Park and Ride Logic Could Have Come in Handy Last Month

parking

When reading news of a proposal that the Port Authority (PAT) could possibly decide to begin charging for parking at its park and ride lots, the trail of how such an idea came about is fairly easy to follow.

Step 1: PAT contracts with the Urban Land Institute in 2014 to produce a study that, while it erred on estimating the potential revenue from a multi-county sales tax, the potential savings from riding transit vs driving, and proposing a head-scratching “parking surcharge” on all parking facilities (including garages Downtown owned by a separate City authority), raises the idea of a $2 charge to use a space at a PAT park and ride lot.

Step 2: The possibility of a park and ride charge is raised, and it is half of the ULI proposed amount.

Step 3: Discussion ensues

The County Executive, who appoints 6 of the board’s 11 members, stated that PAT needs to explore all revenue streams.  Why give away free parking when people will pay?  Not a bad argument–one that could have been used last month when the PAT board decided to take a sponsorship agreement to maintain free rides on the North Shore Connector.

Did the County Executive compare the possibility of a $1 trip charge per ride on the Connector vs the amount that would be brought in annually from the sponsorship and decide what was more justifiable in light of the operating costs of the Connector?  Did the PAT board or administration?  As we pointed out in a recent Brief, based on PAT’s free ride statistics $1 per ride on the Connector would have tripled the income the agency is getting from the five year agreement.

Athletes Sweating Over Taxes

taxes

In case you procrastinated on finishing up Federal, state, and local income taxes and are probably starting to prepare for the payment of municipal and school property taxes, you might be happy to know that you are joined by pro athletes who have to file in multiple states and even have to comply with local taxes that may fall on them for using publicly-funded facilities.  An article today highlighted some of these local “jock taxes” and even mentioned Pittsburgh’s “facility usage fee” and quoted a Pittsburgh baseball player who also weighed in on the topic two years ago in a local article.

Pittsburgh’s fee falls on “…each non-resident of Pittsburgh who uses a publicly-funded facility to engage in an athletic events or otherwise render a performance for which a non-resident of Pittsburgh earns compensation. The Facility Usage Fee is a percentage of the individual’s income attributable to such individual’s usage of the facility.”  According to the 2015 budget the tax is expected to raise $4.6 million in 2015, about 0.9% of total budgeted revenue.  A 2014 article on a suit filed against Cleveland’s “jock tax” mentioned that city, Pittsburgh, and six others that have a local tax on stadium usage.  Pittsburgh’s facility usage fee was authorized by Act 222 of 2004–the law that also boosted the occupational privilege tax and created the payroll preparation tax for Pittsburgh only.

Spiking Pensions Still Persists

piggy bank

A newspaper article today covered the subject of pension spiking by the City of Pittsburgh’s firefighters union.  Spiking is the practice by which employees can work as much overtime as allowable to boost their final average salary which is then taken as a component of determining the employee’s pension.

The article pointed out that the 2014 Act 47 plan for the City called for an end to pension spiking, as did the Mayor in a letter calling for pension reforms, but that the new bargaining agreement between the City and the union did nothing.  The union president pointed to statutory law instead of bargaining, which means that the provision would have to come from a change to the second class city code.

So how many times has the Legislature been informed of the problem?  It was part of testimony delivered in 2008 by the former Mayor, and not only was it in the 2014 Act 47 plan but it was also in the 2009 recovery plan, with both plans noting “of the nine unions in Pittsburgh, only the firefighters have overtime included in final salary for purposes of pension benefit calculations”.  In the 2009 plan the City was told to eliminate it, in 2014 the City was told to “seek to eliminate it”.

Note that the General Assembly recently amended the second class county code (Allegheny County) to change the determination of final average salary and to limit the amount of overtime for new hires of the County.

School Rankings and Absenteeism

blackboard

Nearly a year ago we wrote a Brief on the overall problem of school absenteeism (whether that is chronic absenteeism or habitual truancy) and noted “not much good, and a great deal that is not good, comes from this educational malady”.

So with the most recent list that ranks 105 public school districts in western PA (according to a three year measurement of performance on standardized tests) we thought it would be interesting to obtain average attendance for districts at the top of the ranking and for those at the bottom.  We omitted a few either due to average attendance not being reported or for a few districts that don’t have a stand-alone high school that covered grades 9-12 only.  We used the state Department of Education’s school performance profile data for attendance.

What did we find?  For districts at the top of the list, average high school attendance was 94% or greater.  That means missing an average of 9 to 10 days out of a 180 day school year.  At the bottom of the list?  Average attendance of around 89 to 88%, which implies missing 20 to 21 days of school.  In the Wilkinsburg District, average attendance was 82%, which translates into 147 days of school out of 180 days.

Mapping Exempt Property

county map

A recent newspaper article used data we compiled from the County’s certified assessment rolls on taxable and exempt property to create a map of Allegheny County’s municipalities and the dollar value and percentage of tax-exempt property within those municipal borders.

The article surveyed the opinions of various municipal officials on hosting exempt property, whether that property is government owned, hospital or health care related, or of other types.

Quaker Valley Changes Appeal Standard

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We’ve written a bit about appeals led by governing bodies recently (here, here, and here) and noted that if the state is not going to be willing to mandate a regular cycle of reassessment for counties to follow then what is left is taxing bodies establishing standards to appeal values they feel are too low.  Said another way by a member of the Quaker Valley school board “It falls to school districts to maintain equitability through the appeals process more or less by default”.

Quaker Valley just changed how it will appeal properties they feel are out of whack with assessments: by looking at sales prices, they previously would take the price and the assessment and if there was a resulting loss of $1,000 in tax revenue, the value would be appealed.  Now the resulting loss would have to be $1,500, which will result in 21 homes that would have been appealed not going through the process.  Good news for them, not so much for the ones that did not make the cut.

At current district millage rate (17.1548 mills) a home that sold at $350,000 would produce $6,004 in school taxes if assessed at sale price.  Under the old standard of a $1,000 difference, that home would have to be assessed at $291,000 or less to be appealed.  Now under the standard of a $1,500 difference, the home would have to be assessed at $262,000 or less to be reviewed.  That changes the assessed/sale ratio from 83% to 74%, but how you view the change would likely depend on if you bought the house and the assessment was $265,000 or $259,000.

The $265,000 assessment would produce $4,546 at the current millage rate: compared to what the house would produce if assessed at its sale price ($6,004), the difference would be $1,457–under the $1,500 standard and not appealed.  The $259,000 would produce $4,443, or $1,560 less than the assessment at sale price, and would likely receive an appeal notice and possibly could see taxes hiked.

 

How Much Revenue is Lost Due to Charitable Property?

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If you read a recent opinion piece, and one not long before that, you might think it is $1.5 billion.  That comes from the December 2014 report by the state Auditor General’s office in which the office collected data on ten counties in the state, including Allegheny County and Beaver County in southwestern PA.

The most recent opinion piece stated that “[the Auditor General’s report]…made it clear this past December when he reported that PA taxpayers lose $1.5 billion each year in property taxes because of tax exemptions to a few large non-profits in just ten counties”.  Before that a column noted that the analysis “… $1.5 billion in property taxes was not paid in these counties by organizations with charitable status”.

The only problem is that the report never said that the tax revenue “lost” due to tax-exempt charitable organizations or non-profits was $1.5 billion.  In table 2 of the report, titled “Tax Exempt Properties, 2014″ it notes ” Table 2 looks at…government owned properties, K-12 schools, churches, charitable organizations, hospitals, and higher education institutions.”  That means when the millage rates from the counties, municipalities, and school districts in the ten counties sampled by the report is applied to the total value of exempt property a dollar value is obtained, and that is called “total potential property tax liability” in the table, and, when totaled for the ten counties, a figure of $1.5 billion is obtained.

In fact, the only specific category of exempt property the report shows is in Table 3 “Medical Facilities with Purely Public Charity Status, 2014″ that the “total property tax liability” in the ten counties was $177 million–if indeed the medical facilities were all deemed to become taxable.  Not a small amount, but only a fraction of the $1.5 billion in the piece.  That means the remaining $1.3 billion has to be accounted for by other classes of property.  Without the other categories separated out we cannot compare the liability to state owned universities, community colleges, authority-owned property, etc.

In Allegheny County–one of the counties in the sample–total tax exempt property was valued at $24 billion in 2014, while medical facilities with public charity status totaled $3.1 billion.  When the County’s real estate millage of 4.69 is applied to these assessments, the County would reap either $116 million or $15 million.  If the County had its choice between the two it would probably choose the former, but that would require alot of other types of exempt property to become taxable.

 

Pittsburgh is a Two Party Town

pgh boosters

A local paper editorialized that there needs to be more Republicans on City ballots. This in a city that is overwhelmingly Democrat and has not elected a Republican to city council or mayor since the 1930s. That would seem to indicate that it is probably a waste of time to run as a Republican or even as an independent. The demographic mix of unionism, academics, and other pro democrat interest groups leads to a heavy majority of Democrat voters.
Over the past 60 years, the exodus of people from the city has almost certainly made the situation worse in terms of having a viable Republican candidate. The situation in surrounding counties is much different, especially in Butler and Westmoreland counties. Indeed, Republicans do well in many Pennsylvania counties that do not have a large core city.
Nonetheless, Pittsburgh can be described as having two parties. There are the Democrats currently in power in terms of controlling government, and the Democrats who want to take that power.
Look at the awful job they have done with schools and the city’s finances. But the voters seem to be happy. Possibly because the state provides almost half the funding for Pittsburgh public schools ($9,000 per student) even though the Pennsylvania Education Department’s aid ratios say it should receive $4,000 to $5,000 per student. Without all the fabulous educational, medical, cultural amenities in the City that are largely the result of enormous philanthropic generosity of people who built fortunes capable of funding the amenities, the City would not have been able to retain the businesses or jobs that it has been able to do.
How completely ironic that a city that has benefited so much from capitalism’s wealth production capability, has so little respect for capitalism and free markets.

County Population Change in PA, 2010-14

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News articles yesterday wrote about the year-over-year and five year changes in Allegheny County’s and the metro area’s population and noted not much has changed metro-wide and that the County saw a decline in population for the first time since 2010.  This is a reversal of the previous year-over-year changes since the 2010 Census where County population increased 0.30%, 0.24%, and 0.21% from 2010 to 11, 2011 to 12, and 2012 to 13, respectively, but quite a difference from population changes in the County from 2000 to 2006. 

Of Pennsylvania’s 67 counties (we will count Philadelphia as a county here) Allegheny County grew 0.61% from 2010 to 2014, which ranks it 19th in population change.  It was one of 25 counties to report a higher population in 2014 than it had in 2010.  The increase in Allegheny County is sandwiched between Delaware County (0.70%) and Tioga County (0.59%).  The net 7,458 population increase in Allegheny County, in numerical terms, is roughly the same as Cumberland County (7,809) and Lehigh County (7,651).

Compared to the “large population counties”, by this measure looking at the seven counties (including Allegheny) had a 2014 population of 500,000 or more (Chester County entered the group in 2011) all increased in population and Allegheny was 6th out of 7 (Bucks County increased 0.22%).  Both Lancaster and Chester Counties grew by more than 2.5% from 2010-14.

Big Cities, Big Pension Problems

In 2009 we wrote a full length report on the condition of pensions in the state’s ten largest cities.  At the end of that year the state passed Act 44 which dealt with municipal pensions.  As evidenced by yesterday’s blog there is still alot of work to be done and there is an effort to make sure that municipal pensions are not forgotten in the search for solutions to the statewide pension problem.

A recent article looked at big city pensions by presenting data on active workers, retired workers receiving pensions, and the funded ratio (assets/liabilities) for the same ten big cities.  The article noted that nine of the state’s ten largest cities have more pensioners than active workers (only Lancaster had a ratio of less than one).

So how do things compare from our 2009 report (which reported 2007 PERC data) to the recent article (which uses 2013 PERC data)?

  • In 2007, four cities had a ratio of greater than 1 on active to retired workers, now nice cities do.
  • In 2007, three cities had a funding ratio of 60% or less.  In 2013 four cities did (Allentown at 60%, joining Philadelphia, Pittsburgh, and Scranton)
  • Only Pittsburgh had a decrease in its active-retired worker ratio, falling from 1.37 to 1.28.  It had essentially the same number of active workers but the number of retired workers fell by 6%.
  • Four cities (Reading, Bethlehem, Scranton, and Harrisburg) had a double digit drop in the number of active workers from 2007 to 2013.  Four cities (Reading, Bethlehem, Lancaster, and Allentown) had a double digit hike in the number of retired workers over those years.
  • Only Pittsburgh saw its funding ratio increase (16%) and the ten cities are divide in half with five cities having a funded ratio 70% or greater and five cities 69% or below.