what the Department rules in regards to Clairton. It should be noted that not long after Clairton’s Act 47 designation voters approved a switch to home rule that altered its form of government. It still has a higher earned income tax on residents by virtue of its charter, but the higher earned income taxes on residents and non-residents as permitted under Act 47 have been gone for some time.
A group of business owners has filed a legal challenge to Pittsburgh’s recently rammed through “sick leave ordinance.”
We warned this would happen in a Policy Brief issued August 6. The ordinance is in clear violation of state law and the City has already lost a similar case in court in 2006. Even though they were warned about the illegality of the bill, the Council and Mayor insisted on passing the bill. The usual political rhetoric about how the City is trying to be on the right side of history rings hollow. Putting people out of work or forcing some businesses to close their doors is hardly on the right side of history. Pointing to Europe as an example of mandated sick leave policies is ironic considering the awful economies and high unemployment in much of the continent.
Eliminating entry level jobs is one of the greatest disservices the City could do to young people looking to get experience and make their own way. Of course, as long as the Federal taxpayers and government borrowing keep the welfare programs coming, the damage to the City is not as visible as high unemployment would cause it to look. But that is only temporary; the long term damage to the economy is unavoidable.
Making the City more friendly toward business owners and entrepreneurs should be the policy.
A month ago in a Policy Brief we wrote the following in regards to a possible Wilkinsburg-Pittsburgh Public Schools agreement to send Wilkinsburg’s 7-12th graders to the Pittsburgh Public School District:
Now Wilkinsburg is talking to Pittsburgh about some arrangement whereby middle and high school students can attend Pittsburgh schools. Setting aside cultural and possibly territorial issues that might arise, which schools would these students attend? The best Pittsburgh schools are the magnet schools, and they are full. It is unlikely Pittsburgh school officials would put Wilkinsburg students ahead of Pittsburgh students waiting to get into those schools. That would be a political nightmare for the District. And what would be the point of transporting students several miles to attend Westinghouse Academy or Milliones for example. The academic performance at those schools is almost as bad as Wilkinsburg—and this despite district spending of over $22,000 per pupil. If Pittsburgh officials decide to place Wilkinsburg students in better performing non-magnet schools, the question immediately arises: If the district can put transported Wilkinsburg students in the better Pittsburgh schools, why can’t Pittsburgh students, stuck in bad situations, be shifted to a better school?
Based on an article today, in which the PA Department of Education is quoted and indicated its support for the plan, Wilkinsburg’s students will be primarily sent to Westinghouse and will have the opportunity to attend a high school magnet program, but only after Pittsburgh students have been placed. An article earlier this week cited proximity, space, and the fact that, although a low performer, the school will offer more than is being offered to Wilkinsburg students currently.
Unlike the current arrangement with the Duquesne School District, where students from grades 7-12 attend either East Allegheny or West Mifflin school districts by formula and there is no magnet component or even multiple high schools within those districts from which to choose.