The City of Pittsburgh’s 2015 Comprehensive Annual Financial Report was released today. Its 195 pages are available for perusal here and it is chock full of details on City finances as is the case every year.
One item worth attention comes from the quote from the City Controller upon the report’s release. “In 2015, Pittsburgh saw a minimal decrease in the collection of the Local Services Tax. Local Services tax collections have remained stagnant over the past several years pointing to little or no job growth in the city.”
Since the LST is a flat rate tax paid where one works, dividing collections in total by the flat dollar amount has typically served as a way to approximate the number of jobs in the municipality collecting the tax. As we noted in a 2009 Brief “Using City local services tax data (the $52 emergency services tax formerly known as the occupational privilege tax) a reasonable approximation of how many people work in Pittsburgh can be obtained. In 2000, 324,400 workers paid the tax while the most recent data for 2007 shows a decline to 315,130.”
There was a significant dip in 2008, but that is also when the collection method changed along with the name of the tax due to confusion. If we look at the last six years (2010-15) from audited data in the CAFR based on people subject to the LST in Pittsburgh (residents and non-residents working in the City), we see the following job counts:
2015 was down from 2014, and below the high point of the time frame (2012). The low point was 2011 with 252,000 jobs as measured by the LST.
A tentative contract extension for Pittsburgh Public Schools and its teachers’ union has been reached. The contract would run through June 30, 2017, and still requires votes by the union membership and the school board.
As reported in news media, it is not yet clear if the extension keeps in place the pay for performance provisions that were part of the agreement reached in 2010 and expired in 2015. Here are some of the things we wrote on pay for performance over the life of the contract (here, here, here, and here for instance).
It is worth noting that when pay for performance was instituted in the 2010 contract the district administration noted that because of collective bargaining they were putting the decision on pay for performance in the hands of the teachers’ union (the Effective Teachers Plan noted “…while PPS and PFT leadership support the initiatives related to collective bargaining measures here, the PFT membership will be the final voice on these initiatives”). It is not clear where the district or the union stand on the issue at this point, at least publicly.
Three years ago this April the Supreme Court of Pennsylvania declined to hear an appeal from Commonwealth Court to effectively stop the planned reassessment in Washington County. This month the taxpayers of the County received the preliminary notice of value for the reassessment which is to go into effect January 1, 2017. A copy of the notice can be viewed here. Washington County Prelim Notice
As far as providing the best information available to property owners, how does the notice stack up to the suggestions we put forth in a 2015 Policy Brief? In that Brief we suggested:
At a minimum any notice of a reassessed value going out to a property owner should include in addition to the new value: (1) the percentage change in their property’s value from the pre-reassessment value, (2) the percentage changes in the total assessed values for the school district, the municipality and the county, (3) an explanation of how much millage rates must drop in each of those taxing districts to conform to state law and (4) an estimate of the three new tax bills for the property receiving the notice. At the very least property owners should receive enough information to be able to determine whether taxes will go up or down and if up, by how much.
At most we could say that (3) is touched upon as the notice does point out “tax rates (millages) will be reduced by all taxing authorities as a result of this reassessment”. But there is no estimate of rates for the County, municipalities, or school districts. There is no percentage change from the old 1981 value, no estimate of what is going on with the values in taxing districts, or an estimate of new tax bills. Maybe this will be coming in a future notice, possibly when the formal change of value notice goes out in July. They certainly could have included data based on the outlook that is on the County’s website on how a reassessment would affect a property owner’s taxes.
Yesterday’s Brief focused on the requirements in Act 11, Section 207 that calls on the ICA (oversight board) to complete an annual report and have an independent audit completed and, together, submit them to the majority and minority chairs of the Appropriations Committees in both chambers of the General Assembly. In addition, there is to be a financial statement published in the PA Bulletin. These requirements were severely lacking.
Based on the search warrant that appeared in published newspaper reports yesterday, it appears that the City’s attorney in the ICA litigation was also asked to inquire into the status of the reports as far as whether they were published in the PA Bulletin. Their inquiry found no record of the concise statements.
In October of last year we noted that the North Hills suburb Ross Township made a change for new, non-union hires by placing them into a defined contribution plan. At the time it was mentioned that the Township had plans to do the same for new hires for public works. That change occurred recently, and new hires from March 7th forward will be under a 401k type plan.
In the most recent PERC report Ross Township reported two pension plans, both defined benefit plans, one for police and one for non-uniformed workers. Both have very strong funded ratios but obviously the municipality wants to be proactive in how it handles pension plans for future hires. Both plans have roughly the same number of active and retired employees, but the police plan is twice as large in terms of assets and liabilities. Barring a change in state law the Township would be restricted in placing its police employees into a 401k type plan per the requirements of Act 600. Normal retirement under that plan is age 50 and 25 years of service.
Deciding how to distribute the $5 billion in basic education funding that the state provides to its 500 school districts was the subject of a nearly year-long inquiry by the Basic Education Funding Commission, which issued its recommendations last June. We wrote about the Commission’s work on some key topics (here and here) and how the formula would affect the 43 school districts in Allegheny County (here).
The Governor and the General Assembly are now at differing perspectives on using the Commission formula under the fiscal code. Using the Governor’s proposal, $476 million in basic education funding would be divided among the 43 districts. Using the Basic Education Commission’s formula, $471.9 million would be divided, a difference of $4.2 million for 2015-16. Members of the Governor’s party in both chambers of the Legislature joined in passage of the fiscal code that utilizes the Commission formula for distributing the money. This document from the House Appropriations Committee shows how districts compare under the Commission formula and the Governor’s formula.
If the Governor’s formula were used, six districts–Pittsburgh, Wilkinsburg, Woodland Hills, Penn Hills, McKeesport, and Steel Valley–would receive more money than they would if the formula from the Basic Education Commission were used. Utilize the Commission formula, and 37 districts in the County receive more.
On a per-pupil basis, using 2013-14 enrollment data, Duquesne and West Mifflin would receive $100 or more under the Commission formula. Wilkinsburg would take a big decrease under the Commission formula (a drop of $2,631 per-pupil) but that makes some sense due to the closure of the Wilkinsburg middle and high school and the transfer of students to Pittsburgh Public Schools (the Commission amount would be $5,972 per-pupil).
Three months after the Allegheny County municipality of Clairton was removed from Act 47 distressed status, a borough in Schuylkill County has been declared distressed. Mahanoy City was declared distressed in mid-February upon meeting two of the statute’s conditions of distress. The borough missed a payroll and a minimum payment on its pension obligations.
Based on changes to Act 47 made in 2014, there is a time limit on how long municipalities can be under Act 47 status, so with the five year time frame (barring an extension granted to the municipality) Mahanoy City would have to exit by 2021.
Yesterday’s Brief examined 2015 assessment appeals and spent some time talking about the two primary municipal appellants of assessments–Pittsburgh and Mt. Lebanon–and how both have altered their guidelines for how they will appeal. Last year, Mt. Lebanon (the municipality, not the school district) changed from one where the following had to occur:
1. Property had to sell for $100,000 or more, and
2. The sales price had to exceed assessed value by $58,000 or more, and
3. Assessed to sales ratio must be 85% or less
to this standard, as noted in a 2015 news article: “properties with a difference of $100,000 or more between the Federal Housing Administration comparable and its assessed value”.
In 2014, Mt. Lebanon filed 287 appeals. Last year, 26 were filed. Half of those appeals were for homes sold in the years 2000, 2001, 2002, 2003, and 2004. The new standard did include 5 “newcomers” (five appeals were for homes sold in 2014) but 3 sales prior to 1993 were brought for appeal. The pre-appeal value in aggregate of the municipal appeals was $6 million (average property value of $230k) and, after appeals, rose to $10 million.
Yesterday’s blog discussed the work of the once-a-decade Government Review Commission for Allegheny County government. The Commission makes recommendations on increasing Council and Executive pay. Currently, the 15 members of Council do not receive a salary, and receive a per-meeting stipend that does not exceed $9,000 per member. The Executive’s salary is $90,000.
The Commission recommended that Council receive a salary, that the reimbursement of expenses (up to $3,000 per year) be eliminated and rolled into the salary, eliminate the 5% per five year cap on increase, and set the Council salary at 10% of the Executive. For the latter, salary could be increased from the $90,000 amount by setting the salary as a percentage of either the Governor’s, the District Attorney’s, or by applying the to-date changes in the consumer price index to the salary. The language regarding the increase in the Executive’s salary based on the increases in County collective bargaining agreements is also recommended to be eliminated.
Here’s a novel addition to compensation increases following any adjustment that may occur to Council and/or Executive pay. If any of the 16 elected officials is able to propose and demonstrate real and measurable savings via efficiencies, consolidation, outsourcing, better management practices, etc. that actually gets implemented, the official should be entitled to a performance bonus of a certain percentage of the demonstrated savings. If multiple officials sign on to a proposal, they would share in the bonus proportionately.
We suggested a performance bonus for City of Pittsburgh employees in 2013 when we made recommendations for the current Mayor, and of course County employees could have the same type of program, and it could be part of the pay structure for the County’s top officials.
The County’s Government Review Commission delivered its final report last week on its recommendations for improving Allegheny County Government. The next time a Commission will be appointed will be in a decade.
Proposed changes (read the final report here) include some charter referenda, some administrative code changes, different pay levels for Council and the Executive, elimination of the resign to run provision for Council (tried before, and exists for Philadelphia City Council and voters rejected it the last time they were asked on the ballot). The biggest proposal is likely contained in item C-8, which would nudge toward a merger/consolidation of the County Sheriff’s office and the County Police Department, but even that recommendation just calls for a task force to study the issue.
Based on the most recent CAFR, the Sheriff’s office has 200.5 FTE (full time equivalent employees) and the County police department has 262. The 2014 sunset review, which does not cover row offices (such as the Sheriff’s office) but did evaluate the County police department and its role in public safety. In 2007 the County did propose a ballot referendum making the Sheriff an appointed position and merging the County police under that position, but because state law mandates a five year waiting period between referenda to change government structure and the row office ballot question took place two years earlier, the question never appeared on the ballot and has not since.
So the Commission recommends a task force to determine if there should be a merger and whether the head of that merged department would be appointed or elected.