Tuesday, June 16, 2009

In Russia, Act 47 Coordinates You!

Alright, enough joking around. Pittsburgh is in a real pickle.

The city's original Act 47 5-Year Recovery Plan passed under Mayor Tom Murphy as we first became a Distressed Municipality expires on Tuesday June 30th.

The Act 47 Coordinators' and to an extent Mayor Ravenstahl's new proposed 5-Year Plan is not popular at all -- yet any attempts to revise it will be significantly hampered by the bureaucratic complexities of Act 47 itself, not to mention problems of politics and communication among city leaders.

Though the City's mandatory costs are increasing, and will take bigger and bigger chunks out of our budgets for years to come, the Coordinator's plan offers no solid options for raising revenue to cover for this -- outside of distinctly local tax hikes in the wage, property, real estate transfer and parking categories. All of these taxes are already considered extremely high.

Options which would broaden our tax base (i.e. the non-profit payroll preparation tax, commuter tax) are essentially off-the-table. Initiatives to create statewide cost-saving strategies (e.g. public pension and public health care consolidation) go unmentioned and seem to be garnering little attention. The long-term leasing of the city's public parking garages are held out as the city's best hope of salvation, but this has two major problems: the Plan would have go into effect before we can be assured of those revenues, and any infusion of cash which may result would eventually evaporate further down the road.

Council members are hesitant at best to approve a 5-year Plan that appears to fix nothing, provides little in the way of capital budgets, raises taxes in a tax-rich environment and leaves Pittsburgh facing undiminished or even heightened problems in another five years.

However, the date of June 30th appears to coincide with the opening of contract talks with the city's public safety unions. It has been alleged thus far without argument that if Pittsburgh has no Recovery Plan in place to alter the state's ordinary collective bargaining procedures on July 1st, then when contract negotiations "begin", biding arbitration under Act 111 which must ignore a city's capability to pay for increased benefits would commence. Pittsburgh's long-term costs and obligations would shoot up even higher than we find them today.

As a public service, the Comet presents this video to convey the seriousness of what has been occurring and what is likely to occur if the issue of JUNE 30th is disregarded or fumbled. Warning: Strong animated violence. Viewer discretion is advised:

I say we worry about the guy at the top.


Tonya Payne and Darlene Harris never greatly appreciated the restrictions Act 47 placed on the City. Payne has already said, "I came in saying no, and I'm going to go out saying no." Newcomer Theresa Smith's strong labor ties and short public statements in the debate thus far probably put her in this same camp for now. Veteran Jim Motznik has offered slightly more nuanced positions on Act 47 in the past, but on the whole he has been a skeptic and a critic of state oversight.

That's four out of nine who are unlikely to approve the Plan -- and may not fear the scary consequences if a fifth vote climbs aboard.

Bill Peduto has been a champion of state oversight, but he is not enamoured of this plan before him. Doug Shields has been mercurial on the issue, but he similarly does not look forward to holding his nose and swallowing a mediocre plan unless Mayor Ravenstahl publicly and forcibly puts his own political capital on the line to defend it. No reason not to put Bruce Kraus in this category until we learn otherwise.

Ricky Burgess is the only member thus far to urge passage of the plan by June 30th. By my score it may already be 1-7 FAIL, but let's say the latter camp caves in or is assuaged and it becomes 4-4 TIE.

That leaves Patrick Dowd -- who has said already he "will not vote" for a Plan that will increase taxes, who indicated that he looks forward to grilling the Mayor on the issue of performance measures and audits called for and unimplemented in both the old Plan and the new one, who still owes Mayor Ravenstahl an apology for having accused his administration of corruption, and who made an extended reference to the 1964 Cold War classic Fail-Safe with Henry Fonda while discussing Act 47.

In Fail-Safe, New York City is destroyed in order to avert a full-scale nuclear war precipitated by a simple human error and far too much power invested in systems and machines.


I've been sprinkling these snowflakes throughout my own comment sections. Here they are again in case anyone is interested:

Council will have to make clear that the current proposed Recovery Plan is a non-starter as soon as possible -- because it is, and because that's the responsible and productive thing to do. But just as emphatically it should implore the Coordinators and if necessary the Secretary to craft a solution that takes care of our June 30th / Act 111 problem for a set, reasonable period of time.

There may very well be as many as 8 votes to accomplish this: between the populists who see no light at the end of the Act 47 tunnel, and the progressives who are frustrated by our recovery methods.

No one wants to see the Pittsburgh situation shake up abruptly and needlessly, without all due diligence -- which is exactly what will happen if the present Plan goes up for a vote.

There'd be no reason for the overseers to apply sanctions in the short term. There are a variety of good ideas on the menu we can engage them on, of which possibly only one or two require state action. It would be best to hone in on only the most ripe. We're very close. That's what you say, right? "We're very close".

Seeing as how we are all being productive, a protracted discussion about why the Plan was presented when it was, the efficacy of prior 'budget hearings', and how we came now to be scrambling near the last minute should be strenuously avoided. If there is bait thrown out it should be avoided to the extent that it can be.

The municipality and its leaders should amend for the purposes only of abbreviating some of the City's authorizations for implementation and for delaying others, obtain the Coordinator's consent, PASS ACT 47, and negotiate hard for necessary and equitable solutions at least until November!

That is...

I think another possibility to avoid the June 30th drama could be passage of a short continuing resolution-style recovery plan that buys more time before locking us in.

3 stabs at saying the same thing. Now to some counterarguments:

I understand the inequities of [Act 111, by which public safety employees ordinarily enjoy outsized collective bargaining leverage as compared to other union employees, to nonunion employees and to taxpayers] and I don't like them. However, neither do I like the idea of lingering without initiative in Distressed Municipality status so that we can keep certain employees in perpetual disadvantage as compared to their counterparts all over the state and much of the country. It just doesn't seem good for business.

So I guess you could say I'm only in favor of Act 47 if it's making itself worthwhile by hastening the day we can leave it. Efforts to amend or repeal Act 111 should be done in its own arena.

I imagine the above will continue to be my Foremost Guiding Principle until at least June 29th -- and maybe even after that. It's got a nice beat.

Economically, I think Pittsburgh needs the non-profit tax (I think a freeze or a bump in the parking tax is easy) but politically we CAN'T AFFORD to pursue the COMMUTER TAX. It's political poison. Shut it down. People don't want to see it, don't want to think about. The complaints are visceral. Relax and in 5 years we'll come back with one scaled to income. Meanwhile, tax UPMC et al and party.

Meanwhile, since we may only be able to pick one thing on the menu, we need statewide pension management -- the right kind of pooled statewide system, adjudicated by a complex and cleverly selected board

-- AND we need to reach a consensus on which of our four city taxes we are going to raise, to demonstrate seriousness and oh yeah to raise money. I say parking or property. Yes I said property. Other municipalities in our own County are paying higher property taxes, we can't very well argue we can do different.

If Pittsburgh is asking to be allowed a period of extraordinary negotiation, it would help to have a useful-seeming new negotiating position. That was my attempt at one. I think at the very least it describes the kind of thinking and horsetrading that will be necessary.

5 Year Plans only get to be negotiated once every 5 years. That's a long time to live under something that again fixes nothing, that does not change our economic fundamentals and that exposes us to huge risks.

Why take a knee?



  1. The parking garages are one of our best assets. Why would we sell them?

    The state (see: Act 47 team) refuses to let the city raise the parking tax (see: commuter tax). As part of their "recovery plan" they insist that we lower our rates while they and the "non-profits" reduce their contributions to the city budget.

    OK fine, We can keep the parking garages and jack the rates to make up for any budget shortfalls. (see: Ed Rendell) After all, the "private" lot operators have already proven that they are going to jack the rates when they get their hands on the parking spaces anyways. Why should they benefit when the city can do the same?

  2. Sell the parking garages, a better asset, for the same reason the water pipes and sewers were sold. For cash. For bigger spending on other things.

    Sell the parking garages because they do NOT address the core reason for government.

  3. I wonder if the hidden subtext is that the Act 47 people expect the City *not* to adjust its millage when re-assessment hits, and take the windfall.

    Look, I am having trouble following this. You are saying City Council would be right in resisting raising taxes, and tightening the belt of the City with at best tiny pay raises for City employees. We also should not raise taxes on people who work in the City and enjoy City services. Instead we should expect the State to take care of our pension and debt issues. And you say that the amended Act 47 plan is a non starter.

    So Pittsburgh should take no responsibility for getting itself into (near or essentially) bankruptcy. And we should tell the Act 47 people that we would like to delay consideration and passage of the amended plan until after the June 30th deadline, because if we do somehow make a successful demand of the State legislature to assume our debt burden or pension obligation, that they will have to make a special expenditure and throw this year’s already completed budget into deficit.

    These are the positions the blogosphere should advocate?

  4. Ed - I am saying Pittsburgh must probably choose carefully ONE tax to raise at least somewhat, so that does demonstrate taking "responsibility", although this is less about responsibility than practicality. (We're not Aesop, these aren't fables.) I'm not asking the state to "assume" our pension obligations, I'm asking it to organize the pooling together of the obligations of many MANY municipalities such that we all may take advantage of economies of scale. I hope this clears up the idea of "throwing this year's already completed budget into deficit", if something I recommended leads to that I don't apprehend it.

    Rauterkus, TheTruth - Both good arguments! On the one hand, maybe we should choose the Parking Tax to raise and really jack it through the roof, which would be justifiable on environmental grounds. Screw driving anyway. On the other hand, running parking lots doesn't seem like an essential government service. I know that there is some feeling that there are only so many "limbs" or functions we can sell off -- when you pour money into the pension fund it only goes away eventually - this are why we are asking for sustainable structural changes. There is some feeling among D's also that you don't just relinquish gov't power, although of course that's exactly what an L would prefer.

    I think it indicates that if we DON'T find a good price for the parking lots, THEN we might as well start gouging people. I think I recall Philly being much more expensive...

  5. The Act 47 plan does not expire Jne 30. Distressed ststus does not expire either.

    The plan currently applied runs through the end of the year. Only the Secretary of DCED can make a determination as to the staus (distressed or not distressed).

    The june 30th deadline is a hoax.

  6. Anon 9:00 AM - I wondered about that. Distressed Status itself doesn't seem to dissolve on June 30th, but the 5-Year Plan sure seemed to to me.

    I tried to figure out whether it was Distressed Status or something within our 5-Year Plans that takes care of Act 111 for us, and I was unsuccessful.

    I hope I wasn't taken in by a hoax. We should find out today, unless we really really get distracted by theater.

  7. Here's a link to Act 47 as it exists in PA Code: http://www.pacode.com/secure/data/012/chapter115/chap115toc.html.

    As for the parking garages, CMU students did a study on the feasibility of selling off or entering into long term leases for the garages. They found no net positive financial impact for the city. Maintenance costs over the life of the lease would eat into any money gained by the City, and then put a public asset into the hands of private profiteers.

    Municipal governments all over this country own public garages, and I'm of the mind that some public competition in the parking market is good for providing some lower cost access to areas of high traffic. A "transit first" policy should be our goal, but as we go towards that goal, the City shouldn't give away an asset without certainty that the long term financial picture will be better through its sale or long term lease.

  8. Bram, I'm not psychic and I do not know what the Department of Community and Economic Development or the State legislature (that is its many members) will say if we say we only want to raise one tax at least somewhat. I do not know what they will say if we say that we do not want to adhere to the June 30th deadline. I think it is possible that the word responsibility will be uttered by someone somewhere, and not as part of the telling of a fable, Aesopian or otherwise. You may predict that the Act 47 team will react favorably. I suggest they may not, and that others may join in not reacting favorably

  9. Holy Mackerel....Bram!

    I'll have what Bram is

    Small brain I have, seeks to comprehend...

    What I think I remember is this:

    All solutions will need approval from State…and this has been case for many years...

    Once you take bite of apple all is lost..

    Sophie did this when she reduced City Income tax (twice), to get elected and re-elected...signed off on Act 205 (pension recovery act) State Pension Contribution initially was sufficient to cover tax reduction.

    Worked so well other Municipalities jumped on board...slices of pie grew slimmer..

    City Controller Tom Flaherty advised against...was tarred and feathered for saying Sophie generated tax cut was election day politics..

    If Fire and Police want overtime to be included in Pension Benefit Calculation... a corresponding contribution from their pay check should be deducted...only Public Safety Employees enjoy overtime pension perk. (just the tip of iceberg)

    The solutions are there, balls to enforce, are not...

    No politican wants to go against Heros...

    Pension Liability is Albatross...


    Council Members, recently hired, should know this…Krause, Smith, Rudiak, Burgess…Dowd.

    Recent changes to Pension allocation made prior to your arrival, do not include you.

    If you should serve as Public servants long enough to qualify for City Pension you may have to forfeit up to 50% of City Benefit when you receive Social Security. It is called the Social Security Offset.

    Offset was included in Act 205 Pension Recovery Act.

    After much rebellion by City Workers other than Public Safety, Social Security Offset was Eliminated…was concession Granted under first Act 47 Plan. With stipulation new hires would again be subjected to SS Offset.

    During Hearing, it was apparent Joe King was out classed by a monk.

    New hires should ask Doug Shields about those times, as he served as Bob O’Conner’s proxy on Municipal Pension Fund Board Of Directors with me…

    You need Pension info, call me, the Monk…

  11. The parking garages should be sold. Heck, the pension funds or the unions could entertain a bid to buy them and have a stream of money for the future.

    Sell the garages if a good price is obtained. Don't sell them if the price isn't above and beyond the debt that is retired.

    Sold, the garages represent parking -- plus other opportunities for other buildings in the future. The next owners might one year put up other buildings there -- with internal garages, housing, zip lines, whatever. The market can begin to come alive again if the city gets out of the parking business.

    The city is the 900-pound gorilla in parking now. When PNC Firstside was built - or URA on 2nd Ave expansion, they all used PARKING as a leverage that the city residents paid dearly for. Same too for Lazarus. They won't build here unless parking is used as sweetener. Screw that. Then we (citizens / taxpayers) get double trouble.

    Once the city won't build garages for development deals (hey, remember the sign that was not a sign at bus station) then private owners might build their own garages again.

    The bribe chip is taken off the table -- for a while.

  12. Unions... Boilermakers Local 154 buy Trailer Parks...throw elderly, infirm and disabled into street..

    Don't want them owning anymore parking lots...

    Thanks Mark...you would be first to be towed....

    Money is a bit hard to come by...

    Could manage to scrap some together to pay Chester McCaine Towing..

    ...so what color(s) is your Micro-Bus painted?

  13. What is the average life expectancy of Police and Firefighters compared to other careers? Please do the research.

  14. Please show me the language in Act 111 where it forbids arbiters from considering the financial situation of the municipality? That seems to be the main reason why many in the blogosphere are supportive of Act 47, but it is a myth. I can't find it anywhere.

    Act 111 takes away the right to strike from public safety unions (police, fire, etc) in exchange for manditory arbitration. It does NOT give additional leverage to those unions.

  15. Dude? You are an idiot. The very fact that Act 111 does not require an arbitratore to take into account the city's ability to pay is the problem...and because Police and Fire get the final say over who the arbitrator is, arbitrators always rule in their favor so that they can get future work...therefore, Act 111 ABSOLUTELY DOES give additional leverage to those unions.

  16. Anon 11:12

    There was a study done that said Refuse Workers should be able to retire @ 55. The work is hard and unforgiving...Disability Payments; High cost of...were the authorization needed for study.

    Social Security makes no distinction between job descriptions...old age and death are common denominator in actuarial calculations...

    And as such, old age and death need not be distinction in pension benefits between Police, Fire and all other City Employees.

    ...between you and me, we age and die...

    Fire and Police do not contribute to Social Security, why not? The answer is this...they put the money that you and I put into Social Security, into their pockets.

    Additionally, money they pay into the Pension Fund is reimbursed to them in 'Longevity Checks". I call that the 'Public Safety Pension Contribution Refund Program'...they pay nothing for their Pensions..

    Your sympathy is ill placed...

    (Bram ok to post, lift self imposed gag order...)

  17. Just to add an after thought…when I served on the City’s Municipal Employees Pension Fund Board of Directors I offered a proposal to address Disability Pension Anomaly.

    Police, Fire and Municipal use a system to authorize Disability Payments that incorporates the options of three Doctors. It must be unanimous…

    For municipal employees I wanted to eliminate Three Doctor Protocol. Considered it arbitrary and capricious….my proposal would have recognized SS Disability Approval as criteria needed for City Pension Disability.

    Never passed, even though most on Board thought it to be pragmatic…

    …feared unions…if Municipal Unions were held to higher standard, Police and Fire would be expected to follow. But they do not contribute to Social Security…if proposal was accepted there would have been push to make Police and Fire contribute to SS. Would have cost them 7.25% payroll contribution.

    The Pension is unfunded because Police and Fire do not want to contribute “Fair Share”….they expect “Hero Exemption”.

    (Ok To Post, Bram…statement made while in sound mind)

  18. Anonymous 9:49,
    Clearly you don't know what you're talking about. Act 111 does NOT let police and fire pick pick the neutral arbiter, and the arbiters certainly don't always side with the union. That may be the fantasy spread around at Chamber of Commerce dinners, but it is not reality.

    Finally, what makes you think the arbiters don't take into account the City's ablity to pay without Act 47?
    Maybe in years past, they looked at all the money the City threw around at Lazarus, Lord & Taylor, et al, and came to the conclusion the City COULD afford to pay more.
    Maybe the City's negotiators did not present a clear enough case as to why they couldn't afford those contracts, while the union negotiators presented a clear case as to why they deserved a raise?

    Just because, in past contract negotiations, the arbiters sided with the union doesn't mean the process itself is flawed. It just meant the side you were rooting for lost.

  19. It has been painfully obvious the side Monk is not rooting for. I find that very unfortunate and a bit boring at this point.

    I respect the job done by sanitation workers, and realize that it is hard work, but you failed to address the question over the life span of police and firefighters. Hard work is not the only factor that provides, on average, a shorter life for police and firefighter retirees.

    Of course Police and Fire recruits are only a few of the jobs that one can get in the City without a political connection.

  20. When it comes to disability and death benefits the only criteria that maters is "old age and death make no distinction between job description."

    Police and Fire should contribute to Social Security as a mater of good citizenship...and as a means to protect their families should they die prematurely. This would mean payments to family and educational benefits for children...

    Wouldn't need to beg for handouts to support familes in time of need..

    Why police and Fire are exempt puzzles me...maybe person that posted previously would care to enlighten...