Allegheny Institute Blog

The Pittsburgh Promise—a college scholarship program to help students attending public or charter schools in the City who meet grade point average requirements—has many levers operating the machine. The program was initially promoted by the Mayor and school Superintendent, given seed funding by the hospital system UPMC, administered under the auspices of a foundation, with its own board and an executive director.

So should the Urban Redevelopment Authority—a city authority whose five members are appointed by the Mayor and which characterizes itself as the “developer of last resort” in the City—take the reins by integrating the Promise into a cohesive marketing plan with its housing programs? On the one hand, backers of the move would say they should. After all, schools are an important public service and the Promise, if it is fulfilled, could change the fortunes of the City by keeping and attracting residents with children who will attend college and could use the aid. They might be tempted to move into the City if the URA promotes their residential programs (low mortgages, abatements, etc.) in conjunction with educational aid. The URA’s website shows ten programs related to home ownership and rehabilitation.

But on the other hand, is it the responsibility of an authority, an agency which sits off of the main organizational structure of City government, and one that has been in charge of redevelopment to allow its mission to creep further into education? Then too, the chair of the URA stated “there are several initiatives and several programs that are real economic generators that, quite frankly, we just don't promote enough as things to entice people to move in as residents or business or keep people here.” Yet a look at the most recent Annual Report of the agency shows it spent $23.6 million (21% of total) on housing development. If the Authority’s initiatives aren’t being promoted, it sure does not look like it.

Rather, the declining quality of the schools has probably carried heavier weight than the incentive programs. The Promise will not change that. Only true educational reforms like school choice will entice families back into the City.

We’ve written at length in our Briefs and on this blog about the twists and turns surrounding the new taxes on poured drinks and car rentals authorized in Act 44 to provide dedicated funding to the Port Authority. These taxes would swap places with the $20-25 million or so from property taxes that the County had historically sent to the Authority for a local match. Then the Executive said that the match from the new taxes would not go to PAT until they changed standard operating procedures like being able to retire at 50 and getting health care well into retirement. With the union contract set to expire on June 30th and the authority’s fiscal year starting the day after, the PAT board has floated plans to borrow the local match as a way of protecting itself against the Executive withholding the funds.

Since the taxes are sitting in escrow and the Executive has said that he won’t allow the transit system to be shut down, the union isn’t as boxed in as the Executive would have us believe. In fact, early projections on the drink tax are running ahead of targets and the first quarter of collections are so high that, if sustained, the drink tax will come in at 28% above the budgeted amount.

So what to do? County Council will debate legislation tonight that proposes to cut the rate on the drink tax from 10 percent to 5 percent. No change is proposed to the current $2 per day rate on a vehicle rental.

Here’s another interesting part. The ordinance proposes that “in the event that [drink/rental] tax revenues are generated in excess of those required to meet the statutory matching fund requirement” they will be used for “the purpose of funding other operating or capital needs of the Port Authority”.

That’s quite a change from how this process has shaped up thus far. The rate cut provides relief to those unhappy about the drink tax, but why offer to just hand all the money generated from the tax to the Port Authority, especially when its powerful union may not concede any ground on its contract? With their ability to walk out and shut the system down, pressure will come to bear on the PAT board, management, and County officials to get the buses and trolley running again. This could mean that the new contract ends up a lot like the current contract, and since the Executive’s order states that the County is “legally required” to send a local match, this new legislative language would offer a higher reward to keep PAT operating as is.

Rest assured that if the Act 44 taxes produce more money than is needed for the local PAT match that a lot of people will be clamoring for any dollars they can grab.

This is the type of headline that media outlets love: “Pittsburgh has the worst air in the country”. Print, radio and TV news outlets have been running this headline since the American Lung Association’s State of the Air report showed Pittsburgh moving ahead of Los Angeles in terms of sooty air. But instead of taking the time to show how misleading this report is, and thus save Pittsburgh’s reputation, they are accomplices in a smear campaign.

The reality is the ranking is based on only one of twelve air monitoring meters in Allegheny County—a meter that sits in a valley near a steel mill. Yet this one meter is being used by the American Lung Association to sully the reputation of an entire region. But the ALA is not about to let facts get in the way of promoting their propaganda.

There are twelve meters scattered throughout Allegheny County, one in both Beaver and Westmoreland Counties, and two in Washington County. However, the ALA report includes an eight county area which includes more than 2.2 million people. But as the Allegheny County Health Department notes, there are only 25,000 people living near the offending meter. But to read the headlines, all 2.2 million people are at risk.

If all the meter readings in the area were averaged together, they would be more than acceptable. But the response from the policy leader from the ALA says “we don’t average them together because you don’t breathe average air.” It’s also not fair to lump in an entire region because of one meter. Is it possible that other cities benefit because the ALA only measures a “clean” monitor instead of a “dirty” one? Would the ALA consider using a different monitor for future Allegheny County readings or do they relish using the high reading meter so they can continue their fear mongering?

The ALA’s methodology is very weak and only succeeds as a smear tactic. Pittsburgh’s air quality has improved by leaps and bounds since the mid twentieth century. Furthermore the media, following the “if it bleeds it leads” mentality has been an unwitting accomplice to the ALA’s propaganda. Too bad faulty research and media hype has set back the effort to polish up the steel city’s image.

Who knows why it fell apart, but the City’s attempt to get a one-stop shop for permits (housed in various departments like Building Inspection, Planning, Public Works, and the Water and Sewer Authority) has succeeded in getting furniture and an office but no personnel. The Mayor characterizes the reorganization as “more dead than alive” and with the development czar on paid leave, Council members seemingly against moving the function of planning to the URA, and various options on the table for moving some employees to the Finance Department, it looks like the Mayor might be correct.

There are several lessons here if anyone wants to look for them. This reorganization was City only, not City-County, not City-municipal, and seemed to make sense, yet did not get done. Imagine the hard work involved in moving the levers between the City and Allegheny County departments where they overlap. It is hard, but not without merit. And where are the City’s overseers on this one? If this would make the City more friendly to business, it should not be on life support.

Based on the first three months of collection, the new countywide levies on poured drinks and car rentals could exceed $30 million and might be closer to $35 million. That raises the question: if those projections are reached, what happens to the overage?

Recall that the reason the levies were enacted was to move the County’s annual subsidy to the Port Authority (in the range of $20-$25 million) from real estate taxes, since the executive told us that no County uses real estate taxes for mass transit, to new dedicated sources of funding. Act 44 allowed drink and car rental taxes, Council enacted them, and now they are sitting in a fund waiting on the outcome of the Port Authority contract negotiations.

Assuming the transit union agrees to concessions and reworks their contract to allow for changes to legacy costs, retirement age, and other benefits, the Executive said he would release the money. But does the subsidy go up to include everything from the drink/rental taxes, or just the historical level of subsidy? If it stays at $25 million or so, what happens to the rest of the money—does it stay in escrow and carry over to the next year? Or does the County have the ability to use it for general operating purposes?

A state House committee has passed legislation that would enact cost of living increases for state retirees that range from 2.7 percent to 25 percent. Why would legislators do this? Look no further than the old adage of the “squeaky wheel getting the grease”. One newspaper report notes pressure from retirees on lawmakers due to the level of returns the two statewide retirement systems (SERS and PSERS) are getting and the sponsor of the legislation noted retirees need for financial relief.

Where to begin? There are a lot of retirees in this state, union and non-union, that did not work for the state government and are feeling the pressure of mounting costs and the crushing tax burden that don’t have the luxury of leaning on the legislature for pension enhancements. These retirees will have to dip further into their pockets to pay for the enhancements through higher school property taxes or state income taxes. Remember that thanks to the last cost of living increase in the early part of this decade contribution rates for the school and state systems are projected to jump significantly. That could amount to steep tax hikes.

And what about the rest of the state? Taxpayers have been complaining about taxes and regulations and common sense reform that would grow investment here, yet we only get tepid change. Yet when the head of the retirees’ union queries “what's a better economic stimulus package than to give your former state employees a cost-of-living increase, which they're going to spend right here in Pennsylvania?,” few if any point out that such an action may end up costing Pennsylvanians in the future or the flippant nature of the comment. Consider that, according to the 2006 SERS financial statement, the last three cost of living adjustments for retirees (effective dates of July 1 in 1998, 2002, and 2003) added an additional $1.1 billion to actuarial liabilities of the system. Did this infusion of cash help stimulate PA’s economy?

Hot on the heels of the City Council-Mayoral debate over what City-owned vehicles can be taken home and by whom, the County Council’s committee on Government Reform will try to establish its own policy by taking up a bill to define the use of County vehicles and their take home use. If passed, the bill will create a policy in which the County manager will take an annual count of the vehicles and their characteristics, and whether the vehicle is allowed to be taken home by an employee. The legislation would prohibit the vehicles for “any and all personal uses”.

Granted, there are significant differences from the City’s situation—the Act 47 team actually took the City’s fleet of 83 vehicles and prescribed the steps to remove their use by officials not performing public safety or public health functions and then the remainder with low mileage would be examined individually. The goal was to get the 83 down to 29. Only now is the City getting around to it and the number is well above the 29.

But in both cases, the language of the Act 47 team is apropos: that take home vehicle use was “a symbolically negative image to the City workforce and the public counter to the dire nature of the City’s finances and the need for permanent reform”. With the County’s financial picture not too rosy, and the presence of new taxes on drinks, the Council’s move, if enacted, might be an attempt to head off that perception.

The 2008 Pittsburgh Pirates’ campaign has begun as the team tries to make it to .500 and thus avoid tying the record of consecutive losing seasons in professional sports at sixteen years. The anemic attendance numbers at PNC Park thus far this season indicate that a lot of people might end up missing the possible tying of a record.

Through nine home games, attendance has averaged 14,337, lowest in the league and about 5 percent below the Florida Marlins, who are next to last. How far fortunes have fallen since the late 1990s when taxpayer subsidies for PNC Park were sold as a way to keep the Pirates here, make the team competitive, and boost attendance. One out of three isn’t too bad, we guess.

Here’s the problem as we noted out in our Issue Summary on attendance: aside from the opening year of the park (2001) and the boost from having the All-Star game here (2006), total attendance is not much different from where it was at Three Rivers Stadium. The taxpayers of the region were promised more than a one year boost in attendance and projections placed it closer to the 2 million level annually. More realistic numbers are in the 1.5 to 1.6 million range. PNC Park attendance has never risen higher than 17th in the league, and that happened in the park’s debut year.

Here’s the other problem: the teams languishing at the bottom of the barrel in attendance with the Pirates include Cleveland, Cincinnati, and Baltimore. Two of these cities built retro ballparks that inspired the push and design for PNC Park. In the case of Cleveland and Baltimore, those stadiums will be approaching the two decade mark in the next five years. Will those designs be seen as passé if attendance hovers in the bottom third of major league teams?

Clearly stadiums are not the big draw for attendance they were sold to the public to be. Poor play over time obviously takes a toll on attendance. But in Pittsburgh attendance was never all that good.

As that famous philosopher Yogi Berra would say, “if people do not want to go to the ballpark, you can’t stop them”