Will the State Act on Allegheny County’s Mass Transit Situation?

The wolf is sitting on the doorstep at the Port Authority of Allegheny County (PAT).  A little over six months from now the agency will be staring into the abyss of a $64 million budget shortfall for the fiscal year beginning July 1, 2012. 

 

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Time for Port Authority to File for Bankruptcy

Once again the Port Authority chief executive is warning of disastrous cuts in service if the state does not come through with more funding; something the Governor has suggested is not on the front burner for discussion at the moment. According to the Tribune Review of November 2, the legacy costs of the Port Authority are now a fourth of its total expenditures and slated to rise even further in coming years. The Allegheny Institute has warned of this preposterous situation for years as nothing meaningful has been done to address the problem.

Instead of cutting into these costs and lowering current compensation costs the Authority has engaged in service cuts to lower spending. And while some early service cuts were useful in eliminating costly low volume routes, recent reductions have cut into service affecting large numbers of riders. That action is all management can take in the face of union intransigence and bargaining power backed by the threat of strikes.

The time has now arrived to face the bitter truth. Taxpayers should not be asked to ante up ever more money to pay benefits to people who are retired and not providing any service. It does not matter if previous boards were too generous or whether union bargaining power was overwhelming, the situation must now be dealt with in the only manner possible-bankruptcy relief. Unless the monstrous burden of legacy costs are reduced, there is no future for Port Authority other than continued shrinkage of service offerings or ever increasing taxpayer subsidies to cover benefits that produce no product.

Authorities are not allowed to declare bankruptcy in Pennsylvania so it will be necessary for the legislature to change the law governing authorities to allow PAT to file for bankruptcy. Then it needs to create an oversight board with the power to order the bankruptcy to be filed and then to oversee the implementation of the terms of the bankruptcy judge’s ruling.

This fiasco has to end. Concessions by current and retired employees would be a good start but are so unlikely that it makes no sense to continue hoping for that to happen. Drastic corrective measures are called for. Only Harrisburg can do what needs to be done. It could start by eliminating the right to strike as a quick step in the right direction.

Pittsburgh to State: “Please Release Us” from Oversight

Amid the 2012 budget deliberations comes a not-too-subtle plea from certain City officials that they are ready for the state to remove itself from watching over the City’s shoulders and inspecting its finances. The Mayor’s spokesperson stated "We feel like we can start functioning on our own". The Act 47 coordinator said he "couldn’t put an absolute timeline on [leaving Act 47]" and, by extension, the existence of the separate oversight board.

Recall that in November of 2007 the City petitioned the Secretary of DCED to remove them from Act 47 status. An evidentiary hearing followed and in July or 2008 the decision was rendered to keep the City under supervision. It was agreed that, due to the City’s massive legacy cost problem, an amended recovery plan was needed and that is the plan the City is currently operating under.

With an official DCED designation date of December 29, 2003, Pittsburgh will soon have been in Act 47 for eight years. Twelve other municipalities currently in distressed status have been in longer. Of the six communities that have been removed four came out in less than eight years. Ambridge, in neighboring Beaver County, was in for just three years. The boroughs of East Pittsburgh and North Braddock, both of Allegheny County, made it out in seven and just under eight years, respectively.

In announcing the decision in 2008 the DCED secretary at the time pointed to the City’s pensions, post-retirement health care, debt, and workers’ compensation liabilities as items that needed top priority attention before even considering letting Pittsburgh out of oversight. The City spent all of 2010 focused on the pension part of the equation, and the plan that moved forward was one that beat a state minimum funding threshold, not a long-term solvency plan. They are slowly moving toward a trust fund for retirement health care (there are no assets set aside for that liability), workers’ comp costs are higher than norms, and debt is going to level off so long as the City takes care of capital needs without borrowing. Sounds like there is a lot more work to do prior to release.

A Regional Transit Authority: Will Consolidation Be Better?

Alluding to the dire financial forecast that threatens the Port Authority (PAT) in FY2013 a candidate for Allegheny County Chief Executive recently offered the idea that it would perhaps be better to have a regional transit agency, much like the Southeastern Pennsylvania Transit Agency (SEPTA) that serves the opposite corner of the Commonwealth, handle transit operations here.

 

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Port Authority Staring into the Abyss—Again

In what is fast becoming an annual rite of fall, the Port Authority (PAT) has issued an advisory telling one and all that disastrous service reductions are coming unless state taxpayers come up with tens of millions of additional dollars to support its spendthrift ways. 

 

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An Opening Salvo in PAT Negotiations

PAT board and management proposes, Amalgamated Transit Union opposes and disposes. No real surprise as news of a contract (the four year deal for PAT drivers and mechanics expires June 30, 2012) contains some very tough proposals: a wage freeze, no post-employment health coverage for new hires, higher contributions for pensions, and possibly a defined contribution plan for new employees.

It has happened before: in 2005 there was strong talk about outsourcing a percentage of PAT operations and maintenance to the private sector. Six years later it still takes the abandonment of routes and permission of the board to compete. Note too that the 2005 proposal also talked of a wage freeze and higher contributions toward benefits.

The current contract was supposedly a good thing for the Authority in terms of legacy costs, but no immediate savings were achieved. After negotiators were whisked away to the nation’s capital (the contract even included language that the parties would work toward a nationalized health care plan) the contract that developed segmented the workforce into different tiers and assigned health care benefits and contribution amounts accordingly. We wrote in a Brief right after that contract was awarded that "we will be told that the hammer on legacy costs will ‘really fall’ when 2012 comes around." Here we are.

Uncertainty and Confusion Abound at PAT

What seemed to be a clear and straightforward agenda at the Port Authority (PAT) board’s March 25th meeting turned into a much longer and drawn-out affair after the transit union made a last-ditch concession proposal in order to avert the 15 percent service cut necessitated by a revenue shortfall. 

 

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County Council Continues Its Irresponsible Voting

Hard on the heels of its repugnant and indefensible vote to smear W and K Steel by designating it as a “sweatshop”, County Council has added to its irresponsible record by voting unanimously for a resolution urging the Port Authority (PAT) to spend all the recently received bailout money by June 30 to avoid impending service cuts and layoffs.

 

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Sustainability in Pittsburgh

Could the irony be any richer? Upon the departure of Pittsburgh’s greencoordinator, we learn there is actually a full time permanent position bearing that title. According to one Council member the position is necessary to enhance Pittsburgh’s greenness. A City with spending that is unsustainable, with legacy costs that are unsustainable, with huge debt burdens, a school system that is little more than a high cost money pit, a declining population and a decade long flat private sector employment base is consumed by worry about Pittsburgh’s impact on the global climate.

We might never know if the two year tenure of the now resigned coordinator did much to save the planet, but we can say with some assurance that having a government dedicated to economic principles known to be inimical to growth and private sector employment expansion has done a great job of holding Pittsburgh’s economy in check. Whether the resultant slow or no pickup in CO2 emissions and actual pollutants has made any difference to the global climate is at best a guess.

It is too bad the same degree of Council zealotry, clarity of purpose and devotion to the world’s wellbeing is not in evidence when it comes to dealing with the problems the Council is elected to deal with.

Council’s Last Minute Pension Funding Plan Raises Many Questions

As the proverbial clock moved close to midnight on December 31st Pittsburgh City Council finalized a plan it believed would be sufficient to avoid a state takeover of the City’s underfunded pensions. Instead of a long term lease of assets that would have produced a lump sum of upfront cash for the pensions, the Council’s plan promises to dedicate thirty years of parking tax revenues along with what the City already pays in as its minimum obligation to the pension system.

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