Yes, Let’s See Where ALL RAD Money Goes

An opinion piece celebrates the start of RADical days, when the assets funded by the 1 percent sales tax created under the Regional Asset District offers free admission as a "thank you" to taxpayers to show them what the money has paid for. The op-ed closes by noting "RADical Days are the most entertaining way to watch your tax dollars at work."

Much more entertaining that going down to see what happens at the County Courthouse or the City-County building, that is for sure. If the Port Authority gets deemed a regional asset as is envisioned by the recent bailout plan perhaps there will be a day in the future when "free" bus or trolley rides will get patrons to RADical days.

The piece correctly points out that one half of the proceeds from the sales tax goes to fund the assets. The other half is split into two pieces, 25 percent to Allegheny County, the other 25 percent to the municipalities in the County. The legislation creating RAD mandated that upon accepting the money the County and the City had to eliminate their personal property taxes, and the City had to reduce its amusement tax from 10 percent to 5 percent. The City and the County had to create senior citizen tax relief programs and municipalities other than the City and the County were to use the money to reduce local taxes and dedicate a portion to inter-municipal organizations like councils of government.

Do taxpayers know what their local governments are doing with the money? For the County’s 2012 budget the revenue side shows $41.5 million from the sales tax, which amounts to its 25 percent share under the formula. Then, under "other and miscellaneous" there is $17.8 million reported from the Regional Asset District. The latter allocation in its entirety goes to Parks, which has a $22 million budget this year. The $41.5 million goes entirely to non-departmental revenues, a $408 million pot of money. The City budgeted $12.2 million this year as its share and notes that the money "replaces funds lost with the elimination of the personal property tax, the reduction of the amusement tax…and the expansion of the City’s real estate senior relief program".

The RAD website notes that "as a result of new sales tax revenue, 115 municipal governments reduced local millage, 10 eliminated the per capita tax, and three reduced/eliminated the wage tax." It is a strong bet that many of those millage rates have crept back up, and we know that the County and the City have been granted and are often asking for new sources of tax revenue.

Will RAD Funds Be Tapped for PAT?

Call it a strange case of foreshadowing. When the Regional Asset District (RAD) became law under Act 77 of 1993, only a few people other than Legislators would have noticed the curious fact that the language establishing the District and the accompanying one percent sales tax was appended to an act that amended existing language dealing with investigations conducted by the coroner’s office in Allegheny County. 

 

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Transit Pact on the Table

According to published reports and a news release from the County Executive’s office, there is a tentative deal between the Amalgamated Transit Union and the Port Authority that represents "the first step" to avoiding the service cuts and layoffs scheduled to go into effect September 2nd.

There will be scant details until the contract is voted on, sometime around August 19th. Therefore, any comment as to what is in the contract or what the contract does vis a vis the state putting up money for closing the 2012-13 deficit is speculation.

What can be commented on is how this contract process compares to the 2005 and 2008 contract expirations and negotiations. The last contract was not voted on until December of 2008, some six months after it expired. In 2005 it took until November of that year. If the present contract is approved it will have been a considerably shorter time frame. The 2008 contract also went to fact finding, and that process was not even completed until the end of August 2008.

Going back to January 1, 2006, ATU wages have gone up 3% per year with the exception of 2010, when the increase was 2%. Employees are paying 3% of their wages toward health care coverage. The 2008 contract also truncated employees into various classes based on age and length of service to determine post-retirement health benefits.

Pittsburgh Group Warns of Harm From PAT Service Cuts

Weighing in on the impending slash in bus service in September, an organization called the Pittsburgh Community Reinvestment Group has issued a report claiming that the 35 percent reduction in service will create additional costs for Allegheny County residents of between $328 and $405 million per year. Higher commuter costs, more congestion, and increased parking rates are the principal drivers of the group’s estimate. The group could have added the loss of business revenue that will occur. Hard to estimate but it is almost certainly a significant number.

But the group-an advocate of more state money for transit-is missing two important considerations. First, the crisis at PAT did not arise because of inadequate state funding. The crisis is a product of decades of kowtowing to union demands for pay, benefits and work rules under the threat of transit worker strikes and the damage that inflicts on the community. The Reinvestment Group might want to go back and estimate how much the excessive costs created by the over generous contracts have cost state and local taxpayers and transit users over the last decade. The Allegheny Institute has reported frequently on PAT’s expenditure levels over the years. A reasonably solid estimate could be calculated fairly quickly.

Second, if the impending cuts do occur and appear to be permanent, there will be openings for new transit providers to begin offering service. The recently passed law stripping the Port Authority of its monopoly status will permit regional transit agencies and private carriers to initiate service to pick up some of the slack. PAT should be in discussions with regional transit agencies about how they can coordinate the introduction of service in area and on routes where major cuts are coming. This would include leasing buses to the agencies for a dollar a year to help keep their costs down. PAT could enter into contracts with private companies to cover routes about to be shut down.

PAT should begin these conversations immediately and announce they are doing so as a way to force concessions out of the unions. A transit strike is still a high probability event since the driver and mechanic contract has expired. By encouraging other carriers to offer service and coordinating with the new carriers PAT can make clear that business as usual is not happening. Finally, the state ought to eliminate the right to strike as soon as it returns from summer break. And it could add a provision to replace the Port Authority with a state appointed management team to prepare a bankruptcy filing-the only sure way to do something about the legacy costs that are crippling the Authority.

Are Public Sector Pension Changes Coming?

It is not going to get any easier on the pension front in Pennsylvania.  Just this week, as the state put the final touches on the 2012-13 budget, the warning bells on the costs associated with the two statewide pension systems (one for state employees, the other for school employees) tolled  louder.  Doing nothing means the percentage of the state’s budget dedicated to pensions will grow to 10 percent according to one published newspaper report. 

 

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County Exec Vows to Fix the Port Authority

Allegheny County’s new Chief Executive told the Tribune Review that changes are coming for the Port Authority, either within the existing structure or in a new structure-no indication what that new structure might be.

In that interview, the Exec indicated the agency needs to do more cross training, i.e., bus drivers and light rail operators, drivers and toll takers. He says more advertising revenue is needed and that more corporate dollars to extend the free fare zone to Station Square would be a good thing.

Cross training is not a bad idea, but requires union agreement. And there are many fewer light rail operators and bus drivers so it is not likely to do much for cutting costs. It will almost certainly create more overtime pay. More free rides on the light rail system will worsen after event peak demand and cause long wait times for service.

In short, what we now have at the Port Authority is analogous to a car with an engine that is sputtering from bad ignition problems, has exhaust valve leakage, is burning oil and wasting fuel and needs a massive overhaul or replacement. The Exec’s proposals are the equivalent of rotating the tires, washing and waxing the vehicle and maybe adding some water to the cooling system.

If the Port Authority were a private entity, it would have filed bankruptcy long before now. It faces insurmountable legacy and compensation costs that cannot be avoided because of labor contracts entered into over decades. There is no meaningful solution for the Port Authority that does not address the legacy and compensation cost problem, including reforms that slash the current deficits and set up a system to avoid a repeat of what has happened.

Unless the state approves a change in law to allow the Port Authority to declare bankruptcy, the only options left are: (1) massive, permanent voluntary concessions by retirees on health and pension benefits along with reductions in future retiree benefits and wage costs by current employees, (2) huge and expanding annual increases in state taxpayer funding to avert disastrous service cuts, or (3) disastrous service cuts. Substantial voluntary concessions on retiree benefits and employee compensation rest with the unions. They are not likely to happen. Whether the state will abandon its so far firm opposition to more dollars for the Authority is anyone’s guess.

In addition to allowing bankruptcy the Legislature needs to set in motion a set of changes that will prevent the return of a situation such as the Port Authority now faces. That would include, eliminating the right of transit workers to strike, requiring the Authority to begin privatizing bus service, and allowing competition from regional transit agencies and private companies.

Until these things are done, the Port Authority will never be able to operate as an efficient, cost effective transit system Allegheny County residents should expect to have.

The Exec needs to be working with the Governor and Legislature to effect some meaningful changes that will actually benefit transit users and stop the hemorrhaging of money at the Port Authority as well as the threats of work stoppages and huge service reductions.

History does not offer much hope that any of the necessary steps will be carried out. The Legislature has clearly demonstrated time and time again that it is more afraid of union antipathy than it is the complaints of taxpayers or the economic and public welfare impacts of work stoppages and massive service reductions. Sadly, inconvenienced transit users, lost in their self-interest and ignorance, side with the unions and demand more tax dollars to cover whatever costs the unions create. And so the sorry, never ending tale continues.

Retired Prof Illustrates the Perils Academe Creates for the Economy

One Charles McCollester, retired professor of Industrial and Labor Relations at Indiana University of Pennsylvania, writing in the P-G letters column reveals for all to see which side of Industrial and Labor Relations he shows solidarity with.

In the letter the retired prof launches a withering attack against Governor Corbett saying he is the most anti-labor governor since the late 1920s. And what does he base this on? First, he berates the Governor’s refusal to turn over more state dollars to the Port Authority unless there are substantial union concessions. This is an Authority that is in financial chaos owing to overly generous labor contracts in the past that have created legacy and compensation costs the Authority cannot afford absent the state taxpayers heaping more dollars onto a system that cannot be saved short of bankruptcy. The professor should do modicum of research before weighing in on a situation he knows precious little about.

Second, he caterwauls about trying the Governor’s attempt to break the teachers’ unions by slashing school spending and recommending vouchers. Apparently, the well- publicized huge budget deficit facing the Governor last year and the need to cut spending did not reach Indiana. Or if it did, the professor chose to ignore or believed it was all a Republican trick. Perhaps the professor does not believe that school employees should share in the financial hardship so many Pennsylvania taxpayers were going through during the economic downturn. And, it is also apparent that the refusal of teachers to make voluntary small sacrifices such as deferring pay increases in cash strapped school districts was entirely justified. Stick it to hard pressed taxpayers-that’s the ticket according to those who share the world view of the professor.

Vouchers for kids in grossly inadequate public schools? No way say opponents. That would undermine the wonderful public school monopoly the teachers and other members of the educational establishment enjoy and benefit so handsomely from.

And the professor wraps up his know-nothing screed by attacking the foundation community in Pittsburgh for asking the financially distressed Pittsburgh school district to consider the quality of teachers to be let go as opposed to following strict seniority rules. His argument-stop the cost cutting in the first place. Clearly, the professor has not followed the many reports of the excessive cost structure in Pittsburgh schools where spending tops $21,000 per student and academic performance in many school buildings is below miserable. The legacy of refusal to even nod in the direction of real reforms and the damage done to the cost structure by unions and do-gooder educrats have essentially ruined what was great school system. Time to pay the piper has arrived and all the professor can do is cry about the attack on seniority rules that are one of the biggest factors creating the long slide to a sub-mediocre school district.

How many Indiana University students have had their view of the world hopelessly distorted by the professor and the legions of other faculty members like him?