Will Assessment Proposals Get Any Love?

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Two experts from Pittsburgh had their thoughts on reforming property assessments published in a newspaper across the state.  The piece is not focused on tax shifts or eliminating school property taxes, but rather how assessments are conducted in Pennsylvania and how they can be changed.  As our 2007 report pointed out, based on data collected by the International Association of Assessing Officers, Pennsylvania was the only state in the country where the state did not assess property (leaving it to local government), did not specify a reassessment cycle, did not verify sales data, and did not perform any audits on values.

Since 2007 eleven counties have carried out reassessments–Allegheny County as a result of a 2009 Supreme Court decision, and Washington County is undergoing one now likewise as a result of a lawsuit.  As we pointed out in 2007 and years since there must be a cycle for reassessing; this is pointed out by the op-ed as well.  Also since 2007 the state Tax Equalization Board has been moved within the Department of Community and Economic Development (and is now titled the Tax Equalization Division).  The experts recommend moving STEB into the Department of Revenue (we recommended in the 07 report that Revenue or STEB or a new agency be in charge of overseeing assessments).  When the state moved STEB into DCED it charged it with specific duties (described here).  What did not occur in the folding in process was stipulating a cycle or coming up with a statistical trigger to inform counties when a reassessment is needed.  With 22 states requiring annual assessments and 26 requiring periodic assessments Pennsylvania is woefully out of step.

The experts do suggest an additional $5 fee tacked on to all properties which would then go to Harrisburg but come back when the county is ready to reassess in accordance with national standards.  That might help with the financial side, but what if a county simply does not want to reassess and is content with letting the money sit in Harrisburg while arguing to its residents that it should not have to go forward with the process?

Free Rides at Any Cost

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Three years ago when the Port Authority announced agreements with four sponsors to underwrite rides on the North Shore Connector and make it part of the free fare zone we stated “the strategy is to get people accustomed to using the service and at some point begin to charge passengers or renegotiate the amounts being paid by the parties now providing the $360,000″.  Given news coverage in the last couple of days the focus is squarely on the latter, whether or not that includes current parties or different ones.

We wrote a considerable amount on the Connector, and as well as on the decision to accept sponsorship in lieu of passenger fares (here, here, and here, where we included an Authority estimate of total free fare zone ridership) and the problems with that approach.  Has the reformed PAT board (which was not in place in 2012 when the original arrangement was made) probed for the true cost of operating the system past Gateway Center and back?

Charters in the City


More on yesterday’s blog about the Mayor’s Education Task Force, and in particular, the position charters schools hold.  The Task Force wants to emphasize them, but how many are there?

According to the PA Department of Education’s data on charter schools, as of year end 2014 there were ten charter schools located in the Pittsburgh Public School District authorized by the District itself.  The District’s financials list 26 charter schools that are attended by pupils from the PPS including cyber charters, which likely means students might be attending charters outside of the PPS borders.  Based on the 10 total from the state’s data, and with a combined 50 PPS schools (34 elementary, 7 junior/middle, and 9 senior according to the District’s books) there is 1 charter for every 5 PPS school.  Those 10 represent less than 1 percent of all the charters in the state (84 have been authorized by the Philadelphia District).

Perhaps the Task Force report can move charters into the critical part of the mix for parents–after all, two years ago we noted how the PPS wanted to improve relations with the charters, one that was described as “very adversarial” almost like the relation between the City and the PPS when the idea of the City trying to have a say on school closings began.

Pittsburgh Education Task Force Releases Report

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Can collaboration arise from an idea that was in its infancy met with hostility and disputes over “turf”?  We will find out in the days, weeks, months, and years to come as the Mayor of Pittsburgh’s task force report on collaboration with the Pittsburgh Public Schools was made public today (it has a publication date of February 10th).  No word yet on how the tiny borough of Mt. Oliver has reacted to the report, being that it too is part of the Pittsburgh Public School District but is not mentioned as being an ingredient in the mix of getting municipal and school district folks to work together.

Recall that in 2013 the City Council asked for a moratorium on school closures, and the district superintendent and a member of the school board reacted strongly with the latter feeling that the Council was overstepping its bounds and disrespecting the school board.  

The current Mayor (who was on Council in 2013) appointed a task force in February of last year  and the focus moved from school closings to better City-District collaboration but last fall the feeling was that there was a lack of focus: the facilitator for the group was dismissed and the two city officials leading the group are no longer with the City (here and here).

But now there is an actual product in terms of a report.  What does it recommend?  Public safety coordination between the City police and District security (including amending the mission statements of both to reflect cooperation, safe routes to school coordination), after school activity coordination, and identifying the concept of a community school.  The final two recommendations of the task force are on fair funding–the task force notes that “Pennsylvania contributes less than 39% of the funds required to operate schools across the state”–and wants this rectified, but fails to note that in 2015 the state is providing $245.1 million of the District’s $556.7 million total funding (44%, which means the District is above average, and, as we pointed out recently, the District gets alot of state funding based on its aid ratios) and marketing efforts, which is not too surprising other than the fact that the task force actually wants to emphasize the charter schools that are in the City (there are ten that have been chartered by the District according to the PA Department of Education) as part of the “fabric of public education” in the City.


Governor Pitches Severance Tax Proposal

While stumping for the office, the current Governor made a Marcellus Shale severance tax a lynchpin of his candidacy.  Now that he occupies the seat he has officially proposed a five percent severance tax on the value of natural gas coming from the Marcellus Shale formation.  While most observers knew this was coming, see Policy Brief Volume 14, Number 59, he added an another twist—a flat fee of 4.7 cents per thousand cubic feet (Mcf).


As we wrote in that Policy Brief, a five percent severance tax was not going to raise $1 billion. At 2014’s average trading price ($4.20) and production rates (approximately 3.88 billion Mcf) it would have generated $817 million.  Now that the prices have fallen—closing at $2.62 on Monday February 9th, down $5.50 from this date one year ago—there is no chance of raising $1 billion from the severance tax alone.


Thus the flat 4.7 cents per Mcf has been tacked onto the proposed severance tax.  Taking 2014’s production rate as a base, 4.7 cents would raise another $182 million.  When added to the five percent severance tax of $817 million, the two taxes together magically produce $1 billion.


However at the current price and, assuming last year’s production—which might be too high—the two new taxes would produce just under $700 million.  If prices and production fall from where they are now, revenue from the proposed tax would fall further.


However, keep in mind his revenue predictions do not assume any reaction from the industry.  As we know when costs rise, production will fall.  Thus it is very likely that there will be contraction in the industry, especially from the smaller drillers who were just making it when the price of natural gas was significantly higher in 2014.  They may halt drilling, cap wells, and lower production which would bring the revenue to the state down as well.  We are already hearing of drillers holding back on tapping new wells when the price started to fall earlier this year.  This could also dampen any talk of Shell building the cracker plant in Beaver County.


The Governor then capped his stance by saying “The alternative is not really no tax.  It’s no drilling, a ban, as in the case of New York.”  Does he really mean to imply that he would recommend a ban? Has he thrown down the gauntlet to the Legislature?  Bad move if he has.


Finally, bear in mind that passing a severance tax would rescind the current impact fee and do away with substantial revenue presently being shared by municipalities, counties and state programs.  If the severance revenue is used to replace the impact fee, the net to the state for other purposes would likely be under $500 million.

Experimental License Granted


Today the Public Utility Commission granted a two year experimental license to the ridesharing company Lyft to operate in Pennsylvania.  This is a big win for consumers as there has long been a need for an alternative to the present taxicab situation in Pittsburgh and Allegheny County.  We wrote near the end of last year how the PUC had granted two experimental licenses for ridesharing operations and now this approval means there are three companies presently providing transportation via an app platform.

The chairman of the PUC pointed out that the Commission feels that the General Assembly needs to come up with legislation that applies to ridesharing or transportation network company operations.  The PUC regulations do contain a statement of policy that applies to the criteria for common carrier authority that the PUC itself can alter and we have recommended that some of the language that serves to shield incumbent providers from competition should be revoked (this was done for limos in 2001).  But a statute that covers ridesharing is good policy, and one that embraces competition and consumer choice is even better.

Bidding Adieu to Propel Commission?

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In April of 2007, the City’s Mayor–a twentysomething himself at the time–announced the formation of the Propel Pittsburgh Commission, a 35 member panel chaired by the Mayor and comprised of City residents age 20-34 to “ensure that the city of Pittsburgh remains competitive to attract and retain young people”.  According to an article nearly four years after the Commission’s creation an article pointed out that the number of members were to be reduced by 20 down to 15 and the Mayor would no longer chair the panel.  One member viewed those two changes as critical to the Commission’s survival, a far cry from what was envisioned as a group that would produce quarterly reports and meet with the Mayor regularly.  A report to the former Mayor and City Council was presented in October of 2012.

The Propel Pittsburgh Commission appears to be going away based on a piece of legislation that is to come up in front of City Council that will create the Young Pittsburgh Advisory Commission.  The ordinance as proposed strikes most of the references to the Propel Pittsburgh Commission and replaces those with the name of the new Advisory Commission.  There will still be a total of 15 members and in its present form would allow for members who have been approved on the Propel Commission to carry over, and even if someone was on the Propel Commission and moved out of the City they could be tapped to serve in an advisory capacity.  Whereas the Propel Commission had the Mayor nominate and Council approve the Young Pittsburgh Commission will “appointed by the Mayor and confirmed by City Council, after proposal by the Commission”.  The codified language for the Young Pittsburgh Advisory Commission, since it is supplanting the Propel Pittsburgh Commission, will be contained in Article IX of the City’s ordinances under “Community Advisory Boards”.

So how will this altered Commission, if it becomes official, avoid the fate of its predecessor?  The ordinance states that Council and the Mayor will work with the Commission to develop an agenda and will present any legislation that “addresses, concerns, effects or otherwise impacts, in any way, the demographic…shall be sent to the Young Pittsburgh Advisory Commission…”  Sounds like the Commission could be viewing every piece of City-initiated legislation as that would affect this age group as much as all others.


The Mechanics of Voter Initiative

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The County’s Home Rule Charter (Article XII) allows voters to petition County Council to consider specific legislation (initiative) or for voters to bypass County officials and place legislation on the ballot for consideration by the voters (referendum).  That article also describes how the Charter itself can be amended through a referendum through an ordinance or initiative.  There have been questions on the ballot regarding “resign to run” and there were several competing ballot questions on the drink tax in 2008 that never made it in front of the voters, but up until now there has not been a voter initiative.  The upcoming Council meeting involves the second reading of an initiative to place a moratorium on natural gas drilling in County parks with the exception of Deer Lakes Park.

The County’s administrative code outlines the procedures for initiative and referendum: both have to be germane to County government and there is a long list of items that cannot be subject of an initiative or referendum.  There are naturally requirements for circulating, filing, and certifying documents.  Specifically, when it comes to acting on an initiative, the code states “No later than the 60th day from the date that the Agenda Initiative Petition has been certified as sufficient by the County Council Clerk, the County Council shall consider the ordinance being proposed by advertising the title and summary of the proposed ordinance in the manner provided in § 311.04 of this Administrative Code. The advertisement shall indicate that the proposed ordinance has been proposed through an Agenda Initiative.”  Thus far the ordinance was referred to a committee and returned without recommendation.

Arbitrators Busy in Eastern Suburbs

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Contract disputes between local governments and their employees have led to the commencement of arbitration in the Municipality of Monroeville and the East Allegheny School District.  The process of arbitration is quite different owing to the fact that the disputes are governed by separate state laws, Act 111 of 1968, which governs collective bargaining between police and/or firefighters and their employer, and Act 88 of 1992, which applies to collective bargaining for public school employees.

Both methods of arbitration rely on a panel of three officials, one chosen by the employer, one by the employee, and a neutral third.  Under Act 111, the employer (the municipality) pays the cost of its arbitrator and the neutral; under Act 88, the costs of the neutral arbitrator are split in half (if arbitration is voluntary) or the entire panel cost is split in half between the state and the employer/employees (if arbitration is mandatory).

Since police and firefighters cannot strike, the majority vote of the arbitration panel is final and “…shall be binding upon the public employer and policemen and firemen involved”.  On the other hand since there can be a strike or a lockout in a school district, the majority vote of the panel is final and binding upon the employer and employee unless either party rejects it formally.  If that happens, then a strike can be resumed or initiated, substitute workers may be employed, or a lockout may be resumed or initiated.

Pay for Performance in Neighboring District


As we noted in this week’s Taxpayer Q+A, the Pittsburgh Public Schools will be deciding on what happens, if anything, to the concept of pay for performance for teachers in the upcoming contract (it is probably a good bet that incentives for principals would remain, as that was in place prior to the teacher program).  Interestingly the Wilkinsburg School District, which borders PPS to the east, just handed out bonuses to its two elementary school principals based on the scores of those two schools on the state’s performance profile.

As for the validity of the state’s profile that led to the bonuses?  Well, we just recently wrote on the topic, and one of the two schools in the Wilkinsburg district was a major part of that analysis.