Property tax ‘relief’ that exacerbates inequities

Oh, where does one begin with the folly of public officials seeking to use the legislative process to add to the inequities of the property tax system?

The Post-Gazette reports that a trio of Democrat legislators representing Pittsburgh will seek to amend a 1988 law applicable to Philadelphia (put in place there in 2013 but not allowing homeowners to also claim a homestead exemption) and Pittsburgh/Allegheny County (but never put into practice here) granting them the power “to manage” their property taxes.

Perhaps the more accurate phrase would be “to manipulate.”

Lack of a statewide mandate for regular reassessments — and Allegheny County officials’ steadfast refusal to do the same for political reasons — have left the system filled with gross inequities.

Not keeping up with ever-changing valuations, some properties are underassessed. Others are over-assessed. That means the former aren’t paying their fair share while the latter are paying an unfair share.

And what Sen. Jay Costa and Reps. Ed Gainey and Sara Innamorato seek to do will only exacerbate the inequities.

To wit, they want to create a “Longtime Owner Occupant Program (LOOP) that would, as the P-G reports, “exempt certain homeowners – those who, for example, have owned property for a minimum of 10 years in a rapidly developing neighborhood – from having to pay increased property taxes or allow them to defer the taxes to the next owner.”

Or as Costa told the newspaper:

“This is an attempt to allow those folks to stay in those neighborhoods, those folks who have spent many, many years, in good times and in bad. We don’t want them to be forced out of their homes because of the positive economic development that’s been taking place.”

The City of Pittsburgh is analyzing housing data in fast-developing places such as Bloomfield, East Liberty, Friendship and Lower Lawrenceville and is “poised to begin a public process to decide which neighborhoods would qualify for protection,” the newspaper’s Ashley Murray reports.

The program would apply to city real estate taxes, not county taxes and not school taxes, the latter of which represent the lion’s share of real estate tax bills.

But the simple fact of the matter is that such a program will offload part of the tax burden onto someone else. And it’s not as if the values of these targeted homes haven’t increased and, with that, increasing the equity position of these homeowners. Why should some essentially subsidize the rise in home values of others?

If amended by the state Legislature, this measure would create a situation in which comparable properties would be taxed at different rates solely based on the occupants’ longevity in these respective homes. “Fair”? “Equitable”?

Perhaps next “The State” will guarantee a value floor for the real estate of long-time residents in rapidly declining neighborhoods?

And as with any government operation, unintended consequences loom large.

“Suppose the owner of a property bought the house in a protected neighborhood when he was 35,” says Jake Haulk, the president-emeritus of the Allegheny Institute. “He is now 45 and gets a massive tax break for 25 or 30 years. A 55 year old who bought this year would have to wait until he is 65 and still be living in the house before being eligible.”

Then, too, the Ph.D. economist who’s now a senior advisor to the think tank says, “protected properties might increase in value faster than the market says because of the low taxes and then take a big hit when the tax break goes away upon sale of the property.

“Like rent control, this will have massive unintended consequences. Other groups of property owners will demand relief of some sort,” Haulk predicts.

“The only good news is that the county and district have no incentive to participate,” he notes.

And here’s something else to ponder, per Haulk:

With no regular reassessment, the assessed value will not change unless the property is sold and a governing body appeals the value based on the sales price. The city is on record as not appealing assessments. But the buyer would get hit with the higher assessment following another successful taxing body appeal.

“So, rising property values because of stronger demand will have no impact until a county reassessment or unless the city appeals based on sales prices,” he reminds. “If regular reassessments were in place, all property owners in areas with well above average real estate price increases will get hit hard with higher taxes even with the windfall provision.

“A tax relief program for some of the hard hit will not sit well with others looking at big increases. It will reduce incentive to sell by the beneficiaries of the program, further distorting the market. This plan just has not been thought out well,” Haulk concludes.

Sans Allegheny County officials suddenly having an epiphany and ordering regular reassessments, it remains incumbent upon the General Assembly to pass legislation mandating the same.

Otherwise, this mess will only grow and, with past being prologue, the courts will be forced to step in. And the blame will fall squarely on “leaders” who failed to lead with the latest in a long line of gross panders.

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

 

 

Notes on the state of things

There is talk in Pittsburgh’s Hill District of the heavily taxpayer-funded Shop ‘n’ Save grocery store closing. But it remains unclear whether that’s because the store is failing, whether its government-chosen overseers are failing or both.

The grocery store, which opened in October 2013, reportedly hasn’t paid its rent since last spring. While media accounts suggest that rent has been withheld because the landlord – the financially struggling Hill House Association – has not maintained the property, another business in the complex suggests there’s not enough traffic to maintain a customer base.

But now further complicating matters is talk from city politicians about perhaps another grocery store operator taking over the site. Gee, how much more in public subsidies will be sought?

Here’s an idea: If Shop ‘n’ Save does close, how about putting up the rights to operate another grocery store to the highest bidder? If no bids come, that’s clear affirmation that the profit prospects – i.e. success — are dim.

The evidence, albeit anecdotal at this point, is suggesting a landlord that can’t manage/maintain the property and a location that can’t produce enough traffic to support it.

No one should be surprised. Why? When government practices the perversion of marketplace interventionism, things built that the private investment pool would not end up struggling and, ultimately, fail. And then, those whose intervention led to the failure in the first place, seek another intervention to cover up that failure.

Why? Hubris? Legacy-building? “Because it’s the right thing to do?”

The marketplace is an impressive tutor. Yet activists and their political acolytes always believe they know better. History shows otherwise.

Well, it’s pretty much official: WOW Air won’t be flying again at Pittsburgh International Airport anytime soon.

At least that’s the word from county Airport Authority CEO Christina Cassotis. In fact, she tells the Post-Gazette that the authority will be seeking to recover a percentage of the $800,000 in subsidies and waived landing fees that were part and parcel to a two-year deal cut with WOW in 2017. Flights began in June of that year.

Exactly how much is being sought is not being made public. But one can surmise it will be a pro-rated amount.

WOW began experiencing financial difficulties last fall. And this month, it told USA Today it would end service in eight of 12 markets. It continues to serve Baltimore/Washington, Boston, Detroit and Newark.

Still, Cassotis characterizes WOW flights out of Pittsburgh, suspended on Jan. 11, as something of a great success and hopes when WOW is ready to expand again that Pittsburgh is at the top of its list.

But if these flights were such a success here, why were they canceled? And if there’s truly a market for these flights, why hasn’t some other airline swooped in to take advantage of the profit potential that WOW supposedly is leaving on the table?

That said, if WOW recovers and seeks to restore its Pittsburgh flights, will it do so by risking its own money in pursuit of profit? Or will the Airport Authority yet again encourage it to belly up to the trough filled with public dollars?

Inquiring minds want to know.

From the email inbox, part of a letter from a reader:

“I read your report in today’s 1/20/19 (Washington) Observer-Reporter highlighting potential issues with transportation funding in Pennsylvania with great personal interest.

“My husband and I are two-thirds complete with building a home in North Strabane that may one day be impacted by the Southern Beltway (I-79 to Mon/Fay section). We are hopeful that this section never gets built as currently planned (Section 1 Green Alt Option 1A).

“With construction begun on the Pa. 22 to I-79 section and acquisition beginning on the insanely expensive Rt. 51 to I-376/Monroeville, we are hanging our hopes on funding becoming an issue for the project’s completion.”

But how tragic it would be if this family — or any family — sees its property taken for a highway never to be built and/or for a highway – any highway – whose “need” is dubiously demonstrated.

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

 

Biting the carbon that feeds you

Those advocating for a tax on carbon – its aficionados are legion in Pittsburgh and statewide – to both reduce pollution and foster “green” energy to combat supposedly “man-made” climate change should consider the words of economist Don Boudreaux.

In a letter to the editor of The Wall Street Journal, Professor Boudreaux reminded that “there’s no way that government officials either can know the optimal ‘emissions reduction goals’ or have any real incentives to be guided by them.”

“Any such chosen goals cannot possibly be based on any accurate economic knowledge,” he continues. “Such goals would at best be arbitrary, with a good chance of being set too high given political elites’ long-standing proclivity to focus on carbon emissions’ downsides while ignoring the upsides.”

Boudreaux notes that the upsides “are, in a word, modernity”:

“Carbon-based fuels have powered modern economic growth – growth which is, by far, history’s greatest benefactor of humanity.

“Modern economic growth has ended starvation.

“It has put solid roofs above our heads, solid floors beneath our feet, indoor plumbing and safe emissions-free electric lighting throughout our homes and potable water at our fingertips.

“Our immense prosperity shields us from toxic bacteria, as well as from deadly indoor cold and heat,” the George Mason University scholar says.

And nowhere is that carbon-based legacy, and, concomitantly, the resulting economics legacy, more instructive than in Southwestern Pennsylvania. Steel. Coal. Glass. And, of course, there’s much more.

Thus (and as Allegheny Institute President-emeritus and senior advisor Jake Haulk often reminds), how sadly ironic it is that those who seek to demonize carbon-based fuels in promotion of cost-inefficient “green” energy continue to benefit from the progeny of that legacy.

How’s that? We speak, of course, of the philanthropic foundations and cultural, medical and educational institutions – “all part of the legacy of capitalistic fortune-making,” as Haulk reminds — that continue to contribute so much to the fabric of modern-day Pittsburgh.

Back to the carbon tax.

To borrow Boudreaux’s concluding sentiment, why in the world should we authorize “The State” to “dramatically reduce our access to a fuel source whose record to date is unambiguously positive”?

Carbon-tax proponents most assuredly believe the public to be dolts –and that biting the carbon that continues to feed all of us somehow is sound public policy.

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

 

The rule of law & a house of cards

The rule of law, as various legal resources instruct, is the principle under which all persons, institutions and entities are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated.

Sound public policy cannot be formulated without strict adherence to this principle. Yet, time and time again, Pittsburgh City Council has thumbed its nose at the rule of law and attempted to enact legislation for which — under state statute publicly promulgated by the Pennsylvania Legislature — it expressly was not allowed to enact.

Think of attempts to mandate paid sick leave and to, in effect, guarantee the jobs of janitors. In a nutshell, the courts independently adjudicated that the city exceeded its power under the rule of law.

It’s latest foray in believing it is above the law involves an ordinance seeking to restrict certain firearms and ammunition within city limits.

Allegheny County District Attorney Steve Zappala not only has advised the council that the proposal violates the state Constitution but that council members could face criminal prosecution for violating state law.

Despite the DA’s admonition, City Council has indicated it still intends to pursue passage. The motto for these councilors surely must be “If first you don’t succeed in breaking the law, try, try again.”

No matter what the issue, any elected body so full of hubris that it steadfastly believes it can ignore the rule of law with impunity and repeatedly attempt to pass, or passes legislation, that is in contravention of superseding laws made by controlling legal authorities, is not merely anathema to sound public policy but a dangerous institution not worthy of we the people.

It is breathtaking. Breathtakingly bad, that is.

The more that’s revealed about what a mess OneJet was, the more outrageous it is that county and state officials threw any money at the startup now slogging through U.S. Bankruptcy Court.

Under questioning by a bankruptcy trustee and attorneys representing stiffed creditors, CEO Matthew Maguire professed to not specifically recalling when he knew that the financial situation of the airline was grim, the Post-Gazette reports.

Really? He was whistling that loud as he passed the graveyard?

In that same hearing, Maguire revealed what the conflicted investments were of two of three Allegheny County Airport Authority members – at least a combined half-million dollars.

How astounding that the authority solicitor believed there was no conflict because those members never voted on OneJet matters.

And then there’s this little nugget:

You’ll recall that Airport Authority board member Robert Lewis, in return for OneJet being given $1 million in authority incentives, was made a non-voting member of OneJet’s board.

But the P-G reports Maguire revealed that the OneJet board met not once over the past two years. In fact, it turns out that Maguire was OneJet’s only board member.

Which brings us back to the question we’ve been asking repeatedly: What kind of due diligence did county and state officials perform before they lavished OneJet with millions of dollars in public incentives?

OneJet did not become a house of cards overnight. Surely, had investors, public and private, taken the time to thoroughly vet Maguire and his airline, there would have been more than a few hints that something was not quite right.

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

 

Strolling out a nebulous OnePGH

Pittsburgh Mayor Bill Peduto says his OnePGH initiative will formally bow sometime this year. That’s the mayor’s $3.5 billion plan — heavy on rhetoric but light on specifics — to be, he says, primarily funded by the region’s corporations, institutions and foundations.

There are nearly 50 projects designed to, as the Tribune-Review reported it, “meet the critical needs of the neediest.” Money also would come from taxpayers and national foundations, Peduto says.

The Trib says the mayor believes OnePGH is a way to generate far more revenue for city projects than the payments in lieu of taxes agreements with nonprofits. Tax-exempt properties – those of nonprofits and government – control nearly half of the city’s real estate, the city’s largest revenue source, the Trib reminds.

From the OnePGH website:

“OnePGH is the strategy for Pittsburgh to thrive in the 21st century as a city of engaged, empowered and coordinated neighbors. Pittsburgh will be resilient when our city is livable for all residents. OnePGH establishes a bold vision for the city, building on recent successes and a wealth of community assets, while directly confronting the complex challenges that we all continue to face.”

The word “gobbledygook” comes to mind. So does the phrase non sequitur.

What “recent successes”? The near collapse of the water and sewer system? Pledges to never privatize the same kind of systems that, under private control and continued state oversight, thrive elsewhere?

Or perhaps it’s a reference to attempting to pass laws for which the city has no purview? Or maybe it’s a public-school system not even rising to mediocrity?

Among OnePGH’s projects would be universal preschool, affordable housing, clean air and water and public art.

Those four alone raise more than a few questions, of course, given how “progressives” have operated in Pittsburgh over the last few decades. To wit:

Will “universal preschool” be anything more than a glorified babysitting service? If it’s modeled after Head Start, how are the planners prepared to overcome the primary rap against it — that its long-term cognitive benefits for children are de minimis?

Then there’s “affordable housing.” Will this effort make housing “affordable” for some by making it less affordable for others? That’s what raising the city’s real estate transfer tax did in 2018. Perhaps we need more of that?

Of course, clean air and water are great things. And Pittsburgh has made great strides in both areas. Despite both likely being the cleanest they’ve ever been, further efforts have been deemed necessary by some.

But at what cost? And at what benefit? And will truth be the first casualty (as it is annually from the folks at the American Lung Association when steadfastly misrepresenting Pittsburgh’s air quality)?

Public art? Indeed, art is a wonderful thing and, too often, as once was written, “hath an enemy called ignorance.” But, certainly, Pittsburgh has more pressing needs, does it not? Have the Carnegie Museums closed? Are we really in need of more Dippy the Dinosaurs?

Again, from the OnePGH website:

“Pittsburgh will empower all residents to contribute to thriving and supportive communities by ensuring that basic needs are met.”

What, are we to be a commune? Are we going to open more government grocery stores? Propose ever higher, arbitrary wage floors that do more harm than good? How about allowing the marketplace to work and, in the process, promote not only value but independence over dependence?

“We will be an inclusive city of innovation that celebrates our diversity, and all residents will have equal access to resources and opportunity.”

Pittsburgh being, as the old WIIC-TV Christmas promo went, “a whole world of people,” long has embraced its diversity. Do we now need a public-private partnership to continue?

“Pittsburgh will use land to benefit all residents; to increase social cohesion, connectivity, public and ecological health; and to protect against current and future risks.”

More gobbledygook. Why does the phrase “central plan” come to mind after reading such jargon? Will the “benefits” come in the shape of a cudgel?

“I don’t want to give a time frame,” the mayor said of when things might get strolling, “because it’s more important to me what is the result in 12 years than what is the date we start.” Or, for that matter, much detail.

Perhaps the ends justify the means, no matter how nebulous the effort is?

But, of course, an “administrative council” must first be formed to iron out the details, Peduto says of what will be yet another unelected bureaucracy, long the bane of sound public policy.

Who knows, perhaps there even will be a circus. Send in the clowns?

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

 

 

A minimum wage tutorial

Wages should be left to the fair and free competition of the market and should never be controlled by the interference of the legislature.

  • David Ricardo
  • “Principles of Political Economy” (1817)

Raising Pennsylvania’s minimum wage is said to be a priority this legislative session among “progressive” lawmakers, including those in Southwestern Pennsylvania.

They argue that inflation has increased but the government-mandated wage floor has been stagnant at $7.25 an hour for the past decade. One proposal would raise the minimum wage to $15 an hour by 2024.

Of course, supporters of higher minimum wages invariably see them as a “benefit” and not the cost they are. Additionally, they see this “benefit” being covered by “the rich.”

But their fallacy is multi-faceted, as John Phelan at the Center of the American Experiment recently reminded in an elementary tutorial that should be mandatory reading for all public policy makers.

“Minimum wage hikes are frequently presented as a way for government to help people struggling with the cost of living,” the economist reminds. “But wages are prices as well. They are part of that cost of living.

“When government tries to increase these prices by decree, it pushes up the cost of living – the very problem it is acting to alleviate in the first place.”

Thus, government’s attempts to help “actually hurt,” Phelan notes. “This will, in turn, lead to renewed clamor for government to ‘do something.’” And on and on and on a vicious cycle is replicated.

(This is analogous to, say, pork farmers, stung by low pork prices, seeking government price supports, which, in turn, serve to either artificially maintain overproduction levels or even increase them. And what does that lead to, class? Why, depressed prices and repeated demand for price supports that perpetuate this perverted cycle.)

Additionally, Phelan reminds it’s not “big business” that bears the cost of minimum wage hikes but small businesses already operating on the thinnest of margins. (That’s because many of those larger businesses already, voluntarily and based on productivity and employee value, pay $15 hourly.)

“(I)t is not some mythical ‘robber baron’ who will be forking out to pay for the promises of the state’s politicians,” the economist says. “Instead it will be those business men and women and their customers who pay the price … .”

“Beneficent” Western Pennsylvania legislators supporting a higher wage floor would be wise to embrace Phelan’s tutorial. But, of course, they won’t.

Instead, these government alms-givers, convinced they know better than the fair and free competition of the market, will look for someone to blame – and never themselves – for the resulting fewer entry-level jobs, jobs with fewer hours and even fewer businesses.

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

 

Government Air & government as grocer

“New year, new airline,” is the way Allegheny County Airport Authority CEO Christina Cassotis touted the arrival of Via Airlines to Pittsburgh International Airport’s flight mix.

But reasonable people are forced to ask this question: “Same-old, same-old?” If not this one: “Thank you, sir, may I have another?!”

They certainly are apropos queries, considering the authority’s long list of failures in attempting to command the marketplace with public subsidies. Think OneJet. Think WOW. Think Qatar.

And think of the boilerplate bromides trotted out yet again to announce the coming spring arrival of Via, a small Florida carrier that will offer exclusive flights to Austin, Texas, Birmingham, Ala., Hartford, Conn., and Memphis.

There’s talk from Via of making Pittsburgh a “focus city.” There’s talk of adding more flights. We’ve heard it all before.

“We’re happy. We’re thrilled,” Cassotis said. “They’ve got the right-sized aircraft.  These are the kinds of markets that the serve and we know these markets will perform when they get service.”

Past being prologue, until they don’t, of course.

“It’s a perfect match,” said Rich Fitzgerald, the Allegheny County chief executive. Until it’s not, that is.

Public subsidies? Why, of course, yes. They are said to not be anywhere near the ridiculous $3 million or so given to the now belly-flopped OneJet. But there are subsidies, still being negotiated and other than a “traditional” one-year waiver of landing fees.

Cassotis describes them as marketing incentives of a “modest amount.” The public won’t know that amount until the deal is cut. But if public officials and Via are so confident that there will be demand for these flights, why should public dollars be needed to market those flights?

Via, by the way, is defended as being “established” and not the kind of “start-up” that was OneJet.

But, and yet again, what kind of due diligence was performed to vet Via’s financials. If it was the same process use to vet OneJet and WOW, public dollars could be taken for another ride.

All that said, the Post-Gazette reports Via doesn’t have the best service track record. Flight delays. Unscheduled stops. Canceled flights. As the P-G’s Mark Belko reports:

“Such complaints prompted the U.S. Department of Transportation to write to Via last year to express ‘serious concerns’ about them. Via at the time was receiving a federal subsidy as part of the Essential Air Service Program to ensure flights to smaller airports.”

That’s the taxpayer-subsidized program to put commuter planes at airports where there’s insufficient market demand. What could go wrong, right?

The P-G says Via’s service problems were so severe that two airports asked the feds to replace Via with another carrier. Can it get any more encouraging?

There’s another object lesson in the folly and failure of command economics unfolding in Pittsburgh’s Hill District.

Five years and three months after its October 2013 opening, the heavily subsidized (through public and foundation dollars) Shop ‘n’ Save grocery store appears to be struggling.

That word comes in ancillary news reports about struggles of Hill House Association, the nonprofit group that owns the shopping center in which the full-service grocery is located.

As the Post-Gazette reports it, citing court documents, Shop ‘n’ Save stopped paying rent in the spring of 2018 while another business, a coffee shop, hasn’t paid rent since July 2017, not long after opening.

Exactly what’s going on is unclear. Is the landlord not maintaining the property? Can Shop ‘n’ Save not afford to pay its rent? The coffee shop owner told the newspaper that the shopping center has not generated the customer traffic that either business expected when they signed on to the development. The shop owner alleges Hill House has not sufficiently marketed the complex.

Of course, more than a decade ago when do-gooders were clamoring for a full-service grocery store at the site, the public pretty much was told that if it was built, Hill District residents, without a full-service grocer for decades and stranded in a “food desert,” would flock to the store.

You’ll recall how that claim was, in an illogical twist, the rationale for millions of dollars in subsidies that far outpaced the private investment of the grocer itself.

Well, if it was such a simple matter as building it and shoppers would come, why did this grocery stores require such massive subsidies? You’ll also recall that proposals to build a smaller store with less-expansive offerings that studies suggested would better serve the Hill District were repeatedly rebuffed.

These days, even the foundation community has pulled back from supporting Hill House, obviously seeing little or no promise of sustainability.

Where governments attempt to create markets, governments typically fail. And what appears to be a foundering attempt at “government as grocer” is the latest manifestation of that public policy truism.

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

 

More OneJet questions

A number of questions arise following a Post-Gazette story detailing the number and identities of investors allegedly snookered by OneJet.

OneJet was the heavily publicly subsidized business-oriented passenger air service that was forced into Chapter 7 liquidation in late 2018 by a handful of private investors. The highly touted airline began service to Pittsburgh International Airport in 2015. But by late last summer, it more resembled a flounder washed up on a beach.

The Allegheny County Airport Authority, the county Redevelopment Authority and the state Department of Community and Economic Development had ponied up about $3 million in public dollars. And it appears that nearly all of it likely will not be recoverable from the turnip that OneJet turned out to be.

But far more money is owed to private investors – “a who’s who of Pittsburghers,” is how the P-G characterizes them.

We’ve repeatedly raised the question of what kind of due diligence was performed by government agencies to vet the financial wherewithal of OneJet. What was the process? Who did it? Was it done at all?

But the release of the list of private investors begs a few more questions. What kind of due diligence did they perform?

Granted, a second, larger lawsuit by investors alleges OneJet’s principals misled them about the airline’s finances. But a number of those investors were, for lack of better phrase, “money people” – bankers, corporate executives and even UPMC Children’s Hospital. Did they assume too much? Did they accept at face value OneJet’s claims?

And an even larger question comes into play here: What, if any, influence did those private investors have on government officials to turn public money into venture capital dollars?

Did that influence play any role in government failing to perform its due diligence? Was it the proverbial blind leading the blind? Or did those government agencies fail on their own? Either scenario should raise eyebrows.

More questions – very serious questions — are being raised about the OneJet fiasco on a regular basis. And the need for a top-to-bottom review grows stronger.

As we’ve noted before, and will continue to note, that’s a job for the state Attorney General’s Office, which, per statute, has auditing purview over the Airport Authority.

And everything must be on the table, from how recipients of public dollars are vetted, to past conflicts of interest by authority board members, to the plenary power of authority CEO Christina Cassotis to grant subsidies in any amount, to what outside entities might be having undue influence on the operation of the Airport Authority.

Such a major public policy “fail” demands an exhaustive review. Until that happens, there will continue to be more questions than answers.

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

Tom Murphy’s ‘rehabilitation’?

“I’ve been rehabilitated,” Tom Murphy quipped, wryly, on Thursday after receiving the ceremonial “key to the city,” considered the highest civilian honor that Pittsburgh government can bestow.

The question, of course, is: Why?

Murphy, the city’s 57th mayor, left office 13 years ago after serving for a dozen years (1994-2006). But he left a public policy “legacy” that, overall, is neither worthy of praise nor emulation.

During the key presentation ceremony (the oversized key in a box given by Mayor Bill Peduto), Murphy lamented that “Virtually everything we tried do to, people opposed.”

As if that opposition, based on sound economics (if not economics morality) wasn’t warranted. For so many of Murphy’s proposals were the exemplar of poor, bad and simply lousy public policy.

When, in 1997, voters in 11 Southwestern Pennsylvania counties overwhelmingly rejected “The Stadiums Tax,” it was Murphy who thumbed his nose at the “people.” He hatched the plan that packed the Regional Asset District (RAD) board to divert multiple millions of taxpayer dollars to build the barons of sport new play palaces.

Between the thumping at the polls and the RAD end-around, Murphy mocked the public over stealth legislation in Harrisburg that would have funded the projects. The same “people” he derided did what thinking people do best – they demanded the measure be killed. And it was.

Nonetheless, the public continues to pay to this day. And in ways it never imagined. As the Allegheny Institute recently noted, sweetheart leases allow the Pirates and Steelers to offset lease payments for a litany of “deductions” that defy credulity.

Murphy also fancied himself as a command economist – waving a magic wand that dispensed taxpayer gold to “rebuild” downtown Pittsburgh as only a hubris-filled pol could. His marquee failure — $50 million in public dollars to build Lazarus a new Downtown department store. It went belly-up in five years.

Another Murphy scheme, to effectively bulldoze a large swath of Downtown for a publicly funded retail Mecca, never got off the ground. Thank goodness.

And all of this only scratches the surface of Murphy’s temerity.

Yet, in Thursday’s ceremony, Murphy’s trademark hubris again got the best of him, intimating that the majority of those who opposed his schemes, his end-arounds and his subterfuges of 20 years ago now have come to see the proverbial light.

“What happens after 12 years or 10 years or whatever it is, is that people sort of see the results. If they connect me to it at all, they sort of give me some credit for starting it.”

It’s further proof that hubris, fueled by ignorance, leads to historical impudence.

Indeed, Tom Murphy’s entire record is not cringe-worthy. After all, he did begin to take steps to address Pittsburgh’s chronic fiscal mess (though some would argue he had no choice). And he did take the long overdue step of slashing the city’s payroll.

But, on net, the Murphy years should serve as an object lesson in how not to devise or prosecute public policy. And in how not to disrespect the public’s intelligence. Those who seek to “rehabilitate” Murphy’s image only prove that they have failed to learn the lessons that Murphy’s mayoralty should have taught them.

That Murphy actually believes he has been “rehabilitated” more than suggests he still doesn’t get it – and that he likely never will.

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

 

Slaying rail transit shibboleths

There’s a great new book that should be required reading for every elected and appointed official responsible for mass transit planning in Southwestern Pennsylvania as the new year rolls out.

It’s Randal O’Toole’s “Romance of the Rails,” subtitled “Why the Passenger Trains We Love Are Not the Transportation We Need.”

It’s a beefy (nearly 400 pages with exquisite footnoting) but very accessible look at the nation’s rail services, from the Transcontinental Railroad to urban and regional transportation lines, old and contemporary — and how government invariably mucked up (and continues to muck up) the works.

In fact, O’Toole, a long-time lover of all things trains (hence, the book’s subtitle), exposes darn near every shibboleth about the economic and operational efficiencies of passenger rail – oxymorons promoted shamelessly for more than a century by government and those who long have profited at taxpayer expense and at the expense of sound public policy.

It is no hyperbole to say O’Toole eviscerates every government-promoted rationale for passenger rail, especially the kind of light-rail passenger service that repeatedly has been being foisted on Pittsburgh and Allegheny County residents.

Agree or disagree, but O’Toole says the next bona fide public transportation revolution is upon us with autonomous vehicles, in general, and autonomous ride-sharing vehicles, specifically.

From O’Toole’s book:

“Some transit agencies admit that human-operated ride-sharing services are responsible for low transit ridership numbers. Despite declining ridership, some people continue to support construction of new rail transit lines.

“Most of that support comes from contractors expecting to profit from construction and environmentalists who irrationally hate automobiles even though it is far easier to build a green auto than it is to persuade people to stop driving and start riding transit.”

Continues O’Toole, in perhaps the book’s boldest pronouncement:

“Once driverless ride-sharing is available, there will be little justification to continue subsidizing transit, and most rail transit lines outside of New York City will turn to streaks of rust. …

“In the end, the argument for subsidies to any form of transportation is weak. … (A)ll the subsidies do is create demand for more subsidies,” O’Toole reminds.

“Romance of the Rails” is a critically important book as public transportation in this country arrives at a critical crossroad. How sad that many, if not most, public officials will scoff at its well-argued points and insist on continuing to prosecute the same, and failed, public transit “solutions” that only pay homage to Luddites.

This exact kind of intellectual vapidity was on full display in the Post-Gazette’s year-end story on the Port Authority of Allegheny County. The headline? “Transit CEO brings new attitude in her first year.”

Oh, by gosh, by golly, we learn that in Katharine Eagan Kelleman’s first year on the job (with a base per annum of $230,000) the Port Authority passed out 3,000 flashlights to transit agency workers last March on National Employee Appreciation Day to, as the P-G reported, “show the way to improvements.”

And, good grief, we are told that 60, count ‘em, 60 employees marched in last year’s St. Patrick’s Day parade “with the agency’s first-in-recent memory St. Patrick’s Day-themed bus.”

Of course, there’s also mention of a pricey effort “to create a new brand for the agency.”

But, alas, there’s not one mention of the Port Authority’s out-of-whack cost structure and its chronic ancillary problems.

And hopes that the new year will bring a real new day to the agency appear to have been dashed.

From the email inbox, a reader reacted to the Allegheny Institute’s analysis (Policy Brief Vol. 18, No. 46) of the latest abysmal PSSA scores (edited for clarity):

“It was good to read your article about our Pa. public school assessments.

“Being one of the payers for life, to enable the less fortunate to receive an education, I, for the past 40 years-plus, have wondered what I’m paying for.

“I am now in my 80s, spent three years overseas in the military keeping the present-day students’ grandparents safe.

“Again, for too many years I see public school students being bused to and from the schools — must be bad to walk nowadays; I never was on a school bus when I went to school.

“These kids are now fed breakfast and lunch, most given at no cost. Then, when you tally up the time spent at the feed lot and playing games, very little time is spent in a true classroom learning something.

“Our education system must be revamped; it is now being run by teachers for teachers. The teachers now demand over-average wages and benefits, plus the outstanding pension plans plus medical benefits.

“I sit here pondering how to find the lowest price for my medicine so I can feed myself better — due to paying my property taxes.

“I’m fed up paying for this horrible system.”

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