PAT in RAD Mix Again

"The Port Authority presents today as an eligible applicant with significant regional impact and an urgent and unmet need. Fortunately, revenue growth this year allows RAD to respond to this need on a one year basis without detriment to other program areas. Since this may not be the case next year, we urge state and county leaders to continue their efforts to find alternate, reliable transit funding sources." —Regional Asset District final budget for 2013

Last year, the Port Authority (PAT) asked for and received $3 million from the Regional Asset District as an annual grant. The Authority is making the same request again for 2014. While we know that no comprehensive transportation plan came out of the legislative session, and that PAT passed a budget for 2013-14 that is not yet on the Authority’s website, there are competing outlooks over how long PAT should get money from RAD.

The County Executive-who currently appoints all nine members of the Port Authority and 3 of the 7 members of the RAD board-said last August that he did not want the 2013 disbursement to be "…just a one time grant". An op-ed piece soon after argued against that line of thinking, stating the request "…should be a one-time thing". At least one leader in the arts/cultural community expressed reservations about the precedent the request would make, echoing a state senator who raised similar issues when it was decided that RAD would be able to help the Sports and Exhibition Authority (SEA) for a few years while it waited on gaming money.

Like the County Executive argued that he could think of no bigger regional asset than mass transit, the Executive Director of the SEA likewise opined a handful of years earlier that the convention center met "the definition of a regional asset". Yet the SEA no longer gets RAD money as it now gets gaming money-so it was really a temporary regional asset until a new source of revenue came along. Will that be the same for PAT? Recall that in some versions of the state transportation bill that would be more emphasis on local funding, with possible new and higher revenue options. Who knows if that will make it into a new transportation plan should one be debated in the fall. Is it possible that local officials could make the case that the RAD funded PAT without any hardship to other organizations so that, rather than creating new taxes again the Authority should be made a permanent beneficiary?

Rivers Money Dries Up

"PITG’s commitment to the community included a $1 million contribution per year for three years to a neighborhood redevelopment project in Pittsburgh’s Hill District, a $7.5 million contribution per year for 30 years toward the funding of a new arena in Pittsburgh and a $1 million per year contribution for three years to the Northside Leadership Conference"-Adjudication of the Gaming Control Board, 2008.

We won’t know if the Rivers Casino lived up to its obligation for the hockey arena until the Penguins’ star center is the ripe old age of 53, but the time is up on the three year community redevelopment agreements, and it does not look like the casino is looking to extend what was agreed to by the original winner of the slots license. It noted in a prepared statement that "Rivers will continue supporting Pittsburgh’s neighborhoods through its ongoing community outreach programs." It has met its commitment, and there have been projects undertaken with the money from the agreement, and it should not be expected to do more.

That’s not going to stop the beneficiaries of the agreement from making the case for more and, one could argue, they are free to make an appeal to the casino the same way they would the state, the Federal government, the URA, the County Redevelopment Authority, etc. that their good and noble work needs to continue. One official stated "What they said is not a surprise. That doesn’t mean to our minds that that’s the end of the conversation. That doesn’t preclude future plans. So we’re happy to talk to them about the future". But it is fair to ask if community groups could become addicted to gaming money-if so, do we need to start "Redevelopers Anonymous?"

Advocates Miss the Bus

Proponents of funding public transit rallied at the City-County building this week calling for dedicated funding from the state for the Port Authority, one speaker noting that there is still a "transit crisis" that they hope will be ended when the Governor unveils his transportation plan for roads, bridges, and transit (that is now supposed to come at the budget address next month rather than today). The speaker used the opportunity to state opposition to "privatizing" transit since that "spells disaster … With privatized transit, fares go up while quality, safety and wages go down". Why even mention it? Because the speaker had heard the Governor make mention of it at a speech at the University of Pittsburgh.

Does the speaker realize that several small transit companies in western Pennsylvania, even some that drive buses into Allegheny County on a daily basis, contract with outside companies to run their bus service? Based on our 2011 survey, some even paid higher wages than those that kept their operations "in house". Of course, none could touch the wage of an average PAT driver ($25.48 to $15.23). Or that the Port Authority contracts with a company to provide ACCESS service? The previous Governor’s transportation commission in 2006 gave that portion of PAT’s operations very high marks. Know what else that Governor’s commission did? It directed PAT and other transit agencies around the state to evaluate competitive contracting opportunities, adjust service to meet market demand, reduce labor and management costs, and tie bus fares to inflation. Sounds quite business-like.

The speaker’s worst nightmare might be riding a bus in Denver, Colorado. A 1988 state law directed Denver’s Regional Transportation District to contract out a portion of service, which now stands at 50% of "rubber tire" service. As of 2011 the RTD had 1,093 contracted fixed route drivers working alongside 1,826 represented employees; 537 buses were RTD owned and operated, 457 RTD owned and leased to private carriers. A customer can’t pick and choose whether an RTD driver or a contractor is going to pick them up on a bus trip. And who knows if the quality of the buses under the direction of lessees is compared to the in-house driven ones. Has that uncertainty scared off bus riders? According to statistics from the National Transit Database since 1996 (the farthest back the data goes) unlinked bus trips are up 16%; PAT’s are down that rate over the same time frame.

How Much Do Users Pay for PA’s Roads?

The Governor has let the cat out of the bag, or maybe, more apropos, some of the air out of the tire, on a holistic transportation fix for the Commonwealth. Part will be a proposal to take away a cap on the Oil Company Franchise Tax, a tax that is levied upon gas at the wholesale level but presently applies to the first $1.25 of the wholesale price. Removing the cap to apply the tax to the entire wholesale price, and by one estimate reported in a newspaper article would generate $1.8 billion on top of the $1.3 billion currently collected with the cap.

That was but one recommendation made by the Governor’s Transportation Commission in 2011; others include paying more in fees and registrations but lessening the frequency at which driver’s licenses and auto registrations must be renewed.

Its not clear what lifting the Franchise Tax cap, license proposals, etc. will mean for the end user, the person filling their gas tank and traversing one of Pennsylvania’s roads. A recent study by the Tax Foundation shows that nationally gas taxes, tolls, and other user fees generated just a third of the spending on roads-the rest comes out of general revenues. According to their analysis Pennsylvania is right at the national average: 33%, ranking it 18th out of the 50 states. Outliers include Alaska, Wyoming, and the Dakotas generating 20% or less of road spending from "user fees" and Delaware, Florida, and New Jersey at 49% or more of road expenditure coming from gas taxes, tolls, and driver related charges. Another Foundation document shows that as of 2013 Pennsylvania has the 7th highest gasoline tax at 39.2 cents per gallon (Connecticut has the highest at 56.2 cents, Alaska the lowest at 8 cents).

Just This Once

An op-ed piece today compares the Port Authority to a down-on-their-luck person who comes begging for money and, against the better judgment of the person of whom assistance is requested, gives in. The "askee" this time is the Regional Asset District, which last week included in its budget a $3 million allocation for PAT as part of a big funding package. "it should be a one time thing" the op-ed notes.

That’s going to be difficult: the County Executive, who appoints all of the PAT board members and four of the seven RAD board members, noted back in August that he will "ask the asset district board…to make a $3 million annual commitment, not just a one-time grant." We also documented previous shifts or "flexes" of money to the down-on-their-luck authority as recently as two years ago when the Southwest Planning Commission played the role of the benevolent one, being asked by the Governor to approve money for PAT. That board, in 2005, said that the last time it flexed money would be the last time it flexed money. They did flex the money, basically saying that they weren’t serious when they said they would not shift money again. The RAD board will be in the same position next fall: previous experience suggests it won’t be the one to make the PAT allocation a one time thing.

RAD Creates New Category for PAT

In the 2013 preliminary budget for the Regional Asset District (RAD), total proposed spending would top $88 million: $85.5 million from the half of the sales tax proceeds that go to the District to fund cultural, recreational, and sports facilities; close to $3 million from reserves; and the rest from interest.

The District allocates money to contractual assets (the zoo, libraries, the aviary etc.), multi year assets (money to the Sports and Exhibition Authority for debt service), annual assets (a group that includes a variety of organizations that make annual petitions) and a small share for administration. Next year marks the beginning of a new category-provisional-for $3 million requested by the Port Authority (PAT) as part of an agreement brokered by state, local, PAT officials and PAT employees to avoid service cuts in September. Recall that we pointed out in a Brief earlier this year that RAD had come to the aid of another authority from 2007 through 2010 (the SEA) but the SEA was lumped in with the annual grants along side groups like the Pittsburgh Symphony and the Civic Light Opera.

It is not clear if, by creating this new category, PAT will be required to be put in line for budgetary consideration each year or if the $3 million is guaranteed for a certain number of years. The preliminary budget, which was put together by the District’s allocations committee, notes that "the decision on this unique request needs to be made by the full board after review of the information that has been provided by [PAT] since the [initial] hearing and after public input is received". The committee pointed out that inclusion in the budget did not constitute endorsement, but to show what the budget would look like with it in.

Contractual assets are slated to get $1.8 million more in operating money next year than this year; the multi year debt service payments to the SEA are expected to go down slightly (by $44k due to a drop in arena debt service); annual operating grants are up by $209k, but there was some churn from 2012. This year, 77 organizations received annual RAD operating support; in next year’s preliminary budget six of those organizations are gone (they received a total of $74k in 2012), leaving 71 organizations that received 2012 operating support in consideration for 2013. Of those, 45 are to receive more money than they are in 2012 (increases vary considerably) and the other 26 are slated to receive the same as they did in 2012. There are three organizations that appear in the 2013 preliminary budget that did not get annual operating support in 2012 (the three combined will get less than $10k).

Governor Taking Heat over Transportation Funding

And the cries for the Governor to find new revenue to fix roads and bridges -and fund mass transit -grow louder. This while the Governor wants to protect taxpayers from higher costs. He knows other problems are looming large such as the whopping increases in pension funding that will be required over the next few years. Where will that money come from? There are projected Federal Medicaid funding cuts. How will that be made up?

It is marvelous to watch the crowd that supports an outrageously expensive and inefficient mass transit system and wants the state to pour more money into it grouse about transportation needs. Indeed, the Governor, against his own better judgment and the strong case that was made not to bail out the Port Authority, has committed $35 million a year in additional state tax dollars for the Authority. No one knows where that money is coming from.

What is really galling about the latest round of caterwauling regarding the Governor’s inaction on raising taxes and fees for transportation is the assent given explicitly or tacitly by the same complainers when the previous Governor was moving hundreds of millions in highway funds to underwrite the Port Authority’s egregious spending. That money was wasted rather than fixing road problems.

Moreover, why was it that the people who are now so exercised about the Governor’s inaction could not contain themselves at the prospect of tolling I-80 to raise funds for transit? Anyone who bothered to look at the law could have known that tolling I-80 for any purpose other than funding maintenance and improvements on I-80 was not going to happen. Yet the then Governor, the Legislature and all the spendthrift supporters of mass transit all thought it was great idea and that somehow the presidential administration would get it approved notwithstanding the law. Mirabile dictu, it did not cave to political pressures from the former Governor. Years were wasted in dealing with cost issues and seeking funding sources. And then the sharp economic downturn put on hold any meaningful discussions.

Road work does need to get done. How about we ask the Feds to lift the Davis-Bacon prevailing wage requirements? That would lower costs dramatically. Not that it will ever happen. But the state could eliminate prevailing wage requirements on projects not using Federal dollars. Where is the clamoring for something sensible like that? Why is it always the taxpayers who must make the sacrifices? Why not some concessions from those who drive the costs far above where they would be in market based system?

Transit Shift Does Not Paint a Pretty Picture for Arts Groups

RAD money for PAT: designating the Port Authority as a regional asset would enable it for a $3 million piece of the proceeds from the share of the 1% sales tax set aside for regional assets like the zoo, libraries, parks, etc. and would combine with other sources from the County and the state. Of course, making room for PAT in the RAD pool could mean some crowding out of other assets entirely or through a smaller or flat allotment. A decline in sales tax proceeds could also precipitate complications.

We pointed out in a Brief this year that giving PAT a piece of RAD money would raise "is" and "should" questions (and we addressed the topic in earlier years, here and here). There is nothing in the law that says transit is not a regional asset: we pointed that out and a legal opinion delivered to the RAD board echoed that. Then would come the discussion about whether there was merit in giving PAT a monetary commitment. It could open the door to having other public authorities showing up at RAD’s door asking for money.

Several representatives of Pittsburgh arts’ groups communicated as much to the RAD board at a hearing yesterday. "If this (funding for Port Authority) occurs, then where does it stop?" asked one leader. Another said "Whether it’s one year or 10 years, it presents an unprecedented challenge". Part of the reason could be that the predictions that there would be a $5 million surplus might look a bit different. The RAD budget, and the decision on whether PAT will be a part of it, will come by the end of November.

PAT Could Be an Asset

After reviewing a host of sources-statutes, judicial decisions, internal documents of the organization-an attorney retained by the Regional Asset District (RAD) board has determined "there is no legal impediment to the District providing funding to the Port Authority (PAT). That answers the "is it" or "isn’t it" part of the question of the plan to devote $3 million in asset funding to PAT as a local subsidy.

The opinion does not address the "should it" question (the attorney notes "…we are not opining that the District is compelled or that it is advisable to fund [PAT]) but says that the law does spell out what RAD can’t give money to and if transportation was not the Legislature’s intent it would have put it on the list of prohibited beneficiaries. It also noted that the RAD request will not be a one time deal ("it is further anticipated that this will not be a one time request but will be continuing for at least the next several years").

The Institute raised these questions in a recent Brief and the attorney’s opinion will provide the input the RAD board needs on the decision.

Pittsburgh Promise Raises Money, But Misses Primary Goals

Last week was a bounty of good news for boosters of the Pittsburgh Promise.  It was announced that $160 million had been raised over the past four years, putting it well on its way to a ten year target of $250 million.  The first recipients of money from the 2007-08 graduating class that went to a four year program just completed their studies.


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