Philly Strikes Out

Just hours after the conclusion of last night’s game 5 of the World Series between the Phillies and the Yankees some 5,100 bus, trolley, subway, and mechanics belonging to Transport Union Workers Union Local 234 in Philadelphia walked off the job, idling a significant portion of southeastern Philadelphia’s transit service affecting 450,000 riders per day and having significant negative economic and safety implications.

Well, at least they were kind enough to honor the wishes of elected officials who, according to published reports, asked them not to go on strike while the World Series was in town. The Philadelphia Inquirer noted that the Governor himself noted that a strike during the Series would give the City "a little bit of a black eye" while national attention was focused on the City. Perhaps he had fear of another "the Bronx is burning" moment occurring.

So now residents of Philadelphia and the southeast corner can take consolation in the fact that people around the nation aren’t tuned into the imbalance of power that exists in Pennsylvania in regards to its transit unions. They hold all of the cards and can shut the system down to get what they want. It just happened four years ago in Philadelphia when the system was idled for a week. It has come precariously close here in Pittsburgh until the intervention of elected officials and national unions prevented a strike, only by caving in to union demands.

Pennsylvania needs to get out of the small minority of states that allow transit workers to go on strike. That likely won’t happen. So here’s what should be done: the Governor’s own Transportation Funding and Reform Commission report from three years ago said that SEPTA (and PAT) should be required to "evaluate competitive contracting" in transit service "at least one every four years in concert with the expiration of labor contracts". That would allow private operators to bid and compete against the public sector unions for the right to provide service. Not surprisingly, the Transit Workers Union wants to try to erase provisions in the current labor contract that allow for outside contractors to do repair and maintenance work on vehicles.

How outrageous! TWU workers want it all and then some. Consider that the state legislature just permitted Philadelphia to increase its sales tax another point in order to fund its anemic pensions, much of which is likely a result of over-promises to unions. For a City that has now accounted for a significant share of all transit strikes since 2000, the Governor does not need to worry about the City getting a black eye-it already has one.

Non-Profits Face Two-Pronged Battle

The state and the City of Pittsburgh are prepared to lean a bit harder on the non-profit sector in order to shore up their spending plans. The state wants to extend the sales tax to tickets sold to cultural attractions like the zoo, ballet, and museums and the City wants to enact a host of new fees and charges on things like hospital admissions, college and university students, and water use by large non-profits to provide some $10 to $15 million per year for its pension costs.

Of course, none of the targeted parties like the idea. On the sales tax, various officials noted "The cost of tickets is a big factor. Adding on an additional tax can only hurt attendance in the short term and the long term"…"this proposal would only place an additional burden on us. We definitely feel it could adversely impact our visits"… "Honest, this proposal has come entirely out of the blue, without any prior discussion, and that is what we find so puzzling." Hmm. Wonder if any of the affected venues in Allegheny County would like to get the input of businesses that have been collecting the extra 1 percent sales tax that has gone to support many cultural and recreational attractions helped through the Regional Asset District. That proposal came out of the blue as well: no public meetings, no referendum, and no broad based discussion. It was sold as having minimal impact on business but that has not been the case.

On the City proposal, one quote stands out: "UPMC has always supported the city". The region’s largest employer was a big contributor to the voluntary Public Service Fund and the major driver behind the Pittsburgh Promise. Perhaps they thought that would be enough to convince the City to avoid talk of more fees and charges aimed at the non-profit sector. But not so: instead the non-profit giant’s enabling act has not prevented the City for searching for even more money,

Is there a glimmer of hope for these organizations? Perhaps, but not in this corner of the state. Another news article today pointed out that the County wants to build a package of consistent and recurring revenues for its budget, including "$4 million from contributions by nonprofits to county finances". Is it time for the non-profit community to take a stand?

Real Tragedy of Pirates Losing Season Record

Here’s where we rather impolitely say "told you so." Back during the debate over funding for new stadiums, we pointed out that Pittsburgh was a small market team with little television revenue and did not have a history of being a "baseball" town in the manner of St. Louis with its strong attendance record in the old Busch Stadium or, to a lesser extent, Cincinnati. Thus, we argued that a new ballpark in Pittsburgh would not end the Pirates’ weak attendance or generate significant gains in TV money. So, unless the team owners showed a willingness to roll the dice and spend a lot of money beyond the team’s near term earning potential, mediocrity or futility on the field would continue.

And as it turns out, that has been the result.

But what is worse, during the debate over spending hundreds of million in tax dollars for the new ballpark, we were told that great economic benefits would accrue to the region with stronger job and income gains. That claim turned out to be as fatuous as the assurance that the team would be pennant contenders in the new ballpark. Indeed, private sector jobs in the region are now 30,000 below their 2001 level. Jobs remained below the 2001 level until 2008 when they barely managed to struggle back to the seven year earlier reading.

So much for engendering economic dynamism in the region.

The City of Pittsburgh has been placed in distressed status by the state and remains a financial basket case because of legacy costs and overspending.

The real tragedy of the Pirates arises from the bill of goods taxpayers were sold and had rammed down their throats despite strong opposition by politicians and civic leaders who were certain the corporate welfare involved in keeping the Pirates would pay dividends for the City and region. The greatest irony is the Pirates had nowhere to go. There was no place other than Washington, D.C. big enough to support a major league franchise. And the Orioles were successfully blocking any team moving there. Only years later after Montreal collapsed did Major League Baseball overcome that resistance.

In sum, taxpayers ended up paying for a new ballpark under false pretenses and have received none of the promised returns on their investment. Can public policy be any worse?

Many Wild Cards in Sales Tax Debate

Under various proposals before legislative committees, PA counties could have the ability to tack on an extra percentage point on to the existing state sales tax, thus giving counties a local option tax, something that only Philadelphia and Allegheny currently have. Bills snaking there way through would either apply to all counties except the two that already have the tax, to Philadelphia only, or to third class cities only.

The most recent PA tax manual shows that of all classifications of local government counties raised the most tax money (97%) from real estate taxes, even more than school districts (many levy the wage tax) and money from a sales tax could be used to offset real estate tax revenue. No mention has been made of replicating the Regional Asset District set-up of Allegheny County or the general budget use of Philadelphia if the tax were to go into effect.

Of course, there is still the possibility that the state budget deliberations could involve the state raising the sales tax in order to pay for its own budgetary needs, which would likely forestall the counties getting the add-on. And then there is still the prevailing attitude that taxpayers don’t want any tax increases and county commissioners being reluctant to adopt the tax.

Should City’s Recovery Delay State Budget Settlement?

Apparently the Post-Gazette editorial board thinks so. They want the Allegheny County legislative delegation to hold firm for the "modest" tax and fee proposals the City wants to enact and, if necessary, hold the state budget process up even longer.

What on earth makes the editorial board think that the County’s delegation is interested in enacting taxes or fees that would fall on their constituents who work in or visit the City? There hasn’t been an outpouring of support for boosting the $52 Local Services Tax to $144. Many in the delegation would fight very hard against such an increase. And if it were to happen it is a certainty that the Legislature would allow it in all classes of municipalities across the state, thus essentially making it a statewide tax increase, the exact thing that legislators are fighting against now with the PIT.

Then too, the Act 47 plan outlines three options for the City to generate more revenue for its pension costs. Taxes and fees are one, but the City can also cut its expenditures or leasing parking garages. Why isn’t the City putting pencil to paper now during the budget impasse to look at the alternatives?

Because the PG thinks that if the Philadelphia delegation can throw its weight around and ask for a sales tax increase (another tax option that, if passed, would likely apply statewide) or pension reform. Do they honestly think that the Legislature would pass on a budget agreement to wait and include a solution for Philly’s problems? Even the Governor would likely not do that.

Pittsburgh received a good deal of attention from the state when its tax reform package was put together in 2004-it is doubtful that the issue will be revisited soon.

Pirates’ Attendance Two Leagues Down

Attendance at Pittsburgh Pirate home games has slipped to the lowest level among the 30 teams comprising the National and American Leagues. So far in 2009, home attendance is averaging around 15,600, well under the 17,000 plus average in Tampa Bay, which ranks as the second worst attendance. The Pirates are filling just 40 percent of the seats in the highly touted PNC Park that was supposed to attract 30,000 fans per game and provide the revenue to make the team competitive. What a bill of goods that was. The taxpayers will never get a positive return on their investment-an investment they did not want to make.

Meanwhile, the St. Louis Cardinals who play in a similar sized market are drawing over 40,000 per game and in Milwaukee (a smaller metro area than Pittsburgh) the team is pulling over 36,000 per game.

What is the difference? Milwaukee has spent enough money to build a competitive team. St. Louis is simply a far better baseball town. Their attendance was over 40,000 per game for years even in the old Three Rivers Stadium look alike ballpark. Pittsburgh has not been a baseball town in the way St. Louis has been and the owners have chosen for years not to have the kind of payroll of teams who are perennially competitive.

All this was known at the time of the Plan B that sought and got approval for state funds and the allocation of RAD dollars to build PNC Park. The civic and political leadership wanted the new park and despite overwhelming opposition by the public went ahead with Plan B. Ten years later we are now wasting far more additional dollars putting in a subway so people can get to ball games. Preposterous does not begin to describe how wrongheaded these decisions were.