Bankruptcy for PAT? Councilman Agrees with Institute
A member of County Council plans on introducing a resolution this evening that, if approved, would call upon the Governor and the General Assembly to permit the Port Authority to file for Chapter 9 bankruptcy. Right now, under Pennsylvania law only municipalities are able to file for bankruptcy, so it would take an act of the Legislature to extend such ability to an authority like PAT.
It is an idea the Allegheny Institute first raised in a Policy Brief this past November (see Volume 10, Number 65) for the reason that the legacy cost burden for PAT was so severe "benefits" would soon be outpacing "wages". With transit workers preferring layoffs to benefit concessions and enjoying the right to strike, PAT management is left with the choices of cutting service and/or raising fares. The resolution states that "…the best interests of the Port Authority of Allegheny County and the County’s residents may be served by seeking the protections afforded by Chapter 9…"
Federal bankruptcy law allows states to permit or forbid bankruptcy filings by their local governments and to place as many pre-conditions on filing as they wish, including defining which types of local governments can file. In Pennsylvania filing is restricted to municipalities and the conditions are laid out in Act 47. Philadelphia and Pittsburgh have additional pre-conditions upon them. Since the PA Constitution prevents revocation of already granted benefits by ordinance or statute, the bankruptcy court would be an avenue under which the Authority could get pensions and benefits under control.
So will Council pass the proposal? Who knows. Given the fact that the Council stands ready to implore PAT to spend all of its bailout money ASAP they seem content to think that the state will be ready to rush in with more money. Unfortunately, recent history has proven that line of thinking to be accurate.