Tag Archives: mass transit

Details on the Port Authority’s Extremely Costly Bus Service

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Summary: A recent Policy Brief (Vol. 18, No. 13) demonstrated the Port Authority of Allegheny County’s (PAAC) very high bus operating expense compared to five comparably sized transit agencies. This Brief expands the number of agencies compared and looks at additional measures of efficiency and pay levels to develop a thorough understanding of the key differences that lead to PAAC’s extremely expensive bus operations. The news is not good. PAAC’s bus service is inexcusably costly and imposes far too heavily on taxpayers and Turnpike users.

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As noted in the March Policy Brief, the most comprehensive measure of operating cost effectiveness for comparison purposes is operating expense per revenue hour. That is, the non-capital outlays required to deliver services divided by the hours buses are actually on routes picking up and discharging paying passengers.

Total operating expenses per revenue hour data for 2016 were gathered from the National Transit Database for 28 transit agencies across the country. Of the 28 only one, New York City at $226, had higher operating cost per revenue hour than PAAC’s $189.69.  Boston ($185.14) and San Francisco ($186.54) were close to PAAC. The next most expensive were Newark, N.J. at $167.47, Seattle at $159.41 and Southeastern Pennsylvania Transportation Authority (SEPTA) in Philadelphia at $158.40. D.C. Metro was $152.30 and Los Angeles was $153.73.

No other agency in the group of 28 had total cost per revenue hour over $150. Several were in the $140s including Cleveland, Minneapolis, Miami, Syracuse and New Orleans. Chicago was $139.14. The remaining 14 bus systems had costs per revenue hour ranging from $101 to $130, including Phoenix; Buffalo; Jacksonville; Dallas; Charlotte; Milwaukee; Columbus; Salt Lake; Denver; Indianapolis; Cincinnati; St. Louis; San Antonio and Atlanta.

For detailed comparison with PAAC, a group of 10 systems were selected:  Charlotte; Cincinnati; Columbus; Cleveland; Milwaukee; Minneapolis; St. Louis; Atlanta; San Antonio and Salt Lake.

Operating expense per revenue hour is made up of several expenditures and factors, including operator wage expenses; wages of other employees necessary to produce bus services; fringe benefits of all employees involved in bus service delivery and nonemployee expenses (fuel, etc.), the percentage of vehicle hours that are actually on revenue-producing routes and any time for which drivers are paid while not actually operating a vehicle.

For purposes of this analysis the ratio of operator wages paid, other employee wages and fringe benefits for all bus-related employees to revenue hours and to vehicle hours were calculated for each of the comparison agencies. Recent estimates of average hourly wages for drivers for each agency were collected.

PAAC had a total operating expense per revenue hour of $189.69 while the 10 agency comparison group averaged $117.42, making PAAC 62 percent more expensive than the 10 system average.  Of the 10 agencies, Cleveland had the highest cost per revenue hour at $148.86 followed by Minneapolis at $145.57. The lowest operating cost agencies were Charlotte ($101.31), Milwaukee ($101.28) and San Antonio ($103.28).

Calculated on the basis of cost per vehicle hour, PAAC stood at $161.58 and the average for the 10 was $107.44 making PAAC 50 percent more expensive than the group average. Note that PAAC’s 62 percent greater operating expense per revenue hour compared to the 10 systems is significantly higher than the 50 percent difference in the cost per vehicle hour. This results in part because only 85 percent of PAAC’s vehicle hours are actually revenue hours while the average of the 10 comparison agencies was 91.5 percent.

A look at the components of operating expenses reveals the underlying problem with PAAC’s extremely high relative operating expense per revenue hour.

The most obvious comparative cost measure is driver wage rate.  PAAC’s average of over $25 per hour is 32 percent above the 10 system average of $18.98. The highest wage rate agencies are in Milwaukee, Minneapolis and Cleveland with average hourly wages of between $24 and $25.  The lowest hourly wage agencies were in Atlanta, San Antonio, St. Louis, Cincinnati and Salt Lake with wages between $15 and $17 per hour.  Among the very large transit systems reviewed, Chicago’s driver wage was just under PAAC’s while Boston’s was slightly higher. New York and San Francisco at $31 plus per hour were much higher.

Total operator wages expended per revenue hour to deliver bus service were $37.48 at PAAC and averaged $28.77 for the 10 agencies, a difference of 30 percent. The highest wages per revenue hour for the 10 systems were in Minneapolis at $36.19, followed by Cleveland $32.12 and Cincinnati at $32. The lowest operator wage expense per revenue hour was in Columbus ($23), followed by Atlanta ($25.45); San Antonio ($25.88) and Salt Lake ($25). The remaining three systems had expenses ranging from $28 to $30 per revenue hour.

Note that PAAC’s total operator wage payments per vehicle hour were $31.92, reflecting the fact that only 85 percent of vehicle hours are actually revenue producing hours. Still, the operator cost per vehicle hour is about $6 higher than average driver wages per hour.  This occurs because of overtime pay and pay for time the operators are not driving but are still on the clock.

For the remaining analysis only per revenue hour figures will be discussed since the relation of those costs to cost per vehicle hour has been established.

The second cost component examined is wage expense for bus service employees other than operators. For PAAC the wage expense per revenue for non-operator employees is $39.85 while the average for the 10 comparison agencies is $24.73 making PAAC 61 percent more costly than the group for this cost component. The highest expense among the 10 agencies was in Cleveland at $36.80. The lowest non-driver wage expense agencies were Charlotte ($17.20); Columbus ($22.88); St. Louis ($19.99); San Antonio ($20.54) and Milwaukee ($12.31).

The final component of employee cost is the fringe benefits for all bus service employees. At PAAC fringe expense per revenue hour in 2016 was $72.76 and the average for the 10 systems was $36.27 making PAAC’s costs per hour 100 percent greater than the group. Cleveland had the highest fringe expense per hour at $47.57, followed by Minneapolis at $46.58. Charlotte was lowest at $22.47. The rest ranged between $31.50 and $39.

Total employee cost per revenue hour at PAAC was $150.08 compared to an average of $89.77 for the 10 systems making PAAC employee costs per hour 67 percent higher than the group average.  The highest employee cost system in the group was Cleveland at $116.50 and Minneapolis at $116.07. Lowest employee cost was posted by Charlotte at $68.59. The other systems’ employee costs ranged from $78 to $91 with most in the $80s. In short, PAAC’s employment expenses are enormous compared to these similar sized agencies.

Finally, the cost comparison analysis looks at non-employee costs. PAAC’s non-employee expenses per revenue hour were $39.61. The 10 system average was $27.65, making PAAC’s non-employee costs per hour 43 percent more expensive than the average.

All told, the operating expense per revenue hour was $189.69 at PAAC.  None of the 10 similar size systems came anywhere near that close to that figure with Cleveland the closest at $148.90.

PAAC’s costs are not just a problem for Allegheny County for matching funds and fares, the agency also receives substantial state funding.  For many years, the management and boards at the authority succumbed to union pressures in order to avoid strikes.

Consider that if PAAC had the same cost per revenue hour as the 10 similar size agencies, it would have cost $114.8 million less than the $301 million PAAC actually spent for the 2016 level of service. Just lowering PAAC to SEPTA bus costs per revenue hour would save $48 million per year at current operation levels. Then, too, finding ways to raise the ratio of revenue hours to vehicle hours to the level in the 10 system average would save a lot of money.

Public transit system funds have to come from the fare box or taxpayers, and in PAAC’s case, from tolls paid by Pennsylvania Turnpike users, thanks to Act 89 of 2013. The decision made by the Legislature to allow unionized transit workers to strike and the unwillingness of management to face down unions threatening to strike has resulted in a cost structure that is far outside the norm. Then too, PAAC’s non- employee costs are much higher than those expenses at comparison transit systems.

The PAAC situation demands action to correct the egregious costs PAAC is incurring. Why does the Legislature countenance this glaringly overly expensive transit system and make no effort to rein in the spending and at the very least remove the right of transit workers to strike?

PAT in RAD Mix Again

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"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?

Should the Legislature Drop Efforts to Get an Omnibus Transportation Bill?

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To say the General Assembly has a lot on its plate is a colossal understatement. Liquor store privatization, the budget, transportation, and pension reform along with many other less controversial pieces of legislation. 

 

 

In light of the limited time for action before the end of the fiscal year, the Legislature needs to focus on meeting the state’s most pressing needs. To that end, the condition of the Commonwealth’s roads and bridges, pension reform, along with completing the budget, should be at the very top of the priority list. This is not to gainsay the importance of achieving liquor store privatization before the calendar year is out. But right now there is limited Legislative time and energy and they must be used wisely.

 

In order to insure that the vital work on a bill that makes major progress toward improving roads and bridges is successfully completed, it would be well to set aside for the time being efforts to get agreement on the sources and level of funding for public transportation.  Higher taxes and fees statewide to support the very expensive Port Authority (PAT) for example, will meet with opposition unless largess is promised to many other legislative districts. It is also highly questionable whether it is appropriate to transfer of funds from the Turnpike to PennDOT to be used for public transportation that are derived from money borrowed under Act 44. And those borrowings, as we have noted in earlier Policy Briefs, forces Turnpike officials to continually raise tolls.

 

When the Legislature does get around to grappling with public transportation, it needs to broaden the scope of its approach to look beyond simply finding more money for mass transit. More money, in and of itself, will not solve deep seated problems. Indeed, more money by itself is likely to perpetuate or worsen the problems at transit agencies.

 

The Legislature has had several proposals placed before it over the years that would go a long way to begin addressing expensive, inefficient service of transit agencies. 

 

First: it is essential to recognize the costs and inefficiencies that have resulted from the right of public transit workers to strike. Fewer than a handful of states grant transit workers the right to strike and only a couple, including Pennsylvania, are actually threatened with or suffer strikes. Given the hardships transit strikes create, management is very loath to take a strike. Worse, the threat of strikes inevitably produces an appeal from the affected community, businesses, and civic and government leaders to have the Commonwealth come up with money to meet union demands.  There is no reason transit workers cannot be put in the same type of arbitration system afforded to police and fire unions.  The arbitration system can be designed to guarantee taxpayers are protected by placing conditions on settlements such as requiring arbitrators to consider the financial condition of the employer and the compensation packages of comparably situated workers.   

 

Second: as proposed in the Governor’s Task Force in 2006, transit agencies should evaluate competitive contracting. A 20 percent outsourcing of bus service in five years is a reasonable goal, with 35 percent in 10 years.  Bear in mind that outsourcing means that the transit agency takes bids and hires private firms or other public transit authorities that have met their outsourcing requirement.   The agency contracting out its service would still receive state financial operating support based on total passengers served whether on their own buses or the contracting entity’s buses.  The competitive contracting environment should, over time, reduce cost pressures and reduce the ability of unions to impose inefficient work rules.

 

Third: as proposed by the Senate Pro Tem, appointments to the PAT board would be allocated among several officials including the Governor, Caucus leaders, the mayor of Pittsburgh and one by the County Executive of Allegheny County.  In light of the amount of money the state puts into the Authority each year, it makes sense for the governing officials to have representation in the management of the Authority. Moreover, PAT is a creature of the state and the state has an obligation to insure that it operates in the interest of both taxpayers and transit riders.

 

Fourth:  a new Allegheny Institute proposal asks the Legislature to take into account the fact that the primary beneficiaries of mass transit are the residents, businesses and other employers in the area served. With passenger and other non-tax revenue accounting for only 30 percent or so of total (fare box is about 25 percent of total) and most of the remainder being subsidized by state taxpayers, there is an obvious need to have local sources come up with a greater share of the revenue.  One possibility might be a local option add-on sales tax of some small percentage-or a redirection of a portion of a current local option tax.  The objective should be to raise the local match for state dollars to 25 percent over a period of three years, that is, for each dollar of state aid, the local governing body (or bodies) would have to put up 25 cents. Over ten years the match requirement could be raised further.

 

Meanwhile, only general, broad based taxes should be permitted as revenue sources for the match. For example, in Allegheny County the use of taxes levied on alcoholic beverages and car rentals is an inappropriate way to fund mass transit. Further, any increase in any transit supporting revenue or the levying of a new dedicated tax should be required to meet voter approval through a referendum. The inability to make the local match would result in the appropriate reduction in state funds until the match is achieved.

 

The foregoing provides a beginning list for the General Assembly to tackle if they are to pursue meaningful reform of public transportation. To simply add or raise fees and taxes to fund public transportation at higher levels is merely a band aid and could ratchet up future funding requests.

Is PAT a Burden on Taxpayers?

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In a remarkably inept attempt to invalidate the State Senate Pro Tempore’s assertion that the Port Authority of Allegheny County (PAT) has been a long-time burden on taxpayers, an editorial writer says the Senator’s claim is a flawed premise and misses the significant role mass transit plays in a region like Pittsburgh.

 

 

Clearly, anyone who takes the time to think about the editorial writer’s comment can see the faulty logic of the attempted refutation.  The Senator’s comment neither explicitly nor implicitly claims that mass transit has played no role, important or otherwise, in the region. If he believed that he would more likely be pushing to eliminate state subsidies altogether as opposed to wanting to reform PAT to make it more cost effective and efficient.  Note that state operating assistance and grants provided a combined $205 million (55%) of PAT’s total revenue in FY13, while farebox revenues accounted for $84 million, or 23 percent, of total revenue. 

 

But the larger issue is whether the Senator was right about PAT being a burden on taxpayers. There are a number of ways to look at the burden issue.  For example, are PAT’s costs in line with benefits it produces for the county, region and state? Or, are PAT’s costs in line with other comparable transit agencies around the country? 

 

Well, let’s go back a ways to assess the Senator’s claim that PAT has been long-time burden on taxpayers. In November 2006, Governor Rendell’s Commission on Transportation Funding and Reform issued a report containing the following findings (among others) regarding PAT.

 

  • Needs to focus on financial performance indicators to better align service needs and effectiveness. The Commission wanted PAT to meet industry best practices.
  • Has the highest wage rates in the country adjusted for cost of living.  At the time of the report PAT wage rates averaged $20.50, 40 percent higher than the average of 60 transit agencies studied by the Commission. 
  • Is challenged by high labor, health care and pension costs for current and retired employees. From 1999 through 2005 these line items grew at an annual rate of close to 14 percent.
  • Focused effort on fixed guideway development and service expansion rather than basic asset replacement maintenance. The Commission said that PAT was going after new starts and expansions instead of focusing on existing needs.

 

So where is the agency now?  The National Transit Database’s profile of the largest 50 public transit agencies in the U.S. showed that in 2011 PAT provided 54 million annual unlinked bus trips over a service area of 775 square miles with a per passenger expense of $5.31.  If one looks at agencies in the top 50 that ran the same range of bus trips (44 million to 64 million) which covered areas such as Atlanta, Milwaukee, San Antonio, and Houston only Houston came within $1 of the expense by PAT ($4.95 per bus trip).  If one looks at agencies covering a similar service area (570 square miles to 868 square miles) which included Portland, Philadelphia, Minneapolis, San Diego, and Dallas, all with the exception of Dallas ($6.40 per bus passenger trip) had costs below PAT. 

 

For 2009 (the latest data available) the American Public Transportation Association examined transit wages and average bus operator wages.  In FTA region 3 (PA, WV, DE, DC, MD, and VA) the average agency wage was $17.12: the average PAT wage was $24.25, which was the highest of all transit agencies in region 3.  Adjusted for cost of living, the 2009 average PAT bus operator wage was higher than those of Atlanta, Chicago, Cleveland, and Milwaukee. Bear in mind that drivers at other regional transit agencies in southwestern Pennsylvania earn $8 less per hour and have nowhere near the benefit package PAT drivers have.

 

PAT’s net expenditures for pension, active healthcare, and retiree healthcare stands at $103.3 million in FY2013, 6 percent above the audited 2010 amount of $97 million.  Contract after contract has made changes to fringe benefits as new hires (depending on bargaining unit) come under defined contribution pensions or have age and service requirements to make them eligible for retiree health care.  With a long-term liability of $890 million on retiree health care those are changes that have to be made. As a percentage of PAT’s covered payroll, the unfunded liability stood at 559 percent as of 2012.  By way of comparison, the larger SEPTA system’s unfunded liability to payroll percentage was 299 percent in 2009. 

 

Bear in mind too that the concerns about excessive spending on guideways expressed in the Governor’s report predated the $520 million North Shore Connector project. This project required tens of millions of state and local tax dollars as well as the diversion of millions of Federal dollars that could have been used for other traffic improvement projects in the region.

 

Over and above the state’s generous annual allocations to PAT for operations and capital expenditures, enormous sums of highway money have been “flexed” by Governors and the SPC to fill budget holes at PAT. In 2005 alone, PAT received over $140 million to plug budget holes. Another $47 million was flexed in 2011-12 to avoid shortfalls.

 

Much of this comes down to the issue of contract bargaining that was tilted heavily in the unions favor by their right to strike. “Transit strike” are the two most frightening words transit managers and riders can hear. Because of the threat of strikes, PAT boards have not been able or willing to stand up to union demands, no matter how outrageous or threatening to the Authority’s long term financial viability.

 

The right to strike is granted by the state, which therefore bears some responsibility for the excessive cost structure at PAT and the resulting need for the state to heavily subsidize its operations. But that does not obviate the Senator’s point.  Because PAT’s cost are so high compared to similar sized agencies and because the state’s subsidy keeps expanding in the face of relatively stagnant paying riders, there can be little doubt that PAT is a burden on taxpayers.  That situation must be corrected. And substantial corrective reforms ought to and must receive broad support from taxpayers and businesses if the burden is ever going to be reduced.

Governor’s Plans for Mass Transit

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In the proposed budget for FY 2013-2014, the Governor laid out a plan to increase transportation spending for state highways and bridges, help with local roads, Turnpike projects and mass transit. 

 

 

The plan calls for raising additional revenues primarily through the elimination of the cap on the wholesale price of fuel used to calculate the Oil Company Franchise Tax liability. Other transportation taxes will be lowered-such as reducing the liquid fuels tax on gasoline by 17 percent over two years-as an offset to the retail price impact that will likely occur as the Oil Company Franchise Tax moves significantly higher. Some administration accounts have suggested that transportation-designated revenues will rise about $500 million next fiscal year (FY) 2013-2014 and over five years increase to about $1.8 billion annually beyond the current level in FY 2017-2018. If the reports are accurate the plan will raise and spend an additional $5.4 billion more than would happen without the tax increase over the next five years.

 

However, based on data in the budget, these figures appear to be too high. First of all, the FY 2017-2018 total operating spending for transportation is only $1.2 billion above the current spending rate and, second, the cumulative five year boost above the current level is only $3.9 billion.

 

For mass transit, or public transportation as it is generally designated in the FY 2013-2014 budget documents, the Governor’s summary page describing the proposed transportation changes indicates mass transit will receive approximately $250 million more per year than it currently receives. However, that figure does not match up with projected appropriation in the Transportation Department budget.  It is only in year five, i.e., FY 2017-2018, that the increase reaches the $200 million mark above current year spending.  In the coming fiscal year the proposed appropriation actually drops.  Significant increases are not projected until year three (FY 2015-2016).

 

Note too, that in FY 2017-2018, five years out, the annual operating appropriation reaches $755.6 million, a rise of $45.6 million or just 6.4 percent above the current FY 2012-2013 budgeted expenditure. Next year, in FY 2013-2014, appropriations for transit operations are budgeted to fall before beginning a modest growth trend in FY 2014-2015.

 

Indeed, most of the five year jump in mass transit funding out of current revenues is slated for the line item called Asset Improvement-which next year absorbs the capital improvements line item to simplify the accounting. Asset Improvement appropriations hold flat until year three when they jump by almost $100 million and, after staying flat in year four, leap by more than $100 million in FY 2017-2018, reaching $251.6 million. Note that combined asset improvements appropriations and capital improvement appropriations in the current fiscal year stand at $53.3 million.  Thus, after five years this category of spending will have risen by just under $200 million and account for the bulk of new state expenditures on mass transit.

 

There is other funding for capital projects through the Capital Facilities Funds and the Public Transportation Assistance Fund but that funding appears to be level at $175 million throughout the period.

 

But there are more serious problems with the plan as revealed in budget forecast data. Based on estimates provided in the FY 2013-2014 budget documents, the elimination of the wholesale price cap on the Oil Company Franchise Tax will raise only $1.06 billion more in revenues five years from now in FY 2017-2018 than are forecast for the current fiscal year. Moreover, the budget documents’ projected five year cumulative addition to revenue from eliminating the wholesale price cap compared to current year levels is only $3.8 billion. Then too, other categories of motor license fees and taxes are being lowered considerably holding down net motor license fund revenue growth. 

 

By the same token, funds for transportation are also taken from other state revenue sources. For example, mass transit receives a 4.4 percent share of the state sales tax, payments from the Turnpike Commission, the Lottery, certain motor vehicle fees and from Capital Facilities Fund bond proceeds. These funds will help revenue available for transit to increase.

 

An immediate question arises concerning the use of the Oil Company Franchise Tax for mass transit. Motor fuels taxes are constitutionally not permitted to be used for purposes other than highways and bridges.  Unless there is a plan to shift fungible revenues to mass transit, the plan as proposed will probably not pass muster. If there is such a provision it is not spelled out anywhere in the Transportation Plan or in the recently released budget.

 

One thing is certain: motorists will not take kindly to having the price they have to pay for fuel raised to fund mass transit. Especially motorists in most of non-urban Pennsylvania where there is no public transportation.  And even more especially when the income transfer is going to support transit agencies that are egregiously expensive and cost inefficient.  Local transit should instead receive a large share of its support from a local tax levy that has been put to voters in a referendum. A local option sales tax for example distributes the cost of subsidizing public transportation to those who benefit most from the presence of the transit services.  A share of parking tax revenue in a county or city would be another option for raising revenues to subsidize transit. But there is a reason the Constitution prevents the use of motor fuels from being diverted to transit and that law needs to be enforced.

 

Beyond the funding source considerations, it is incumbent on the Commonwealth as creator of the transit authorities to take more responsibility to help ensure efficiencies of operation and to keep costs under control. For instance, Pennsylvania should immediately end the right of transit workers to strike. The right to strike has been the single biggest factor in driving the Port Authority to virtual bankrupt status. The appointment of board members of the Port Authority exclusively by the Chief Executive of Allegheny County is another serious problem.  The Legislature and Governor should look for ways to insure high quality, non-political appointments to boards as important as the Port Authority.

 

Moreover, Pennsylvania will continue to ill-serve its taxpayers until it eliminates the prevailing wage requirement on construction and maintenance projects that use state funds. Many millions could be saved each year that could be returned to taxpayers or shifted to other core services, reducing the tax burden on the state’s residents and businesses.  

 

Finally, the transit plan will gradually raise the local match to receive funds for capital projects to 20 percent from the current 3.3 percent and gradually raise the match to receive operating funds from 15 to 20 percent.  These changes are designed to help ensure better local management.  It could help restrain unnecessary and poorly thought capital projects. In Allegheny County the 20 percent match requirement could lead to a hike in the drink tax, which was originally created to generate the local matching funds but was lowered from 10 percent when it produced more than enough revenue to meet the County match.

 

Another provision in the proposed mass transit scheme requires local transit agencies to modernize services by carrying out consolidation studies. If cost savings can be realized and agencies implement the consolidation they will have their matching fund requirement for state dollars drop from 20 to 15 percent.  If they fail to adopt the changes their local match for state funds will rise to 25 percent.  Unfortunately, what is meant exactly by consolidation studies is not clear. Does it mean consolidation of routes or service runs within a county’s transit agency? Or does it mean consolidation of services with other counties’ transit agencies? If the latter, the opportunities for the Port Authority are slim indeed because of its very high labor compensation costs compared to the other regional agencies.  Who will evaluate the studies to see if they have assiduously looked for savings or considered sufficiently radical changes that would produce significant savings?

 

Rather than trying to force consolidation as a way to lower costs, the language of the bill ought to set outsourcing targets-with either private carriers or other regional carriers. For example, in the next five years 25 percent of Port Authority bus service should be provided by lower cost regional or private carriers. These carriers would get the Port Authority state per passenger subsidy passed through to them as the contractor carrier to enable them to compete for bus service.

 

In short, the proposed mass transit plan offers little in the way of real structural change either in management or in the underlying drivers of cost.

 

County Priorities Set for 2013

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The County Commissioners Association of PA is a statewide association representing the interests of the state’s counties, and it has released its "wish list" by setting priorities for its members of what they would like to see the General Assembly act on. The priorities for county government include action on human services, Marcellus Shale, and 911, but let’s focus briefly on three issues that we have written about:

Property Assessments: The Association talks about the 2010 study done on assessment practices by the Legislative Budget and Finance Committee, task forces, work they have done with other professional associations in the state, and would like to see the recommendations of the 2010 study (training, funding, tools to determine timing of assessments, etc.). No word on the Association’s feelings on the court battles that took place in the member counties of Allegheny and Washington over doing a reassessment.

Transportation: The Association supports the work of the 2011 Transportation Commission on how to fund the state’s road, bridge, highway, and transit needs overall, but points out that it "does not have a unified position on mass transit" because of the differences between systems across the state.

Prevailing Wage: The Association notes how the prevailing wage requirement on public projects has not been updated since the 1960s and how a court decision brought what was considered "maintenance" under the auspices of the wage requirements. Priorities the Association would like to see acted upon include indexing the amount, opt out provisions, or a full repeal.

Will County’s Counsel on Transit Be Heard?

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Since announcing the formation of a Special Committee on Public Transportation in mid-April, two meetings have been held. The first, in April, lasted 48 minutes. The most recent, on May 10th, lasted 30 minutes. A total of seven County Council members have attended, with four having come to both.

The Committee’s goal stated at the outset was to "…develop a unified public transportation plan that county officials can present to Governor Corbett and legislators". Soon after the County created the Special Committee the Governor announced his own transportation task force, a task force which has been written on in the blog and in Briefs, and it will be deliberating through the summer and is expected to issue recommendations by August 1st. Now the County wants to have its deliberations and feedback forwarded to the task force by the beginning of July.

Will the County have a unified transit plan? Usually the chorus of voices that is the loudest chants about dedicated revenues, which the Governor’s task force is going to look at, but in a broader scope for roads, bridges, transit, airports, etc. What are the ingredients of the unified plan? It is very unclear, but the May 10th hearing produced a few interesting tidbits from the PAT CEO. First, answering a question from a Council member he noted there have been "…increases in utilization of the Authority’s park and ride lots near the routes turned over to Lenzner in the North Hills". Recall that the board voted to allow the private provider take over two routes that the Authority was no longer going to operate. Thus far there has been little evidence about how Lenzner is doing on those routes and while the CEO’s comments don’t provide any detailed numbers and could be anecdotal.

Second, the CEO stated "…escalating legacy costs will likely hamstring the Authority in the event that the performance based funding model is perpetuated from Act 44 to the new legislative solution". The 2010 single audit for PAT shows an unfunded retiree health care liability of $812 million and an unfunded pension liability of $198 million. PAT put in over $60 million for both benefits in 2010. What is the "performance based funding model" you ask? According to PENNDOT factors like passengers per hour, cost per hour, revenue per hour, and cost per passenger trip would factor into allocating scarce dollars. No wonder officials at PAT are scared: our Brief last week showed that PAT has very high passenger costs on buses and those costs increased over the decade at a very high rate.

What to Do About Mass Transit Costs in PA?

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“Let’s face it-transit agencies are not private companies and do not make a profit.  Public transit has both a business and a social mission”.  So began the presentation on mass transit made by PENNDOT to the Governor’s Transportation Funding Advisory Commission (TFAC) on May 16th. 

 

Continue reading →

Transportation Funding Commission Omission

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Upon a moment’s reflection there is an obvious and glaring flaw in a newly appointed commission set up for the express and single purpose of looking for funding sources for the state’s transportation systems. Here’s a better idea. How about a commission to look for ways to solve the problems facing transportation?

For one thing, the eagerness to lump mass transit in with highways and bridges is a mistake. There are vastly different issues involved that should be examined separately. Transit operations are localized and have localized issues. Port Authority in Allegheny County, for example, is beset by vast financial problems of its own making and more funding will not solve them until the underlying problems are addressed.

Then too, road and bridge work faces unnecessarily high costs because of the requirement that employees on these projects be paid a prevailing wage. Before the Governor or the Legislature enact any new funding plan for transportation, they should take a long, hard and honest look at how much the prevailing wage requirement is adding to the annual cost of supporting transportation projects.

Further, do we know for sure that the engineering, design, and implementation procedures-including letting of contracts-used by the state are the best available and devoid of political favoritism? If not, why not?

This commission, with its unfortunate single focus on finding funding sources, is missing an important opportunity to find ways to save money or do things more efficiently. Looking for funding only sends a message that enables the spenders of the money to be less assiduous in their search for cost savings.

Improving Home Rule in Allegheny County as the Second Decade Begins

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As home rule government begins its second decade in Allegheny County-the effective date of the Home Rule Charter was January 1, 2000-taxpayers and residents of the County have several big issues coming at them related to their government. 

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