City’s Retiree Benefits Problem Getting Worse Fast

As we have written on previous occasions, the City of Pittsburgh’s legacy cost issue is multi-faceted-although little attention is given to some important parts of the problem. Heavy focusing of time and effort on one part of the problem can allow others to worsen. 

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Poor City, Poor County

Now, both the City of Pittsburgh and Allegheny County are pushing ahead with plans to pry money out of the non-profit community, which, by and large, means the institutions in the City.

Both governments are facing difficulties balancing their out-year budgets so they are flailing around looking for any source of potential revenue they believe they might be able to intimidate or shame into coughing up money. The irony could not be more complete.

Hospitals and universities are endlessly hyped in marketing and self-promotion literature as the great drivers of the local economies. And they are. A large share of net new job growth is traceable to health care and education.

After imposing tax, regulatory and labor climates that are inimical to private sector expansion, the two governments (assisted by costly school districts) find themselves in position where raising taxes is likely to be counterproductive. Quite a conclusion for big government advocates. So what’s left to do? Go after non-profits that might have some extra money lying around. The question: where will they go when they milk all they can out of those institutions and it also turns out to be self-defeating and counterproductive and when they find still do not have enough cash coming in to fund government?

Cutting spending comes to mind. But why not do the cutting now before more revenue chasing does more harm to the area’s economy?