Councilman Burgess-along with his allies in the campaign for "living wage" bill-are still pushing hard for the legislation.  In a comment filled with irony, the Councilman said at a hearing that it is unfair for "government to profit from the misery of the people who work for us."

Perhaps it has never dawned on the Councilman that the "miserable" City workers (if there are such folks) could always look for other employment that pays better.  And perhaps the Councilman might consider the pain and misery his bill would cause already hard pressed City taxpayers who would have to reach deeper into their pockets to pay these "miserable" workers. Or maybe the City would have to layoff some workers or enter into fewer service contracts in order to save money to pay the higher wages of those workers fortunate to keep their jobs and other benefits.  How miserable would the laid off workers be?

There is no free lunch Councilman.  Where will you find the additional revenues or budget cuts to fund the living wage?  In a City that is struggling to find money to meet its already enormous personnel legacy costs, plans to increase spending even more without any idea of where the money will come from are the last thing the City needs.

We ask again: Where are the oversight board and Act 47 coordinators? They should make it clear that this bill is a non-starter as far as they are concerned.  The whole episode points to the lack of seriousness of City government and its overseers in solving the City's problems.

Who could have possibly found any long-lasting joy in the recent snowstorms that hit western Pennsylvania?  Tree companies would certainly answer in the affirmative.  In fact, several did in a news article this morning.  Among the quotes: "It was just awesome the way everything happened this year, monetary-wise...This year because of the storm, it was a blessing. It's really banged up here. Almost every yard has damage. We go from one property right to the next". 

Sure, the snowstorm and resultant tree damage was like manna from heaven.  Echoing themes laid out by economist Henry Hazlitt, we might even say "wow, how great for the tree companies, if not for the storm, how would they have made it through the winter?"  But being able to look "not merely at the immediate but at the longer effects of an act or policy" we have to realize that there are opportunity costs associated with the fallout from the storm. 

For private citizens needing to pay for cleanup, the money spent is money that cannot be spent on other goods and services thus affecting the well-being of other businesses.  The attention will be on the benefit to the tree companies, not the other businesses that will not get the benefit of a transaction. 

This is likewise true in the public sector, as the article notes that the City and the County spent a combined $4.6 million on storm cleanup, with about 6 percent of that going toward tree removal.  How do they intend to recover their costs?  By seeking a reimbursement from the PA Emergency Management Agency.  Numerous other communities will likewise do the same, and the money dedicated to reimbursement for this emergency will not be there for the next incident.  For that the government will have to compel more sources of revenue, a power that private businesses do not have. 

The real estate tax; the wage tax; the Local Services tax; the realty transfer tax; the parking tax; the poured alcohol tax; the gross receipts tax; the parking tax; the mechanical devices tax; the amusement tax...

You get the idea: there is a plethora of tax sources available to local government in Pennsylvania.  That's why it is always surprising to hear calls for even more sources of tax revenue, particularly when there is a call for layering more taxes upon the existing ones instead of phasing them out.

Just last week the PA League of Cities and Municipalities called for counties to get an additional 1 percent on the sales tax (except in Allegheny County and Philadelphia, which already have local add-ons) for "easing school property taxes (remember Act 1?) and helping county government and municipalities pay their expenses".

Or counties could get a poured alcohol tax like Allegheny County has or, failing those options, the state could just hand out revenue to offset the presence of tax-exempt property (which often generates much of the taxable activity that is captured by one of the many taxes listed above.

Maybe a better option-in light of the massive state budget shortfall, the looming problems with the two statewide pension systems, and the impact of legacy costs at the local level-would be to try and control the spending side of the equation with a spending cap that is tied to inflation and/or population, referenda on tax increases and creation of new tax sources, and a movement to a defined contribution system of pensions for new employees.  Otherwise there might not be enough room in the local tax code to list all of those tax sources. 

The City will arrive at a critical juncture in the next ten days: that because parties interested in pursuing a lease of the City's parking facilities have until 5 PM on March 19^th to reply to the Request for Qualifications proposal.  The lease (or concession, as it is described in the RFQ) will "grant certain operating management, and revenue collection rights for a certain period of time in exchange for an upfront, lump sum payment".

That lump sum payment is expected to be used to pay off the Parking Authority's debt and the remainder for helping the City's ailing pension funds.  At least $200 million would be needed to bring the funds to a level of health necessary to avoid a state takeover of the pensions.

So what exactly is to be included in the lease?

• 8,987 spaces in 11 garages and 1 attended lot in Downtown, Oakland, and Shadyside
• 6,931 spaces served by on street meters
• 1,776 spaces in metered surface lots

All in all, some 17,694 spaces are up for grabs, but the RFQ points out that "certain facilities, assets, and elements may be added or removed during the process and will be further detailed in the subsequent RFP".  Much of that continues to play out as Council debates as to how the deal will be structured. 

Pittsburgh has received $40 million from the Gates Foundation to figure out how to define and promote effective teaching. That is more money than many school districts spend in a year-true, not nearly as much as the outrageously expensive Pittsburgh school district that should already know what makes an effective teacher.

After unimaginable amounts of money spent by governments, philanthropic organizations, schools of education and private research over the past century or more, one would have thought we would know what makes a teacher effective. Granted, technology changes, curriculum content changes, etc., mean teachers might need to adapt pedagogically and to reflect technology. However, the basic thrust of imparting knowledge, encouraging interest, inspiring students and rewarding achievement seem to be timeless.

Indeed, it is entirely possible that the concept of "effective teacher" has been studied to death. Some teachers are more effective than other for a variety of reasons.  Love of the subject, love of the profession and burning desire to make a difference in children's lives and futures. It is doubtful that after $40 million of expenditures Pittsburgh will be able to define precisely what makes an effective teacher. They will conclude there are a number of factors that appear in different levels among effective teachers.

One thing we know for sure. Teachers whose primary interest is union membership and ever bigger paychecks and benefits will probably not be the ones who will do the most to help with the $40 million effort to define effective teaching.

A city with budget woes, many of them related to long-term debt, comes up with a plan: why not lease or sell the parking structures owned by the city (or a related city authority) and use the proceeds to pay off the debt?

This sure sounds a lot like Pittsburgh, but as we've chronicled in earlier blogs and a Policy Brief it is Harrisburg that is looking around for dollars.  After this past week in which the Mayor vetoed a revised budget and still has to contend with a $4 million shortfall but did nothing to address the debt related to an incinerator owned by the Harrisburg Authority but guaranteed by the City of Harrisburg the possibility of asset sales became more real.

According to published reports the Mayor of Harrisburg "has supported looking into the sale or lease of certain city assets - including parking garages, City Island and McCormicks Island - to help retire the debt."  Now the City seems prepared to hire outside experts to see how much money the assets could bring in.

There will likely be more cities and local government that might be hoping that their parking structures can deliver quick fix savings for debt and legacy cost problems that are staring them in the face.  Unfortunately, this will be happening in retrospect (looking for money to close budget gaps) instead of prospectively (making a judgment as to whether parking or other municipal functions are a core function that ought to be moved to the private sector). 

Unlike Mr. Smith who went to Washington and attempted to do the noble thing by defending liberty and attacking graft, Mayor Ravenstahl is going to Harrisburg to plead for state money to help the City with its perennial and seemingly unfixable fiscal problems.  After rebuffing the Legislature's efforts to help the City with its pension difficulties last year, the Mayor might get a polite but cool reception when he shows up in Capitol City.

This time he is coming with the purported support of yet another newly formed coalition of corporate, university and elected officials. Interestingly, one of those is the Chancellor of the University of Pittsburgh who vigorously fought the Mayor's effort to impose a tuition tax on college students in the City. The Chancellor also headed the task force looking into a City-County merger. A task force that recommended strongly the City and County consolidate duplicative services. In two years since, there is no measurable progress in that direction. Now the Chancellor is back as a member of the new coalition agreeing to help lobby the state for additional sources of revenue for the City.

How ironic. The state is facing serious fiscal problems of its own and to make matters even worse, revenue is coming in a half billion dollars below projections in the current fiscal year-an additional shortfall to be made up somehow. The universities have complained about the inadequate funding they receive from the state while many municipalities and school districts will also be pleading for more state funds.  And the answer from the Chancellor is to lobby for more or higher taxes on already strapped Pennsylvanians to fix Pittsburgh's spending problem.

Perhaps it never occurs to these folks that the voters in Pittsburgh were silent partners and enablers in creating the monstrous fiscal mess the City finds itself in. And, it must be noted, the state has helped with new revenues several times already over the past couple of decades. If more revenue would solve the City's financial problem, it would have been solved. Even under supervision of two state watchdog groups for the past six years Pittsburgh has failed to make substantial progress. The real problem is the City cannot bring itself to make the serious cuts it needs to make and it has refused to take the steps other communities have taken to reduce expenses through outsourcing.

Basically, Pittsburgh's government is run by and for the people who work for the City government. Until that situation changes, Pittsburgh will never get well. 

It was heartening to learn Pittsburgh officials are opening up to the idea of looking at outsourcing and other private sector involvement to solve the City's perennial fiscal problems. The Allegheny Institute has been arguing for such an approach for 15 years only to have our research and recommendations rebuffed by elected officials. Now, according to recent news accounts, the finance director has been telling New York financial players that Pittsburgh is actively exploring public-private partnerships as a way of generating revenue and/or lowering costs.

The time has come-the Mayor now says-to be open to a concept that is widely used already by other state and city governments but one that has been stymied in Pittsburgh. Political and union led opposition toward anything hinting of privatization has been fierce. Therefore, it must be asked; Is this a real epiphany on the part of the Mayor and his staff, or is it just an effort to convince financial markets that Pittsburgh is moving toward a sensible approach to solving deep and longstanding fiscal problems?

Certainly, it is to be hoped that the more open stance is real and sincere. If it is, the Mayor deserves congratulations.  If previous mayors and councils had adopted a friendlier position on privatization, outsourcing and public-private partnerships 15 years ago instead of wasting enormous amounts of money pursuing a publicly funded, wrongheaded growth strategy, Pittsburgh would undoubtedly been in better shape than it finds itself today.  Unfortunately, delaying the shift toward market based, private sector involvement for so long has almost certainly lowered the potential gains to be had from the new approach.

Still, it is never too late to begin using the private sector to improve the City's financial situation-the sooner and more extensively the better. Let's hope for the sake of City's long term well being the Mayor is serious and the inevitable union and Council opposition can be overcome. 

A PG editorial this morning said that "the sorry condition of Pittsburgh streets is testimony to the fact that the city is not out of the fiscal woods".  True, Pittsburgh is not out of the fiscal woods-it won't be until there is an execution of a plan to deal with legacy costs and bring per capita levels of spending down to more competitive and taxpayer friendly levels.

A lot of people might think that the condition of the roads is testimony that the City has been focused on other things, like economic development and conjuring up schemes to grab more taxpayer money, than taking care of the municipal basics of public safety and public works.  But the PG feels that the City needs to turn to commuters and non-profits for more money in order to take care of basic road maintenance.

Never mind that the City (like all counties and municipalities) gets a share of the Liquid Fuels tax ($4.6 million in 2010) that is used for road maintenance and levies the Local Services Tax ($12.5 million in 2010) which replaced the old $10 Occupational Privilege Tax and has statutory language that mandates that one of the four possible uses for the LST is "road construction and/or maintenance".  What else would they suggest?  An increase in the wage tax under Act 47?  For one, it cannot be done because of legal restrictions and two it would cause an increase in the wage tax for people living in the City, making their rate far higher than it would be on non-residents.  Plenty of places have commuter taxes (New York, Philly, etc.) and that has not solved the financial difficulties. 

An alternative has arisen to the Mayor's plan of leasing Parking Authority garages to a private interest in exchange for a lump sum payment (that sum would be used to pay off the Authority's debt and bring up the asset total of the City's pension funds): making the pension funds the "owner" of the garages. 

News reports describe the transaction as "giving the pension fund ownership of some or all of the city's 11 parking garages".  It is doubtful that the pension funds could buy the garages as that would further deplete the low balance of the funds, and it raises lots of questions about the merit of this proposal versus the lease or sale.

Would the Parking Authority's bondholders allow such a transfer?  Would the Authority board resist "giving ownership" away?  Could they be compelled? How would the lump sum needed for the pensions be realized?  How would the pension funds-which hold $52 million in debt securities and $207 million in cash and cash equivalents-do owning publicly owned infrastructure?  What becomes of the debt elimination plan for the Authority?

The Mayor says he is open to the alternative and that "if this ends up being the proposal, that's fine" while also noting that the transaction "doesn't equate to real dollars" the way a lease or sale agreement would.  Clearly it is going to take time to explore the proposal, all the while the clock on restoring the pension funds to health continues ticking.