Notes on the state of things

Pennsylvania Gov. Tom Wolf’s push to increase the state minimum wage in excess of 100 percent “is facing a rocky road,” reports The Associated Press.

And with good reason.

As the AP also reports, the state’s Independent Fiscal Office concludes that raising the wage floor from the current $7.25 to $12 an hour – the first step on the road to a $15 hourly wage mandate by 2025 – would lead to the loss of 33,000 jobs.

No doubt, raising the minimum to $15 will lead to even more job losses. And that will hurt the very people their professed benefactors so ardently claim they are trying to help.

Still, Rep. Matthew Bradford, a Democrat, laments that the $7.25 minimum “is not commensurate with the dignity that we all propose work should come with.”

As if a misguided public policy that, just to begin, eliminates 33,000 jobs somehow is dignified?

In the name of “security and safety,” Pittsburgh officials are attempting to clamp down on economic liberty.

The Post-Gazette reports that public safety officials want to crack down on towing operators competing for accident work. Not only has the city requested proposals from tow companies to bid for the right to tow wrecked vehicles from accident scenes – and limiting bid-winning towing services to geographical zones — it wants to apply a city ordinance that caps general towing fees to accident tows.

Furthermore, it attempts to dictate not only what kind of equipment eligible tow companies must have to participate but what kind of business they run.

To wit, towing companies affiliated with auto body shops are barred from bidding under the new zoned regimen. Talk about arbitrary and capricious government-knows-best malarkey.

The rationale for this latest spate of government interventionism comes from an official who laments that tow trucks competing for accident business create “several safety concerns.”

Among the claimed concerns – tow truck operators “often speed and break traffic laws to get there first” and “add to traffic congestion.”

What, there’s poor enforcement of speeding and traffic laws? And by this rationale, surely it’s also time to crack down on the Pittsburgh Pirates’ weekday afternoon games for the near-gridlock they regularly cause.

Also cited was a recent incident in which two competing tow operators brawled, leaving one in critical condition. And police are reported to have complained about regular trouble between tow truck drivers.

What, there are no existing laws to address such situations?

It should be difficult to imagine any government jurisdiction proposing such a perversion of the marketplace. Sadly, it is not difficult in the City of Pittsburgh, where government believes markets exist to attempt to command them and that the fundamental laws of economics are not immutable at all but merely suggestions.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Convention center machinations

A timely reminder came this week from the Post-Gazette about how taxpayers keep footing part of the bill for the confabs of this group or that group at the David L. Lawrence Convention Center.

And just why it keeps happening remains an important public policy question.

It’s no secret that the convention center, built and maintained with millions of taxpayer dollars, offers steeply discounted or even free space to national conventions that come to town. The rationalizations are those old standbys of “It’s how business is done” and “Hey, the subsidies pay for themselves.”

But as the P-G’s Mark Belko astutely exposed the elephant in the room, those discounts and freebies come “even as the center itself piles up annual operating deficits.”

And guess who gets to cover those?

Without getting too far into the weeds, officials steadfastly argue that the price paid in such concessions more than pays for itself in the money generated by convention center events.

But here’s a simple fact: Even more money would be generated if those using the convention center paid their own freight for that space and those deficits might just be eliminated.

And we’re not talking chump change when it comes to rental rates; we’re talking tens of thousands of dollars, if not well past $150,000.

Fear not, however, there always is some scheme to use taxpayer dollars – you know, taken from a bottomless pit lined and filled with gold — to further subsidize the already heavily subsidized facility to make up the difference.

Then there’s the argument that because of the “competitive” nature of the convention business, such discounts and freebies are an automatic. Otherwise, they say, conventions would go elsewhere. Only in public policy can extortion be rationalized in such a manner. Perhaps that’s the case for privatizing the convention center.

There is, however, another elephant in the room. And that’s the issue of taxpayers – and not effectively but actually — helping to foot the bill for private groups and causes they likely would not otherwise support and have no business having their pockets picked to support.

Think of things like a labor union’s convention, among others.

And then there’s the shell game of using VisitPittsburgh, the region’s tourism agency, to help cover the rent discounts using a “credits” system.

Or as KDKA Radio talk show host Wendy Bell wryly put it on Monday: “So, we pay for the building and for the event.”

Two decades ago, the new convention center was billed right up there with a new baseball field and football stadium as the be-alls and end-alls to foster Pittsburgh’s next great renaissance – something akin to perpetual money-generating machines that would make Rube Goldberg blush.

And to this day, their promoters rave on and on about the multiplier effects they have that don’t merely ripple through the economy but roll in like some kind of can’t-fail wave of great things fronted by the mechanical wave of a beauty queen.

Of course, the veracity of those claimed multiplier effects typically are dubious; governments are infamous for such exaggeration.

Long point short: If the convention center is the grand economic driver they claim it to be, there should be no need for discounts and/or subsidies; it should be self-sufficient.

Period.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

A pig in a poke in the Hill?

Court documents indicate the heavily publicly subsidized Shop ‘n’ Save grocery store in the Hill District has not been paying its rent. But it’s unclear as to why.

There are suggestions it’s because the Hill House Association, the struggling nonprofit that owns the property, has not been maintaining and/or policing the parking lot and lighting. That raises the question if the association has the management wherewithal to be the landlord.

There are other suggestions that there is an insufficient customer base to support the store. That raises the larger question of whether the store should have been built in the first place.

So, what are the answers?

For decades, the marketplace decreed that there was no market for a full-service grocer in this locale. And no private grocer would come in precisely because of this reason. Only when heavy public subsidies were offered, did Shop ‘n’ Save agree to come – and then with woefully little of its own skin in the game.

You’ll recall as well that 11 years ago the Save-A-Lot chain was ready to attempt a Hill District store. But that effort succumbed to the mindset that only a “full service” grocer was acceptable.

In 2008, Save-A-Lot featured a smaller, more targeted inventory but prices that it said were 40 percent lower than a full-service grocer. It might have been a better fit for the Hill. But, then again, there’s really no way of knowing that.

But given the public “investment” in the Shop ‘n’ Save, the public has a right to know what the full and real story is. That’s especially critical given that some pols already have floated the idea of replacing Shop ‘n’ Save with another grocer.

Is there another chain that sees enough profit potential to take over the Hill District location? Or will any replacement simply be another subsidized player — the same kind of pig with a new shade of lipstick, a newly gussied up salesperson for yet another pig in a poke?

Again, the marketplace has been speaking in one of two ways or both in this matter.

From the information made public, it’s either a case of the Hill House Association not having the chops to manage this property or there simply not being enough traffic to support this grocer, even heavily subsided – or both.

Whatever the real story is, it has become a textbook case on the hubris of marketplace interventionism. Bureaucrats have a not-so-funny and typically very expensive habit of doubling down on their mistakes to cover up the economic lie of interventionism, throwing good money after bad.

And that’s the kind of public disservice that is anathema to sound public policy.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Government’s default position: Fleecing

What is it about government mass-transit projects?

New York City is moving forward on a controversial streetcar line to run through Brooklyn and Queens. And it appears to be another farce in the making, a la Pittsburgh’s North Shore Connector.

The original New York proposal for the Brooklyn-Queens Connector, or BQX, was to run 16 miles at a cost of $2.5 billion. But now, five miles have been axed from the project. And guess what? The cost has jumped to $2.7 billion.

File that one under “Stupid Government Tricks.”

Which brings to mind the Port Authority of Allegheny County’s North Shore Connector. Its “spine line” to the David L. Lawrence Convention Center was lopped off but the half-billion-dollar price tag remained. Then, some officials even snapped their braces about the project being brought in on budget. Really. Talk about chutzpah.

New York Mayor Bill de Blasio’s plan for that shiny new streetcar, supposedly guaranteed to spark economic development in the boroughs, took a big step forward Wednesday last.

The NYC Economic Development Corporation, which also runs NYC Ferry service, announced it approved a contract with a consultant to oversee the environmental review process for BQX.

The New York Daily News reports concerns remain about whether the trolley line will lead to gentrification and rising housing prices. Of course, the greater concern should be if ridership will end up being anything close to the projections always used to justify such projects.

Long answer short – it seldom is.

Oh, and there’s another kicker to the New York trolley project – “it still hasn’t (been) determined how it will be (fully) funded,” the newspaper reports.

An estimated $1.4 billion of the project’s cost will be covered through a scheme called “value capture,” or VC, the current darling of “creative financing” in Europe.

Value capture is not unlike that dubious methodology so favored in Greater Pittsburgh known as tax-increment financing (or TIF). That said, it appears VC is more market-perverting than TIF.

“It’s not yet clear where the remaining $1.3 billion will come from,” the Daily News reminds.

Oh, one can only imagine someone will cook up yet another “creative” financing scheme.

One needs to look no farther than the Pittsburgh Water and Sewer Authority to understand how dysfunctional “government water” can be.

The PWSA, you’ll recall, long was treated as a piggybank by the City of Pittsburgh and prone to the worst of political machinations. These days, it’s under state Public Utility Commission (PUC) oversight and faces a long slog to recover from that abuse.

On Thursday, the PUC approved across the board double-digit percent rate hikes to pay for long overdue upgrades. Future rate hikes are virtually assured.

In addition to mechanical upgrades, another of the many areas to be reformed is a 24-year-old agreement between the city and authority that, among other things, gave city government entities 600 million gallons of free water annually, saw the city cover authority pensions to the tune of $2 million each year and transferred millions more dollars in agency payments to the city.

PWSA board chairman Paul Leger tells the Tribune-Review:

“The old agreement is now invalid. What we are trying to do is come up with a new agreement that reflects itemized costs that we will pay for and/or that the city will pay for or perform that reflects current standards of operation both for us and for the city.”

You know, run things like a business — a private business. Ahem.

The better idea, obviously, is to get government and shadow governments (i.e. authorities) out of the water business. Which is about as popular with government bureaucrats as garlic is with vampires.

It’s certainly not as if there aren’t multiple scores of examples of private companies providing excellent services at competitive prices to multiple millions of customers, all still overseen by state utility regulators.

Right?

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

The ‘green’ road to trouble

Pittsburgh Mayor Bill Peduto would be wise to review a Feb. 3 Investor’s Business Daily commentary by John Merline. It questions the practical, economic and environmental efficacy of “100 percent renewable energy.”

Peduto, of course, is a big proponent of “green energy.” Among his proposals are “achieving 100 percent renewable electricity consumption for municipal operations” and “development of a fossil fuel-free (municipal) fleet.”

The mayor is not alone in his efforts. Myriad “progressive” governors around the country propose even more expansive “green energy” programs. So do many prospective Democrat presidential candidates.

One proposal, now before Congress, seeks to stop using any fossil fuels for energy production by 2035.

But Merline details how just 12 percent of all U.S. energy production currently comes from “renewables.” Government estimates, based on current trends, suggest that will rise by a mere three percentage points by 2050.

“In other words, attempting to turn the country’s energy supply to 100 percent renewable would be a monumental task,” he writes. “It would involve fundamentally reshaping the nation’s energy economy. And it would add significantly to energy costs – since renewable energy is generally more expensive.

“How that could be achieved without crashing the economy is anyone’s guess,” he says.

Additionally, even “environmentalists” question just how “green” renewables are. To wit, hydroelectric power generation can take a serious toll on wildlife. The same goes for wind and solar.

“Most forms of ‘clean’ energy require massive amounts of land to produce a relatively small amount of energy,” Merline reminds. As one example, he cites the 3,500 acre (5 square miles) Ivanpah Solar Electric Generating System in California that produces 392 megawatts.

But a natural-gas fired generating plant in Michigan, “which is a postage stamp by comparison,” generates 1,633 megawatts, he says, reminding that “wind power is even more of a land hog.”

“A study by Harvard researchers found that meeting current electricity needs using wind power alone would require 12 percent of the entire continental U.S.,” an area twice the size of California, Merline writes.

Here’s another inconvenient fact: Heritage Foundation scholars found that states requiring 25 percent or more renewable energy have utility rates higher than those lower mandates (10 percent or less) and 50 percent higher than states with no such mandates.

Wow, there’s an “incentive” to live and do business in such states, eh?

“Once you get beyond the bumper sticker appeal, calls for 100 percent renewable energy look like a bad deal for the economy, families and even the environment,” Merline concludes.

Indeed, conservation efforts are a wonderful thing at every level of government. But by the very same token, this blind pursuit of “100 percent renewable energy” looks to be one of those proverbial “cures” far worse than the “disease.”

And how troubling it is that such “cures” too often permeate public policy proposals.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Shale tax shibboleths & sophisms

It was French polymath – that is, a universally learned person – Gustave Le Bon who, in 1895, perhaps best defined a climate permeated by those constantly employing shibboleths to argue their cases.

It came from his seminal work “Psychologie des foules” (or, in English, “The Crowd: A Study of the Popular Mind”):

“Reason and argument are incapable of combating certain words and formulas. They are uttered with solemnity in the presence of crowds, and as soon as they have been pronounced an expression of respect is visible on every countenance, and all heads are bowed.”

Shibboleths, in another word, are sophisms, arguments that, though plausible, nonetheless are fallacious. Uttered with the greatest of regularity, typically by politicians, they paint themselves in the veneer of truth.

But, alas, if reasoned people take the time to peel back that veneer, they uncover the cheap particle board beneath. The gross misrepresentation. The outright lie.

Which brings us in this ‘round-about way to Pennsylvania Gov. Tom Wolf.

For the fifth-straight year, the second-term Democrat governor will, in his annual budget address, urge the Republican-controlled General Assembly to enact a severance tax on shale gas extraction. Lacking “legs,” it’s likely dead on arrival.

But still expect Wolf to trot out the usual shibboleths and sophisms as he yet again attempts to make his dubious case. After all, he’ll reiterate, Pennsylvania is the only state without such a tax. We’re “leaving money on the table,” he’ll likely argue.

Or, in the nomenclature of his preview comments:

“It is far past time that Pennsylvania stop allowing our commonwealth to be the only state losing out on the opportunity to reinvest in our communities.”

Of course, omitted from the governor’s statement is that Pennsylvania indeed already has a tax on shale gas. It’s called an “impact fee.” And, in fact, the state’s Independent Fiscal Office projects it will raise a record $247 million in 2019.

Those receipts are split, as the Post-Gazette reminds, to primarily “compensate (the) state and local communities for the burden on public services and the environment.”

But Wolf is taking this year’s entreaty for a new shale severance tax to another level – legacy-seeking.

The governor said that as long as there is no additional tax, “my vision of a restored Pennsylvania that is ready to compete in the 21st century economy will never become reality.”

Ah, there it is, the old nub of the rub: We must tax our way to prosperity! What is it that prevents “progressives” from learning anything?

And Wolf not only wants to attempt to improve our lot in Pennsylvania by confiscating more private dollars, he wants to drive the commonwealth ever deeper into debt to achieve his vision, using the shale gas industry as collateral.

The governor wants the Legislature to approve the borrowing of $4.5 billion over four years, to be repaid using new severance tax receipts – over 20 years.

But much like Wolf’s proposal to more than double the state minimum wage and his plan to allow higher-wage workers to file for overtime pay, this “benefit” also comes at great cost.

There will be less money to invest by an industry operating on thin margins. There will be fewer jobs. Prices could rise. Ancillary industries will suffer. And, depending on how his new tax is structured, it runs the risk of siphoning impact fee dollars for other uses.

Since when is raising the cost of doing business any way to enhance one’s competitive advantage? Since when are such proposals — by any stretch of the imagination or by any sound economic metric — sound public policy?

Well?

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

2 cons, updated

Gov. Tom Wolf characterizes his push to increase Pennsylvania’s minimum wage by nearly 107 percent by 2025 as a “moral” issue.

But what’s “moral” about advocating for a public policy that most assuredly will result in either fewer hours or fewer jobs (or both) for those on the first rung of the employment ladder?

Wolf also seeks to raise the earnings threshold for salaried employees to be eligible for overtime pay. That is, salaried employees will be able to earn a lot more but still be eligible for overtime. But as Allegheny Institute research associate Liz Miller reminded (in Policy Brief Vol. 19, No. 1):

“The proposal would be a huge detriment, especially to small business and nonprofits, because it would force many companies to reduce hours and limit promotions.”

Wolf (and his many “progressive” brethren in Western Pennsylvania) fervently believe that it is up to “The State” to “give” workers such “opportunities.”

But in a free-market system, in a capitalist economy, workers must prove their value to their employer who then bases their wages on their productivity. There’s nothing “moral” about public policies that, in a grand perversion, reduce opportunities in the guises of “expanding” them.

You might recall the big announcement that, in return for oodles and bootles of taxpayer “investment” – think $4 billion, $2.85 billion in cash — Foxconn Technology Group would invest $10 billion and employ 13,000 workers to manufacture liquid-crystal display screens in Racine County, Wisc.

But Foxconn, the same company that, in 2013, made grandiose promises of a big investment in central Pennsylvania (in return for public “incentives”) that never materialized, did a 180 on Wednesday then another 180 on Friday.

“The global market environment that existed when the project was first announced has changed,” the Taiwanese company said in a Wednesday statement. Some question if an economic climate conducive to Foxconn’s plan ever existed.

But that was Wednesday. On Friday, Foxconn said it indeed would still build the facility. The 360 is reported to have been executed after the company’s chairman spoke with President Trump, reported the Reuters news service.

Even though the incentives were to be based on Foxconn’s performance, a reversal would have left taxpayers exposed. There was lots of talk about a “bait and switch” in the Badger State.

Detroit News columnist Daniel Howes pulled no punches in his assessment of Foxconn’s Wednesday about-face:

“Numbers matter in business, until the laws of competition are outlawed. The Foxconn deal may turn out to be what skeptics feared: too good to be true.

“It was such a head-slapper because it promised comparatively high-wage jobs to manufacture a commodity typically sourced from Asia and other lower-cost countries.

“Michigan lost (the Foxconn plant) to a Great Lakes rival,” Howes continued. “If this keeps up, folks around here will barely remember Foxconn – emphasis on the ‘con’ part.”

Some have taken to joking that Foxconn is all bun and no beef and, to paraphrase one Wisconsin legislator – big on promises and lousy on delivery.

Even the liberal Urban Institute (of which former Pittsburgh Mayor Tom Murphy is a card-carrying member) is panning Foxconn.

“Foxconn has a history of not delivering on its jobs and manufacturing commitments that it’s made,” research associated Megan Randall told The New York Times. “These types of instances are exactly why accountability measures are so important in state and local tax-incentive deals.”

Perhaps, if you’re wedded to repeatedly handing out corporate wealthfare.

But the Foxconn experience, as with so many before it – and no matter if Foxconn builds or doesn’t build the Wisconsin factory — is the perfect argument to stop turning public dollars into venture capital dollars. That public officials near and far continue to do just that suggests they require a tutorial on the definition of “insanity.”

All this said, it’s hard to tell what Foxconn really will do. Perhaps the new week will bring a new story. But as Reuters also reported on Friday, Foxconn’s latest statement made no mention specifically of those 13,000 jobs.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

 

 

2 cons

Gov. Tom Wolf characterizes his push to increase Pennsylvania’s minimum wage by nearly 107 percent by 2025 as a “moral” issue.

But what’s “moral” about advocating for a public policy that most assuredly will result in either fewer hours or fewer jobs (or both) for those on the first rung of the employment ladder?

Wolf also seeks to raise the earnings threshold for salaried employees to be eligible for overtime pay. That is, salaried employees will be able to earn a lot more but still be eligible for overtime. But as Allegheny Institute research associate Liz Miller reminded (in Policy Brief Vol. 19, No. 1):

“The proposal would be a huge detriment, especially to small business and nonprofits, because it would force many companies to reduce hours and limit promotions.”

Wolf (and his many “progressive” brethren in Western Pennsylvania) fervently believe that it is up to “The State” to “give” workers such “opportunities.”

But in a free-market system, in a capitalist economy, workers must prove their value to their employer who then bases their wages on their productivity. There’s nothing “moral” about public policies that, in a grand perversion, reduce opportunities in the guises of “expanding” them.

You might recall the big announcement that, in return for oodles and bootles of taxpayer “investment” – think $4 billion, $2.85 billion in cash — Foxconn Technology Group would invest $10 billion and employ 13,000 workers to manufacture liquid-crystal display screens in Racine County, Wisc.

But Foxconn, the same company that, in 2013, made grandiose promises of a big investment in central Pennsylvania (in return for public “incentives”) that never materialized, has done a 180.

“The global market environment that existed when the project was first announced has changed,” the Taiwanese company said in a Wednesday statement. Some question if an economic climate conducive to Foxconn’s plan ever existed.

Even though the incentives were to be based on Foxconn’s performance, its reversal still leaves taxpayers exposed. There’s now lots of talk about a “bait and switch” in the Badger State.

Detroit News columnist Daniel Howes pulled no punches in his assessment of Foxconn’s about-face:

“Numbers matter in business, until the laws of competition are outlawed. The Foxconn deal may turn out to be what skeptics feared: too good to be true.

“It was such a head-slapper because it promised comparatively high-wage jobs to manufacture a commodity typically sourced from Asia and other lower-cost countries.

“Michigan lost (the Foxconn plant) to a Great Lakes rival,” Howes continued. “If this keeps up, folks around here will barely remember Foxconn – emphasis on the ‘con’ part.”

Some have taken to joking that Foxconn is all bun and no beef and, to paraphrase one Wisconsin legislator – big on promises and lousy on delivery.

Even the liberal Urban Institute (of which former Pittsburgh Mayor Tom Murphy is a card-carrying member) is panning Foxconn.

“Foxconn has a history of not delivering on its jobs and manufacturing commitments that it’s made,” research associated Megan Randall told The New York Times. “These types of instances are exactly why accountability measures are so important in state and local tax-incentive deals.”

Perhaps, if you’re wedded to repeatedly handing out corporate wealthfare.

But the Foxconn experience, as with so many before it, is the perfect argument to stop turning public dollars into venture capital dollars. That public officials near and far continue to do just that suggests they require a tutorial on the definition of “insanity.”

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Set the sun on government authorities

As we wait for the Allegheny County Airport Authority to announce its latest “pump-priming” public subsidy to an airline that will fail – or on the oft chance that the state Attorney General’s Office announces an audit of the dubiously behaving authority – we commend for your rapt attention some words of wisdom from former Allegheny Institute Associate scholar H.B. Strickland, Ph.D.

They came in a September 2002 monogram, “The case for reining in governmental authorities.” And the following was culled from the “Key findings and recommendations” section.”

To wit:

“The use of authorities in Pennsylvania was adopted in order to circumvent constitutional debt limits which otherwise would have prevented the public from receiving basic services — an appropriate purpose at the time — but one which is no longer valid, as such restrictions have been all but eliminated.

“Although (authorities) are no longer needed, they continue to exist and be created.

“They are easy to create — voter approval is not required. Their supervision is minimal and accountability limited.

“Authorities are more expensive to finance than traditional governments and can jeopardize the credit status of their sponsoring basic public entities. Their management and finances are found to be hidden from public view and inspection. In addition, they weaken and fragment unnecessarily conventional government.

“Information about authorities is skimpy, fragmented and incomplete, including such basic data of their number and debt outstanding.

“Authorities have numerous supporters and proponents which include public officials, investment underwriters and legal counselors who obviously benefit personally from authority formation and existence.

“They compete unfairly with private enterprises, including the fact that they are exempt from many taxes and thereby deprive communities of significant business-generated income.

“Authorities identified as ‘industrial development’ are the principal disguised conduits for financing non-public, special interest projects — a questionable practice since the public-at-large does not appear to benefit in such undertakings.

“Authorities have served their original purpose well. But as the record will show, they are no longer needed. Today, both state and local basic governments are capable of providing essential public needs without sacrificing the open, accountable and participatory electoral form of a democratic government.”

And what did Professor Strickland recommend to end the political and economic machinations associated with government authorities?

To wit:

“Authorities, both state and local, should no longer be created.

“Current active authorities should be phased out with a date set certain for their demise.

“Reporting standards should be upgraded and oversight increased immediately.

“During the phase-out period, the following guidelines should be adhered to:

“Authority borrowing would only be allowed for emergency or legally required purposes and conducted on a competitive bid basis through its  traditional full faith and credit governmental sponsor.

“Any replacements needed for board membership would require an electoral vote.

“If ever a public need should arise to use authorities again, it should be as a last resort and the following conditions should be adopted:

“The intent and function would be limited and then only for a public-at-large purpose. Non-public, special interest projects would not be permitted;

“Voter approval would be mandatory for their creation;

“Board membership would require an electoral vote;

“All financing done on a competitive bid basis only.”

Talk about nipping poor public policy in the bud.

In conclusion, Strickland said that government authorities perpetuate “a shadowy, obscure form of government that is void of electoral endorsement.”

“In addition, these units disguised as public entities engage in activities that are not necessarily in the best interest of the public. As such they are political facades that are used as fronts for private endeavors.

“Not controlled or accountable to the electorate, authorities only add to the fragmentation of government. Costly to finance, their existence can threaten the financial well-being of the community they proclaim to serve.”

“Often competing with private enterprise they are a device whose convenience is no longer required or necessary. They should be eliminated.”

Seventeen years ago, Harry Strickland laid out a succinct and reasoned rationale for eliminating these “fronts” for questionable public policies.

Since then, his argument has been affirmed in Pittsburgh, repeatedly, by the likes of, but not limited to, the Pittsburgh Stadium Authority; the city-county Sports & Exhibition Authority; the Port Authority of Allegheny County; the Pittsburgh Water and Sewer Authority and, of course, the Allegheny County Airport Authority, created by a rubber stamp and which has continued to operate in the same fashion.

Simply put, it’s past time for the people to demand that this kind of shadow governance be phased out and that accountability be restored.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

 

Calling out ‘clandestine mini-governments’

“The deeper one delves, the more temptation there is to throw up one’s hands in despair.”

That’s how Clark M. Thomas, a former senior editor at the Post-Gazette, characterized Pennsylvania’s public authorities in a long-ago 43-page treatise titled “Invisible Governments.”

“Clandestine mini-governments” was how one state legislator at the time defined authorities to Thomas.

This trip down memory lane is sparked by word that Allegheny County Chief Executive Rich Fitzgerald has nominated Lance Chimka, his economic development director, to the county Airport Authority board of directors.

The nod-nod, wink-wink about these authorities is that while they are supposed to be independent agencies, they tend to do the bidding of the politicians whose board members they appoint. And the results can be disastrous.

As but one example, think of the mess decades of such behavior created at Pittsburgh Water and Sewer Authority, a mess that will take decades and billions of dollars to remedy.

Think, too, of the Allegheny County Airport Authority. It’s coming off a year in which attempts to command the marketplace with public subsidies predictably failed. And failed miserably.

But in the process, serious ancillary questions were raised about authority operations.

Among them – giving authority head Christina Cassotis plenary power to grant subsidies of any amount to any airline, multiple board members having blatant conflicts of interest by investing in now-bankrupt OneJet, one of the subsidized carriers, and a solicitor who had the audacity to see nothing wrong with the practice.

As we’ve said many times before, the Airport Authority is ripe for a review by the state Attorney General’s Office, which, in a quirky scenario, has auditing purview over it.

Such a review is critically important given that 2019 could offer fertile ground for more machinations with work on a $1.1 billion re-do of Pittsburgh International Airport picking up steam. It was a plan, by the way, sprung upon the public with little or nothing in the way of public input.

A “clandestine mini-government,” indeed.

Back to Clarke Thomas’ long-ago monograph:

“Given the questions raised about authorities, even if only a few culpable ones, it certainly is not amiss to suggest the advisability of some touches with cautious hands … .

“Basically, the goals should be greater accountability and ‘transparency.’ That is, not only doing things right but accomplishing them in an open way so as to be convincing to the general citizenry.”

Not to mention parking a brand of hubris endemic to such authorities that make them think the fundamental laws of economics somehow don’t apply to them.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).