Council Lady Displays Woeful Ignorance about PAT

The following paragraph is taken verbatim from a sitting member of Pittsburgh’s City Council and illustrates perfectly how the City got into financially distressed status and why it is likely to remain there if her views continue to guide policy decisions. Writing in the Post Gazette editorial pages Councilwoman Rudiak says, "We live in an extraordinarily wealthy country that can afford the vital, world-class public services that have provided the foundation for our economic prosperity. Unfortunately, our priorities have shifted. Many of our elected officials have decided that maintaining public services is not important and that our nation’s wealth is best kept in a few hands."

This paragraph is part of an editorial in which the Councilwoman bemoans the fact that the state is not rushing to pour more money into Allegheny County’s outrageously expensive and effectively bankrupt public transit system. According to the Councilwoman it is mere selfishness on the part of Harrisburg officials by which she undoubtedly means the Governor without saying as much.

Ms. Rudiak either has no conception of the extraordinary burden imposed by legacy costs at the Port Authority or the extremely high wage rates and benefits paid by the Authority or chooses to ignore them while slamming elected officials who have the responsibility of seeing that public dollars are used wisely.

But most ridiculous of all is the argument that world class public services are the foundation of our prosperity. The foundation of prosperity is a free enterprise system that allows free people to start businesses and use their talents, hard work and creativity to generate income and wealth. The rule of law and protection of individual and property rights are the foundation of prosperity; infrastructure and adequate public services are facilitators. As we have plainly witnessed in the Soviet Union, a good mass transit system and huge expenditures on "public services" did not create prosperity.

And to argue that the wealthy are being allowed to keep too much of their income and wealth is simply devoid of any factual basis. It is a known fact that the top 10 percent of income earners pay the lion’s share of all Federal income taxes. Ms.Rudiak quotes a study claiming that high income earners in Pennsylvania pay a much lower share of their income in state and local taxes than do middle income earners, 4 percent for over $428,000 as compared to 9 percent for $35,000 to $56,000. But the proviso is that the 4 percent is after Federal offsets, whatever that means.

It would not be surprising to learn that very high income earners pay a lower share of income in sales taxes or property taxes but not low enough to make their state and local share only 4 percent. In absolute terms those taxpayers are paying a large amount of state and local taxes. The state income tax is a flat 3 percent and there is no way their combined property and sales taxes account for only one percent of their income. For that to happen they would have to spend most of consumption dollars out of state and own very little taxable real estate.

One of the crises facing Pittsburgh, Pennsylvania as well as many states and cities across the nation is the financial burden of pension costs of public employees whose benefits are far greater than most private sector workers. With a greater and greater share of tax dollars going to pay for legacy costs, there will be fewer dollars to pay workers to perform for public services. Unless, of course, taxes are raised which will in turn stifle the income producing private sector that is needed to support all the public spending.

Ms Rudiak-and the other elected officials who believe that higher taxes are the answer to the economy’s problems-is a main reason the country and many states are in the shape they are in financially. How easy it is to believe that taxes can be raised willy-nilly to fund ever less efficient government and its rising costs without serious consequences to the city, state and nation. For these folks, there is never enough government or publicly provided services.

Governor Holds Firm on PAT Funding

Governor Corbett has shown real grit in refusing to acquiesce to the entreaties by some and scurrilous name calling by others demanding that he come up with more funding for the Port Authority. In fact, his adamant unwillingness to capitulate to those demands is the only reason the transit unions have any motivation to even consider making any concessions on wages or benefits.

Enter the Post-Gazette editorial writers with specious arguments and adding their voice to the clamoring cries that the Governor act soon. First, they point out -again-that the Governor’s task force on transportation made recommendations several months ago and he has declined to say what, if anything he will support from the those recommendations. The ed writers might want to remember that Governor Rendell’s 2006 task force on transportation made many recommendations for PAT including a call to begin explore competitive contracting. Not a single route has been privatized.

Secondly, the P-G mentions that the unions made concessions totaling $93 million. What they don’t say is that those savings are spread over many years. That’s a start but not nearly enough in the face of the billion dollars in unfunded benefit liabilities facing the Port Authority. What PAT needs are savings in current outlays and those have been reduced only through laying off employees. And that requires serious cuts in wages as well as concessions by retirees. Until those are forthcoming PAT will continue to strangle on excessive pay and retiree benefits.

So, until PAT’s unions and retirees are willing to make some serious concessions the Governor is right to hold firm. Any indication from him that he might yield to the mounting pressure to come up with additional funding will only encourage the unions to back away from concessions. This is the game of chicken they have played for years and have won. They must not be allowed to win again.