With the opening of the North Shore Connector and the extension of the trolley line to the North Shore, and until there is the extension of the project to the airport or the North Hills as boosters of the project have used as justification, it is important to take a snapshot of light rail operations as they are in order to establish baseline for comparison to future operating data.
This year’s Port Authority budget (2011-12) put in some growth in rail ridership (less than 1%) and expenses (5.2%) due to the opening of the Connector. But actual and audited numbers for PAT’s light rail system (in the 2010-11 fiscal year) without the Connector’s impact shows the following:
- Total Rail Ridership: 6,918,000
- Total Passenger Revenue: $9,811,000
- Total Other Revenue: $295,000
- Total Expense: $49,038,000
- Total Rail Employees: 468
- Total Length of system: 48.9 miles
- Total Rail Vehicles: 83
The critical measure we can glean from this data is "total expense per rider" which stands at $7.08. Of course, this does not take into account the capital expense for the existing rail system which would boost the expense per rider significantly higher. But as the Connector leg gets up and operating and ridership numbers come in it will be easy to see from PAT’s numbers what happens to the total expense per rider. Based on FY11 numbers, a light rail trip was about $1.50 more than a PAT bus trip.
More than 80% of the total expense for light rail is accounted for by salaries and benefits, leaving $9 million or so to be spread between materials, utilities, provisions for injuries and damages, purchased services, and other. Passenger revenue ($9.8 million) covers about 20% of total expense. Recall that until 2015 corporate sponsorships are underwriting free trips between Downtown and the North Shore stations (and vice versa) so "other" revenue on the light rail system may rise slightly relative to passenger revenue.
One of the items on the agenda for County Council this week is to levy the fee on Marcellus Shale activity permitted to counties under Act 13 of 2012. Our Brief outlined the specifics of the Act and how the fee will be distributed. The legislation before County Council states that the fee "…will be to the benefit of the citizens of the county because the revenues generated from the imposition of an unconventional gas well fee will be appropriated in part to counties and municipalities within the Commonwealth for important public purposes…"
The ordinance also points out that the County has spud wells now and "is likely to have more in the future". Based on our analysis-factoring the price of natural gas, the number of wells in the County (4) and statewide (just over 4,100), along with the distribution formula for the revenue-Allegheny County and its municipalities within the County stand to share around $112,000 in 2013 from the fee. For comparison’s sake the County collects more in the "fees" it levies on recording and filing ($19.1 million), copying and printing ($603k), swimming ($1 million), and landfills ($217K) than it would take from the shale fee initially.
The Act spells out how the proceeds will have to be used. It is not sure where the County will place this money when it is received. In the 2011 budget, when revenues are broken into object code, there are "taxes" which cover property, Regional Asset, drink and car rental taxes but also the gaming host "fee"; there are no "fees" in the object code "licenses and permits" and there are several "fees" in the code "charges for services"; there is one "fee" in the code "fines and forfeitures". All that is left after that is "state revenues" which could be a landing spot for the money since the Public Utility Commission will be remitting the revenue to local governments.
Students of the Pittsburgh Public Schools, education advocates, and parents of children in the District are in Harrisburg today to petition for more money for public education. At least one student stated "we need to prioritize the budget and make education the No. 1 thing like it was a long time ago".
Without any reference to when "a long time ago" was exactly, let’s look at it from the perspective of a high school senior who will graduate in June of 2013, just about when the 2012-13 fiscal year will be wrapping up. That senior would have been in kindergarten in the 2001-02 fiscal year. Here’s how the spending of $1 in general fund money compares now and then:
All Other Functions
The other functions include health and human services, protection of people and property, direction of services, economic development, and other.
Education has been the top dog in state spending likely for much longer than the public school enrollment for the soon to be graduating senior. Keep in mind that Federal and local dollars are in the mix and that, for the Pittsburgh Public Schools, if there is an issue about in-class resources it should be noted that the last decade has seen tremendous growth in personnel and costs associated with folks who won’t step foot in a classroom and have a direct influence on the student.
The newly installed County Exec, after declaring he would be leading the charge in PAT labor negotiations, has made his way to Harrisburg to lobby for more funds for all but bankrupt Port Authority. He will argue that the looming $64 million deficit and the cuts in service it will require could have serious negative effects on the region’s economy.
What he will not tell the legislators about is the lack of progress by PAT in getting any meaningful concessions from the transit unions or retirees. Therein lies the principal root of PAT’s financial problems but nothing significant ever gets done to lower immediate cost other than lay off employees and cut bus service. The Exec has not once indicated he will press for major concessions by the retirees or union members. Hence the legislators should politely indicate the way out of their offices to the Exec.
More money for PAT now will only beget the cries for more money next year.
Really hard to enact bills need to be passed by the state government to address PAT’s fiscal situation. We have outlined those on many occasions. Eliminate transit workers’ right to strike, eliminate PAT’s monopoly in Allegheny County, and amend state law to allow PAT to declare bankruptcy. There is no other way to reduce the enormous burden of legacy costs that are driving the Authority into the ground.
The question is, do the Governor and the General Assembly have the intestinal fortitude to face down the Exec and the unions and do what needs to be done?
Yesterday’s blog outlined some of the important characteristics of the FY2012 budget for the Pittsburgh Public Schools. The superintendent’s budget message noted "even as the City of Pittsburgh’s population has declined, the number of students attending Pittsburgh Public Schools has declined even faster".
In 2001 enrollment was 37,612; in 2010 it was 27,132. Based on operating expenditures, the cost per pupil in the District rose from $12,840 to $20.686. When total expenditures-capital and debt service-are figured in, the per pupil cost stood at $23,224 in 2010.
Operating expenditures for the coming year are $529 million, down from this year’s projected total of $540 million, but until enrollment numbers are released it will be undetermined whether per pupil cost will stand. Over the decade of audited numbers per pupil spending has never fallen year over year.
Seems like only yesterday we were warning the state, school districts and municipal government about the dangers of grabbing Federal stimulus dollars and spending them as if they were permanent replacement funds for local revenue shortfalls. Now the stimulus dollars are gone and local tax revenue has not risen enough to make up the difference. Case in point; Allegheny County is facing a significant budget problem for 2012 the Chief Executive spokesperson says stems directly from the cuts in Federal and state funds that were available in 2009, 2010 and 2011.
Rather than make the spending cuts in the Executive’s proposed 2012 budget plan the majority members of County Council are proceeding with legislation to boost the County tax rate to 5.69 mills, a 21 percent increase from the 4.69 rate currently in place. As we have noted earlier, the 21 percent hike in a reassessment year is likely to run into legal difficulties.
The problem for Council is twofold. The failure to adjust spending to a lower path when the stimulus funds were arriving in anticipation of the day when they would no longer be coming in is simply inexcusable. The nearly decade long adamant refusal to allow property assessments to change to reflect market movements has locked property tax revenues for the County at artificially low levels with the major inequities frozen in place as well. Now, the Council wants to solve all the problems created by past policy blunders in one dramatic act-raising taxes by 21 percent.
Thanks goodness state law will protect property owners although it is likely to get messy and drag out any eventual resolution. The question is how far and how vigorously the new Executive and the Council will push against the law as they have all too willing to do over the last few years, resulting in expensive lawsuits that have all been lost-up to and including a Supreme Court order to reassess.
Facing many challenges at the same time, from "uncertain federal and state funding" to "declining school enrollment" to "increasing costs", the most telling piece of data from an October 20th budget presentation on the Pittsburgh Public Schools is the one that states "we can get greater efficiencies because others are delivery services for less". Surely the presentation meant delivering services for less; either the grammar teacher with the ever-present red pen must not have been nearby to correct the budget department or the number-crunchers did not re-read their statement.
The arithmetic, however, shows what plagues the City schools: based on the 2009-10 average daily membership, the cost per pupil in the Pittsburgh Public Schools was $21,027. Seven other urban districts in Pennsylvania, from Philadelphia with 207,000 students to neighboring Wilkinsburg with 1,560, don’t even come close to that level of spending. The range covers $10,414 in Wilkes-Barre to $18,619 in Wilkinsburg. On average, the districts (excluding Pittsburgh) spent $14,130 per pupil: roughly 50% less than Pittsburgh. It should not come as a surprise to anyone inside or outside the District that per pupil costs are far out of line-we have been pointing it out for years.
Surely the lackluster performance results could be achieved for a lot less per pupil. Districts spending much less have official state overseers at this point or had them previously. Now another round of school closures/realignments is slated for PPS and there could be more layoffs. But the per student cost continues to rise. To say that greater efficiencies could be found is an understatement.
The idea was probably germinating for a long-time, but in September of 2009 the County Executive announced that he would be seeking $4 million from non-profit agencies in the County to help with the budget in 2011 (the Executive stated "it is not in my budget until 2011" and that requests would start with hospitals "because they’re the largest [nonprofits] in the region. It doesn’t mean we’ll stop there").
The line-item for the contribution did indeed make it into the 2011 County budget: in the section titled "Revenue by Object Code with Character Sub-Totals" under Local Unit Revenues there isa line item of $4 million from "non-profits", right below money from the Regional Asset District, the City of Pittsburgh, and the Airport Authority.
Last year as the 2011 budget was being assembled printed reports detailed the scant and secretive details. To the best of anyone’s knowledge that money is not available. In September it was reported that "No deal has been reached to provide those funds, but [the Executive] pledged that an agreement would be signed by year’s end and the money would be available for 2011. He declined to identify any of the nonprofits with whom his administration is talking". In November it was reported the Chief Executive "has been closed-mouth about the status of any negotiations with nonprofits, [but that Council’s finance chair] said he expected the money eventually would be there."
Now state-level changes (the state funds a healthy portion of law enforcement and health and welfare functions in all counties) mean a $15 million gap in the 2011 budget and the status of the $4 million from unidentified non-profits makes that shortfall even more pronounced.
Tomorrow is the first day of the 2011-12 fiscal year for the Commonwealth, virtually all of the state’s school districts, and for special purpose agencies like the Port Authority. The operating budget for PAT is $322 million, with a gap between revenue and expenses covered by the final piece of the flex money Governor Rendell found and was approved by SPC as well as budgetary reserves. The employee headcount for PAT is 2,495, which is unchanged from the end of the 2010-11 fiscal year.
Obviously PAT is waiting with anticipation for the results of the Governor’s transportation task force, which is to deliver its recommendations on how to fund all of the state’s transportation needs in a month. Already increases in registration and licensing fees have been floated as a real possibility, but it is unclear if the revenues from those sources will be tied to a particular use. PAT’s budget presentation opines that "unless statewide transportation funding crisis resolved satisfactorily over the next 14 months, massive unfunded deficits will be projected in FY13".
Unfortunately as we have pointed out on many occasions there are numerous cost-side drivers behind PAT’s funding problems. First and foremost is the cost of labor, which is front and center in the next year as the authority is entering the final year of its four-year contract with the Amalgamated Transit Union. This year workers get a 3% raise (non union workers’ wages are frozen), and there is projected to be a jump in pension contributions from PAT ($20 million to $33 million) and healthcare expense for active and retirees are still around $70 million. It is also important to look at the ratio of retirees to actives at the agency: in 2002 there was 0.71 retirees to every 1 active; now there are 1.13 retirees to every 1 active. If PAT and, by extension, County officials, feel the 2008 contract did "good" things then the 2012 contract is going to have to be even "better".
And last, but certainly not least, let us not forget that spring of 2012 will mark the commencement of service via the North Shore Connector. If the timeline holds as well as cost projections did, look for the first trips to occur well after the anticipated launch of service.
The recent addition of Ms. Dugan to the Intergovernmental Cooperation Authority (known as the oversight board) was a tremendously positive step for the Governor to take in addressing the lackadaisical approach of the board and its habit of too often being irrelevant to the job at hand-guiding the City’s financial matters with strict discipline.
But more remains to be done to bolster the resolve and performance of the oversight board and the Act 47 recovery team. The Republicans in the House should move quickly to replace the appointment made several years ago by then Speaker Perzel. The appointment of a Democrat union leader by the House Republicans was disappointing in that it gave the Democrats a four to one majority on the board. Leaving this appointee in place keeps the board in the hands of a majority likely to be friendly to the City’s employees and higher spending and less likely to be worried about the taxpayers, fiscal discipline and the business climate.
At the same time the Governor, through the Secretary of DCED, should evaluate the performance of the Act 47 coordinator with an eye to replacing the group with someone less intimidated by the Pittsburgh government and its political and civic supporters.
The latest report from the City Controller, showing Pittsburgh spent more than it took in last year along with the debacle over the City’s massively underfunded pension plans, point to seriously inadequate financial oversight for the last seven years. What do Pennsylvania’s taxpayers have to show for the millions of dollars spent since 2004 for the two oversight groups? Not much apparently.