Pirates and Port Authority: A Losing Duo

What do PAT and the Buccos have in common? No matter how much taxpayer money they have been given, they simply are not able to keep from falling into deeper and deeper holes.

The Pirates’ long, painful slide into being a major league laughingstock is well known. PAT’s long decline into financial ill-repute takes a little more digging to understand. For the Pirates years of mismanagement and poor judgment have produced the fiasco that portrays itself as a major league franchise. Port Authority’s troubles arise out of too much spending on projects that can never pay a return to taxpayers and collective bargaining agreements that have saddled the agency with employment costs and legacy cost that no private entity could hope to survive.

The Pirates promised that a new ballpark would end their financial and performance woes. The Port Authority thinks cutting service and laying off overpaid drivers will solve their problem. All they are doing is running a smaller, still very expensive system.

The question is; why do fans and taxpayers put up with the endless displays of incompetence?

Mandated Wage Mania in Allegheny County

Hard on the heels of the efforts of Pittsburgh to put together a “prevailing wage” law for workers on development projects that receive government financial assistance, now appears Allegheny County with its own plans to mandate wage levels for projects receiving County aid.   Very convenient for the City in view of the Mayor’s argument that the City should not impose a prevailing wage requirement unless the County enacts a similar law.

 

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Pittsburgh Tax Revenue: A Better Approach

 

When Pittsburgh’s plans to use projected tuition tax revenues were denied by the Oversight Board, the resulting loss of $15 million in projected revenue for 2010 necessitated some reworking of the budget to meet the balanced budget mandate.  One of the revenue sources picked for enhancement was delinquent tax collections. Instead of the $4.4 million anticipated in the earlier budget, the City boosted the amount to be collected by $2 million. The amended budget notes that “in anticipation of aggressive collection from a new agent,” the 2010 collection would rise to $6.4 million.

 

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Prevailing Gamesmanship

In a bold New Year’s Eve gambit, Mayor Ravenstahl’s veto was able to stymie City Council efforts to institute a “prevailing wage” law in Pittsburgh through a bill it passed unanimously on December 21.  Unable to override the veto because of the last minute Mayoral maneuver, irritated Council members have promised to reintroduce the legislation in 2010.

 

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Gaming as a Way to Fund Spending a Sure Bet

No cards have yet been dealt, not a roulette wheel spun, and no dice have been tossed, yet several stakeholders are counting on table games to fund their budgetary needs. In Allegheny County this includes the Carnegie Libraries and the Allegheny County Library Association, as well as the tourism agency in Monroeville. Statewide there will be many others.

And this should come as no surprise: the original 2004 slots bill allowed for economic development handouts for debt at Pittsburgh International Airport, to pay off debts related to subsidy programs administered by Pittsburgh and Allegheny County, for a hockey arena, for the convention center, etc., etc.

Of course the state needs the licensing fee money for this year’s budget and then when the table game enterprise is up and running it can count on recurring revenue. As one state representative noted, using slots for budgets and economic development projects is the worst way to raise revenue "’except for all the other worst ways."

This all raises a line of inquiry: how would the state and the region fund its "needs" without the slot money? Would the absence of $150 million for debt at the airport have forced the County and the Airport Authority to raise fees or possibly look at turning the facility over to a private operator to raise money and achieve efficiencies to retire the debt? Would the City of Pittsburgh, caught in the quagmire of legacy costs, be able to find the money to pay off the Pittsburgh Development Fund? How would the hockey arena be built?

As much as it would be desirable to witness, it seems awfully unlikely that the City and the County would have cut general spending in order to save money to devote annual allotments to these projects.

Mayor Vetoes Terrible Bill

In a moment of economic lucidity, Pittsburgh’s Mayor on December 31 vetoed the so called "prevailing wage" bill Council passed in the waning days of 2009. The late veto made it impossible for Council to put together the votes needed to overturn the veto.

The legislation, a last minute Christmas gift to labor unions, was passed on December 21. That opened the opportunity for the Mayor to veto the bill on the last day of the year. One wonders about the Council’s rush to pass the bill in the last few days with the very real threat of a last minute veto hanging over the process. Was all this carefully choreographed as a Council sop to the unions that was never meant to be put into effect? We will know if Council revives the bill in 2010 and overturns another veto.

The bottom line is the prevailing wage bill was terrible legislation and the Mayor’s reasons for vetoing it were extremely logical. It would have made Pittsburgh even less competitive for attracting companies and investment into the City by aggressively interfering in the market’s ability to set wages through supply and demand.

More devastating, it would have sent yet another signal to the local, national and global business communities that Pittsburgh is slipping deeper into an anti-free market, statist approach to public policy.

We can only hope this poorly thought out and insidious bill never sees the light of day again.

Pittsburgh Prevailing Wage: Union Power Play

Pittsburgh’s Councilman Shields will propose a prevailing wage bill that is expected to mandate that employees at businesses with a City contract or receiving any City subsidy be compensated the same as City employees doing the same job.

Since City employees other than managers are likely to be union members, the compensation requirement would effectively unionize all newly covered workers in terms of pay and benefits. But unless they are union members they will not have a contract covering work rules and they will not have to pay dues. Thus, the non-union workers covered by prevailing wage would receive the benefits without the union dues cost.

If the employees covered by the prevailing wage are union members but are earning less than City workers, the new law will in effect supersede collective bargaining agreements. And we have been told for years those agreements are sacrosanct. That appears not to be the case if the government decides to force the company to pay more than the negotiated contract calls for.

In the case of the non-union workers getting union pay and benefits, the question must be asked: Why would unions support the proposed bill? Why not simply ask that Council require the workers on City contracts or on projects getting a subsidy join the union? Legally, that might be hard to enforce if the workers vigorously oppose being compelled to join a union and fail to vote to be represented.

All told, one must wonder why the prevailing bill is so important to unions. It must be viewed as just another way of showing their strength in the City and reminding politicians who is in charge.

Could We Please Just Have Market-Driven Development?

A recent entry noted the emerging coalition of groups trying to push developers for certain goods-green buildings, living wages, etc.-and noted that their pleas are probably only going to get louder.

One would think that the PG editorial noting that "the City Shouldn’t Dictate an Employer’s Wages" would be a blow against the coalition’s calls for super-minimum wages, also known as living wages. And the editorial notes that it would likely push developers to other communities.

Except that the editorial seems to be ok if a "larger region, preferably the whole state, had the same rules in place"; and it seems ok to require green architecture for development, or for "City Council can find a way to encourage developers to build close to public transit, for instance" (there already is the statewide Transit Revitalization Investment District program). On top of what we always hear from consolidation proponents about building permits and Byzantine regulations, along with zoning and community impacts, these additional requirements are likely to have the same "push" effect on businesses that the wage requirements the editorial does not like.

It would be nice to see investment-not the subsidized Downtown tower, not the casino (which came by way of a monopoly license from the state), and not the conversion of a subsidized department store into condos-that comes by way of developers taking the risk, abiding by sensible codes and regulations, and undertaking a project.