City-Oversight Board Showdown

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The City wants it to happen, the oversight board says it is happy for it to happen, and the office who is being asked to make it happen says it will assist any way it can.  So what is happening, exactly?

The Mayor of Pittsburgh is requesting the Auditor General’s office to audit the Intergovernmental Cooperation Authority (oversight board) and possibly move to disband it.

By the language of the statute that created it, the oversight board is required to have its “…books, accounts and records audited annually in accordance with generally accepted auditing standards by an independent auditor who shall be a certified public accountant” so that does not disqualify the AG’s office but it does not specifically mention the office either.  Perhaps if someone is going to swing by Pittsburgh they could drop by the SEA and offer their two cents on who should be looking at their finances as well.

The statute also mentions that the chairs of the House and Senate Appropriations Committees “…shall have the right at any time to examine the books, accounts, and records of the authority”.  It should be noted that a search of the AG’s site and that of a similar oversight board in Philadelphia seems to indicate that the AG has never had a role in auditing that agency.

What Would It Take to Fulfill Group’s Wishes?

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A citizen led group in northeastern Pennsylvania is taking up the banner of complete property tax elimination–not just school property taxes for homeowners, and not just school, county, and municipal property taxes for homeowners–but apparently everything across the board for all classes of property.  As a newspaper piece put it, “The Luzerne County organization CAP Taxes — Citizens Against Property Taxes — wants to see the elimination of all property taxes. Not a reduction, or an adjustment. They want property taxes E-L-I-M-N-A-T-E-D.”

They are pointing out that there would have to be a tax shift–income and sales taxes would have to rise in order to eliminate property taxes.  As we noted in 2014, to eliminate property taxes to fund schools (around $11 billion) the sales tax would have to increase 1 point and the income tax 1.27 points according to one group pushing for complete school tax elimination.  The sales tax would also have to be extended to additional items.  A 2006 study by the Commonwealth estimated that the amount of county, municipal, and school taxes paid by all classes of property (in 2006-07) was $14 billion, and about half of that from homestead property and estimated what was collected via sales and income taxes in order to replace homestead property taxes.

Obviously to wipe out all property taxes would take hikes of a more significant level to income and sales, and probably on a host of other taxes that would apply to non-residential classes of property that pay property taxes to the taxing bodies.

Pop Tax Economics

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There is a new study out on the relatively new “soda” tax (“pop” here in western PA) that has been imposed in Berkeley, CA and descriptive words like “flat”, and “fizzled” are accompanying the initial analysis, such as this one.

The researchers assumed that the demand for pop would be inelastic and that most of the tax would be passed on to consumers, thus raising the price and discouraging consumption.  The ability to cross borders and purchase such drinks in non-taxed areas has some impact, it appears.

So why is this topic being mentioned?  For the fact that Pittsburgh, way back in 2010, had a proposal for a pop tax proposed by the Mayor at the time.    It came right after a variety of other revenue raising ideas, all of which would have had to pass through Harrisburg as local governments can’t create new subjects of taxation without state approval.  We then noted how the idea migrated out west, and Berkeley adopted it but San Francisco did not.

Legislature Should Amend the Law to Allow County to Audit the SEA

Once again the battle between Allegheny County Controller and the City-County owned Sports and Exhibition Authority (SEA) has bubbled to the surface.  She seeks the right to audit the Authority’s performance, particularly the practice of giving out free tickets to venues they own.  They say it isn’t under her jurisdiction.  She hasn’t been deterred and the SEA is asking an Allegheny County judge to stop an audit.

 

More than likely the SEA will succeed.  As we had written earlier this year (Policy Brief Volume 15, Number 4) the law authorizing the SEA (Act 85 of 2000), states that as long as the Authority has a certified public accountant examine its books, accounts, and records annually then they fulfill their public obligation.  If they fail to do so, “then the controller, auditors, or accountant designated by the county or city is hereby authorized and empowered from time to time to examine at the expense of the Authority, the accounts and books of the Authority, including its receipts, disbursements, contracts, leases, sinking funds, investments and any other matters relating to its finances, operations and affairs.  The Attorney General shall have the right to examine the books, accounts, and records of any Authority.”

 

That is correct—the Attorney General has the right to do an audit as specified in the law creating the SEA.  Not the Auditor General, whose office has expertise in such matters.  The Attorney General is currently too embroiled in her own scandal to care about a ticket giveaway program at the SEA.   Furthermore as the State’s top law enforcement officer, she lacks the skills to do such an audit.  This was done deliberately by the authors of the law to limit governmental scrutiny of the SEA.

 

But the remedy is quite easy.  The Legislature can simply pass a one sentence amendment to Act 85 to enable the County Controller the right to audit.  They can change it to give the County controller the right to do the audit.  If the Authority is operating above board, they shouldn’t care who does the audit.  The awarding of tickets to events at SEA venues has the look of buying favors or rewarding past support.  The public has a right to know whether this entity is operating properly.  This is especially true since the public provided a large portion of the funds the SEA used to build its facilities.

State Budget and County School District Talks

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An official from the state teachers’ union commented yesterday on the state budget impasse and the possible connection that might have to contract negotiations in roughly a quarter of the school districts in Allegheny County.  “With the lack of movement at the bargaining table in Harrisburg, there’s a lack of movement at the bargaining table of the local school districts” was the official’s take on the matter.

If there was a budget agreement that included a big boost in education funding it is a likely bet that the official would like to see an increase in pay and benefits for the districts that happen to be negotiating now.  Teacher contracts that were ratified in 2014 and 2015 in Allegheny County resulted in a range of increases of 2% to 4.7% according to articles on individual districts.

The comments from superintendents from some of the negotiating districts seemed mixed on the impact of no state budget agreement.

Of the ten districts listed in the article, all received, at a minimum, 32% of their 2013-14 funding from the state.  On the low end was Baldwin-Whitehall at 32% and Northgate at 33%.  Included in the group is Duquesne, which received 78% of its funding from the state.  South Allegheny and Sto-Rox were both in the 60-69% range.  The biggest district in the County and the second largest in the state, Pittsburgh, received 41% from the state.

 

 

 

 

Looking at the URA’s Saks Sale

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Buy high, sell low.  The Urban Redevelopment Authority of Pittsburgh is selling the vacant Saks Fifth Avenue store and related property for less than what it paid for it because the Authority believes in the potential of the project.  But that does not mean that the sale occurs and the public stands out of the way, far from it.

As department stores disappear and become retail/residential lifestyle centers, there is still a desire to pump public funds into the transformation.  That’s what happened with the heavily subsidized Lazarus store, is happening with the Saks store (not to mention that there was a last minute attempt to cobble together an incentive package for the store to stay put) and it won’t be surprising to see it happen with the Macy’s store.

Saks is partaking of a $4 million Redevelopment Assistance Capital Grant (the original request was $8 million, see here under 2014 awards–ironically, an August 2011 headline titled “Seeking to Keep Saks Downtown, Local Leaders May Seek State Money For Upgrades” could be retitled to “Seeking to Redevelop Saks Site after Retailer Vacates, Local Leaders Still Seek State Money for Upgrades” ) and a URA financed loan that will be repaid with 75% of the parking tax revenue generated at the site.

Borough Gets Mass Transit Back

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The residents of Baldwin Borough are happy, no doubt, since service has been extended by the Port Authority following 2011 route cuts.  In another four weeks the service will be restored.

With Port Authority being the sole provider of mass transit in the County, it took much organizing and lobbying to the Authority for service and with funds from Act 89, the operating costs are estimated to be $562k.  If the estimated 62k rider trips are round trips, then the cost per passenger is about $18.

Of course those without bus service aren’t concerned with that right now, they are just pleased to have service back.  But could there have been a similar move like the one in the North Hills in 2011 that would have brought service back more quickly?  Or did anyone on the PAT board look at the PENNDOT study from five months ago and ponder what a contracted out operation would look like compared to an in-house one?

We Second the Need for Minutes

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A new audit by the Auditor General’s office focuses on the topic of open meetings, sunshine, and good record keeping.  During an audit of the Borough of Steelton (Dauphin County) pension plans, it was found that the borough’s government failed to maintain meeting minutes for close to two years.

The Allegheny Institute testified on proposed changes to the sunshine law and making agendas clear and available at public meetings last year.

The AG’s news release on the subject tried to make a connection between the failure to maintain good records in Steelton with the problems that plague Scranton and its pension woes.  However, at this point, the pensions in Steelton are in much stronger funding shape than Scranton’s.

What to Make of Remedial Education Data?

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A recent article and op-ed piece covered the issue of students from Allegheny County’s school districts that enroll in the Community College of Allegheny County that need remedial education classes.  We have written about remedial education previously (see here, here, and here) with the last piece addressing the growing need for remedial education at CCAC.

The percentages (in terms of the number of students from a particular school district attending CCAC) range from 100% for students that graduated from one of five districts to 53% for those that graduated from one district.  The average for the County was 78%.  Note that the article and op-ed are solely concerned with remedial education at the County’s community college, not any that might be taking place at other colleges or universities attended by students from the County.

Note too that the average per-pupil expenditure for instruction expense only in Allegheny County was $9,094 in 2012-13.  Sixteen districts spent above that amount and twelve of those reported 70% or more of their students needed to take remedial classes.  What is their explanation for why students enrolling in the County’s community college need to take remedial classes despite the above average instructional expense?

 

 

A Look at Indiana County’s Reassessment

Although not part of the Pittsburgh metro area Indiana County is adjacent to it and its decision to reassess all real property for the first time since the Packers beat the Raiders in Super Bowl II has not surprisingly led to sticker shock and confusion about what a boost in real estate value means for real estate taxes (see this article).

Data from the state’s Tax Equalization Division (formerly the State Tax Equalization Board) shows that for the County (not including portions of school districts that cross county lines) there is about $3.1 billion in market value that is assessed at $544 million, on average a 17% of assessed to market value.

A sample reassessment notice and estimated tax impact helps taxpayers to understand the change from the reassessment on their property.   The property in this example (if we ignore the clean and green provisions) would see a significant jump in assessed value (six times the current 1968 base value) and thus a big increase in real estate taxes–not the six times of the property, but a near doubling which means the property might have well been underassessed and would be increasing relative to the change in the County.