Port Authority Facing Deficits


News reports tell us the Port Authority is staring at a $25 million deficit in the current fiscal year, and possibly another $25 million next year. They complain that revenues are down and fringe benefits, especially health care, are rising quickly.


Is anyone surprised?  Back in 2008, the Port Authority Board caved to union demands and agreed to a contract with no savings in it other than far distant pension and health care payments. A savings that could be reversed in future contracts.


The union was threatening a strike that could have savaged the local economy and brought massive hardships to transit users and produced highway traffic tie-ups. And as usual, the Authority blinked.


Thus, the Port Authority will now be forced to (a) go hat in hand to Harrisburg to ask for more money (b) raise fares again and/or (c) reduce service and layoff drivers and mechanics. This is what happens when a financially strapped entity fails to do its duty and stand up to unions. But wait. The management is hamstrung because it dares not take a strike for fear of what happens to the economy and the fact that it might end up losing some of its already slim user base.


So the problem really goes back to Harrisburg and the state government where there is no real effort to take away the transit workers’ right to strike.  Consequently, severe financial problems will continue.  As we have recommended many times, the Port Authority must stop filling vacancies and when 20 positions open up due to attrition and retirements, it should outsource routes those jobs supported.  Over time, the Authority could make a significant dent in the ability of the transit union to overpower the Board in contact negotiations.  We will know the Authority is serious when they announce a complete hiring freeze.

The City’s Police Contract: What’s in There?

"I would characterize this contract as a good contract for both [the City and the Fraternal Order of Police"-that’s what the head of the City’s FOP said in a newspaper article yesterday when responding to a question about the newly negotiated pact between Pittsburgh and its 885 member police union. It might be so good that the police membership may actually vote to ratify the contract instead of it proceeding to Act 111 binding arbitration, the latter being the norm for the past three decades.

There are no real details as of yet, but it will be interesting to see how the contract treats some key components of reform suggested by the Act 47 team in its amended report. For instance:

  • Civilianization: The recovery team noted that Pittsburgh "has an unusually high ratio of sworn officers to civilian employees", especially compared with other police departments around the country. It suggested that some functions could be turned over to civilians. The 2004 Act 47 report started this discussion, and the amended plan said that "the City needs to make more progress toward civilianization".
  • Overtime Reduction: The Act 47 team wanted the Police Bureau to "develop a comprehensive strategy for controlling overtime expenditures". This could be accomplished by adjusting court time and overall scheduling.

Beyond these specific recommendations there are general goals of moving long-term benefit costs lower by looking for lower cost options on health care premiums and possibly lower cost defined benefit pension plans for new hires. Recall that the last police (and fire) contract eliminated retiree health care for those hired after December 31, 2004 and put the onus for paying premium increases on retirees who did not retire by that date based on recommendations of the recovery plan.

It is hard to fathom the hard work being over for the City and its largest bargaining unit, but the talk as of now makes it seem like the worst is behind them.