With school districts facing as much as a sixfold jump in the amount they must pay for teacher pensions by 2012, teachers are very worried that school boards will have to cut programs and/or staff.

School districts and teacher unions are asking Harrisburg for a fix that will help cover the additional funding. Good luck with that. The state faces its own enormous pension payment increase and its finances are very shaky with looming huge deficits.

What to do? If teachers and their union leadership want to avoid program and staff cuts, they should offer to help. They should agree: (1) to accept a voluntarily salary freeze and (2) agree to pay more for health care. These actions would help to offset some of the impending huge pension payment increases.

Union leaders argue that school districts have been derelict by underpaying into the pension system. Maybe they should consider that the strident position taken by unions during bargaining, backed by the right to strike, have already stretched to the limit the ability of taxpayers to support schools.  No group has fared better economically than Pennsylvania's teachers during good times and bad. Virtually no layoffs, protection of underperformers, excessive, blind support by Harrisburg of the public school system, and lack of accountability are the real problems.  Addressing those is the best place to start.  In the meantime, let's see if teachers are willing to offer school districts any help with the pension payment hike.

Could a decision to guarantee an authority's debt on an incinerator turn Harrisburg's finances to ashes?  It seems to be the case as the state's capital (population 47k) is in such a pickle that elected officials including the city's controller are suggesting Harrisburg needs to "...decide which way to go, in bankruptcy or Act 47".  Much hinges on debt service payments that the City agreed to make for a waste-to-energy incinerator owned by a separate authority.

The Mayor stated that finances are so bad that they "might not be able to meet payroll this month".  Tax increases, asset sales, and an exploration of takeover remedies are on the table.

At least it does not appear that pension costs are what plague the city, at least not yet.  Harrisburg showed a very healthy fund ratio in 2007 with more than enough assets to meet its liabilities (118% funded).

As our 2009 report on Chapter 9 bankruptcy pointed out, the U.S. Constitution allows Congress to write uniform bankruptcy laws and municipalities are permitted to file for bankruptcy protection (debt adjustment may be more appropriate).  In order to preserve the Federal-state balance of power, states are free to prohibit their municipalities from filing and those that do can place as many restrictions on filing as they wish.  In Pennsylvania authorities cannot file for bankruptcy and the only statutory language on municipal filings flow through Act 47.  Thus, a municipality would have to be in Act 47 status and meet certain criteria in the Act 47 statute to proceed to bankruptcy.  No community in Act 47 has yet to file for Chapter 9 bankruptcy.

Maybe communities that are faced with a sudden catastrophe of an economic kind ought to have a quicker route to Chapter 9 than first entering into Act 47.  Consider that Harrisburg is in a really bad spot: the Act 47 process has to play out, then a recovery plan has to be written, and then one of the criteria related to a Federal filing has to be satisfied.  There may be some cases that require swifter action.  

The Mayor has asked for permission to create a 25 member task force that will deal with the City's vacant properties.  The panel, if created, will have two years to write a plan.

How extensive is the problem?  The Act 47 plan contains data on vacant housing units as a percentage of total housing units.  Pittsburgh has some 29k housing units that are vacant: with 160k total housing units, that works out to 18%. 

That percentage is higher than other PA cities looked at by the recovery team-Philadelphia (14.9%), Allentown (9.5%), and Erie (14.7%)-but not as high as Buffalo (21.2%), Cleveland (23.3%), or St. Louis (21.3%).  Pittsburgh exceeded the overall U.S. average of 11.6%. 

To be sure, data shows that the rate of condemnations far outpaces the rates of demolitions, thus making the backlog grow annually.  And though we have been told that the Pittsburgh region by and large did not partake in the housing boom (thus implying there has been no housing bust here) there has to be a good portion of stock that fell into foreclosure.  To be sure, there are examples out there of what other cities have done to combat vacant housing and most certainly the task force will have to address the operations of the Bureau of Building Inspection, which was examined by both the Act 47 team (in the amended report) and a separate oversight board study. 

As details of the proposed Fraternal Order of Police contract with the City of Pittsburgh begin to leak out, there is still no indication that the Act 47 team's recommendation (codified as PB01) in the amended recovery plan that the City pursue a strategy of civilianization.  In plain terms, civilianization is "placing civilian employees in positions held by sworn employees so the latter can be reassigned to patrol and more traditional police activities".

The recovery plan found a ratio of 13.7 sworn employees for every one civilian employee in the Pittsburgh police department.  That was higher than Akron (10.5), Cleveland (4.5), Rochester (4.2), and Newark (3.1).  The team characterized Pittsburgh's ratio as "unusually high" and the International Association of Chiefs of Police backed the idea in a 2005 report.

There has been a snail's pace at acting on the recommendation: in the 2004 Act 47 plan the team targeted 38 positions for civilianization, and only two officers have been redeployed thus far.

Obviously one has to wonder why, if civilians could perform certain functions at a lower price tag (on salary and fringe benefits) that the idea has not received more attention. 

According to newspaper accounts, the four Democrat candidates for Governor have publicly supported the continued monopoly government control of liquor sales in Pennsylvania.  Not too surprising given that the venue for the statements was a forum hosted by labor unions, the single biggest beneficiary of the status quo and implacable enemies of reform.

Just one more example of how organized labor, especially public sector unions, has Pennsylvania in a vise grip when it comes to policy. Teachers' and transit workers' right to strike and union-favoring binding arbitration for police and fire both combine to make Pennsylvania one of the worst, if not the worst, state in the country in terms of the power of labor to control a state's governance and economic freedom.  The financial situation in Pittsburgh and many Pennsylvania municipalities reflect this powerful interest's control and the inability of these governments to enact the type of policies that would help them escape their financial plight.

Unfortunately, labor's control over policy is so profound that not one Democrat candidate could support a sensible step such as privatizing the liquor stores. Indeed, there are few Republicans who will call for an end to teacher and transit worker strikes or stand up to police unions on the need for binding arbitration reform for fear of retaliation.

So on the state will go, among the worst economically in a country that seems headed for a period of very weak economic performance. 

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?

In announcing the release of some $26.4 million in Federal money to the Commonwealth for rail improvements, left at the station is the proposed high-speed Maglev project that would have connected Pittsburgh International Airport to Greensburg in Westmoreland County (passing through Downtown Pittsburgh).  The project sought $2.3 billion, and received zero.

One could say that the writing was on the wall when the U.S. Secretary for Transportation noted in a visit to Pittsburgh that Maglev (in general) is "very expensive" and that the administration had more interest in developing high-speed rail.  Sure, backers of Maglev here locally were awarded some $28 million in September to study the feasibility of the Airport link, which was originally estimated to cost $3.75 billion to link to Greensburg. 

Pennsylvania did get the money it was seeking ($750,000) to study rail improvements between Pittsburgh and Harrisburg, where AMTRAK service provides one daily trip (contract that with Harrisburg to Philadelphia service, which has 14 daily trips).

Who knows what this means for the experimental project that is Maglev, especially in western Pennsylvania.  Maybe the transportation generosity was all used up on the North Shore Connector. 

Municipal authorities were purportedly created in part to do things regular governments cannot do and to assume certain financial and operational functions. In Pittsburgh, we have the water and sewer authority, the parking authority, the housing authority, the redevelopment authority, etc. These authorities are governed by a board that is appointed by the Mayor and approved by the City Council. Within the state's statutes governing the authority and the authority's own charter and by-laws, the board presumably has the responsibility and freedom to make the big decisions for the authority.

Generally speaking the board is supposedly independent of political pressures. Of course, board members who continually run afoul of the Mayor's wishes could be asked to resign or not be re-appointed.  Certainly, the City Council should not be stepping into manage the affairs of any authority. That is a prescription for turmoil.

Now comes Councilman Shields saying, "The [Urban Redevelopment Authority] can't even breathe a breath without the consent and authorization of this body"-referring to Council.  He went on to say that he would do unimaginable things to the URA if it did not comply with the prevailing wage bill Council is getting ready to pass.

So, in Pittsburgh, what is it? Are authorities independent or are they lackeys of City Council?  Apparently, a new era of Council hegemony just dawned in Pittsburgh.

On Monday, Pittsburgh City Council unanimously voted to adopt a prevailing wage law. One more vote from Council and the bill goes to the Mayor for a second time.  The first time the united Council passed the bill it was vetoed by the Mayor on December 31^st and Council was unable to gather enough votes to override it.  Undeterred, they vowed to reintroduce the legislation and once again pass it unanimously-which they have just done.

Now it will be interesting to see the how the Mayor reacts. 

He tried to play both sides of the fence by denouncing the prevailing wage bill as a killer of (subsidized) development, yet introduced his own competing prevailing wage bill, which Council summarily ignored.  Now he needs to contemplate his next decision.  He either vetoes the bill again, signs it or allows it to become law without his signature. If he vetoes, chances are high the veto will be overridden. Thus, barring a sudden and unexpected outbreak of sanity on Council, prevailing wage legislation is on the verge of becoming law.  

It appears City is all but certain to be saddled with another market interfering mandate.  A mandate that will prolong the City's exit from distressed status.

Late last week the Pittsburgh Board of Education approved a new set of guidelines on how to dispose of surplus property.  With declining enrollment and some buildings not fit for rehabilitation, the District will now have a clear way of proceeding with the sale of property. 

Key in this set of guidelines is the fact that charter schools will not be discriminated against buying District-owned property that is for sale.  As the solicitor for the District noted the policy "removes the apparent bias against charter schools" who felt that they were not getting a fair shot at buying property.  For instance, the URA-which is marketing some closed school buildings-had a note on its website that "the district prefers not to ‘encourage' competing schools."  That language is supposed to be removed as a result of the guidelines. 

That does nothing to guarantee that the District won't continue to stifle actual charter school competition by denying charters (two were turned down last month) but it might give parents who want choice some hope.  Consider that the Center of Education Reform's latest "Survey of America's Charter Schools" found that 65% of all charter schools have a waiting list, which is up from 58% in 2008.  On average, 239 children are waiting to enter a charter school.

If Pittsburgh Public Schools are confident in their product, then they should welcome all competition, especially those willing to take some property off of the District's hands.