Right, since I am on vacation myself this week, I didn’t know the instant it happened that UPMC dropped their call for a tax credit (or something) from City Council in exchange for their donation to the Pittsburgh Promise. They probably felt the tax credit request was stirring up too much trouble. There was an opinion piece on Monday in the PG from Martin Gaynor of CMU that I was gearing up to respond to (c’mon, Gaynor is in a professorship donated by a former CEO of what is now Highmark, how ironic can you get …). Gaynor made the (vaguely worded) claim that UPMC was launching some elaborate scheme designed solely to benefit itself. But UPMC has dropped it all, although they do say that if they run a deficit any particular year, they should be let off the hook for the PP. Also UPMC is standing by the tax credit agreement the school board made with them. They are also making the mil and a half contribution for this year, at least, to the Pittsburgh Service Fund – the non-profit’s pot of money given directly to the city.
I’ve come to believe that UPMC did have a subtle agenda, but its target was not the city or the state legislature, rather it is the state insurance commissioner. Currently we have an acting commissioner, and given that state senate is republican controlled, th-our governor may not want to spend political capital to get someone acceptable to the republicans and risk offending his own party. Especially since Rendell is trying to shepherd through legislation on a state malpractice fund in surplus, and what to do with that surplus. Now is the perfect time for UPMC to have a low profile statewide, or at least a low negative profile. We tend to forget that UPMC is both a health care provider and a health insurance provider. As such, it is likely to get even closer scrutiny from the state insurance commissioner, especially if it runs a 600 million dollar profit; er, ... surplus; sorry, ... excess margin. To be perfectly honest, I am not sure whether the health insurance wing or the hospital part ran the surplus, or if they did together. Regardles, UPMC probably felt it had to make a grand charitable gesture to engender goodwill, and make the state insurance commissioner seem like Scrooge if he complained about UPMC’s excess margin.
I don’t think UPMC cared that much about getting a double tax credit (from the city and the school board), although I’m sure they felt it would have been nice. But I guess their assessment of the problems it might cause, and the likelihood it could cause lawsuits to arise, changed rapidly from last Monday to today. I think UPMC got what is wanted, though. There is still some hypothetical tax-incentive for other non-profits to donate, including Highmark (with its own large excess margin of over 300 million in 2005 and almost 3 billion in reserves. The trick for UPMC is to get non-profits (or anyone else) to contribute after next year, to trigger UPMC’s matching grants. If Highmark kicks in a million and a half dollars each year, after this next year, UPMC will match with its own million dollar contribution. The Pittsburgh Promise will benefit, and UPMC will be winning a strategic war, getting Highmark to put more money into this charity than UPMC does. Since everybody could get the same tax credit, and at least UPMC is assured of getting the tax credit, that is a small but essentially positive factor. In fact, UPMC is probably counting on everyone claiming the credit, giving it as their incentive to donate to the PP.
So UPMC has essentially won a tactical battle, having magnanimously given up their request/demand for the tax credit from the city. There had been some suggestion that non-profits should kick in some property tax dollars during the election, but mostly in terms of “wouldn’t it be nice”. UPMC had raised its own talk about that this past Monday, people wondering if a state senator or representative had tipped UPMC off or something. Mostly, though, I think UPMC was doing its own maneuvering to give future donors to the PP some incentive. In that regard its hard to see them as anything but successful.
I want to say something about the death of Benazir Bhutto in Pakistan. Pakistan has been something of a nightmare for us for years, all the way back to the eighties, when I guess we turned to them as our non-arab ally in the region. they are nuclear armed and seemignly a short step from becoming another terrorist-controlled state. As it is, we can't get to Osama Bin Laden, whom is believed to be in Pakistan. As allies, they have been a problem. So we apparently pinned our hopes on Bhutto, and surprise, now she is dead. We are saps, and dangerous ones at that.
Thursday, December 27, 2007
Saturday, December 22, 2007
Alternative absolution...
In the interest of maintaining this reputation for “fair and balanced” opinions I am occasionally told I have, I feel the need to say that all liberals are commie weenies. Whew, glad I got that out …wait what no that’s not what I wanted to say at all …
I have to say that there is another way to look at the supposed antics of Our Mayor (his new preferred form of address) with regard to the Pittsburgh Promise. He has said he knew about the broad outlines of the UPMC contribution to the plan as long ago as six months (suspiciously around the time of the Mario Lemieux Invitational Golf Boondoggle). He also said he knew more specifics three months ago, just in time not to be able to answer specific questions about the Pittsburgh Promise and the contributions non-profits make to the city accurately during the debates. By the way, I characterized this as lying to the voters, perhaps that was a bit harsh, although I’m not sure how th-Our Mayor would suggest it be framed. But however you describe it, Outted Mayor … I mean Our Mayor did not give details with (what he describes as) the best of intentions – because UPMC told him not to release those details, presumably until December 5th. I believe th-Our Mayor suggested UPMC would have pulled their donation if he had spilled the beans early, although that stretches the bounds of credibility. Stiil, the question is, what did those interim specifics consist of? It’s possible they did not include UPMC’s request for a future tax credit on hypothetical (state legislature generated) taxes on non-profits. It’s just as possible that Jeffrey Romoff called th-Our Mayor and Roosevelt over to his place on Sunday and told them UPMC was going to make this demand, tax credits one for one on the future UPMC donations to the PP from both the city and the school board. Th-Our Mayor could be entirely blameless (this time) in terms of revealing the truth to the citizens of Pittsburgh. There is, literally, no way to know short of getting (time stamped) internal documents from UPMC or the Mayor’s office showing that, probably emails. But even without this “evidence”, I think its important to consider all the possibilities. Th-Our Mayor may have turned over a new leaf, and be trying to provide his constituency with the best governance he can. At an affordable price. I hope.
By the way, I wanted to repeat an idea I raised in my response to Char’s comment on my previous post. I suggested other non-profits, such as Highmark or Pitt or CMU, might want to try donating to the Pittsburgh Promise after next year on the off chance the state legislature might create a tax on non-profits after next year. If the legislature decided to make the tax effective the year they passed it, then these non-profits might greatly reduce their expose, by possibly taking advantage of UPMC’s deal, and avoiding both city and school board taxes. Such action by other nonprofits would greatly increase UPMC’s matching gift in the future, for the next nine years. Possibly all the non-profits in the city would do this, or perhaps many would not. But all that did would be doing the city a fair service, with UPMC’s dollar match on their dollar fifty.
And for those people who wonder why the legislature might even consider such a tax, I suggest that the issue of how poorly Act 47 addresses the long term problems of the city was raised in the last election. Our Mayor largely ignored those questions, but DeSantis raised them at least obliquely, and some blogs have talked about them. I think they got into some newspaper stories too, but those stories stopped showing up once it was clear the debates were going to be fluff pieces. The legislature could raise (yet another) special tax just for distressed cities, one on non-profits. It could be payroll, property or the legislature could just tax donations to non-profits. The tax could be used to apply specifically to long term issues, or it could just go into the legislature’s bonus fund. Personally I don’t think its going to happen soon, but if the city stays in Act 47 for another couple of years, and slips back into deficit, the legislature might start to get tired of us, and punish us by hurting our non profits.
I have to say that there is another way to look at the supposed antics of Our Mayor (his new preferred form of address) with regard to the Pittsburgh Promise. He has said he knew about the broad outlines of the UPMC contribution to the plan as long ago as six months (suspiciously around the time of the Mario Lemieux Invitational Golf Boondoggle). He also said he knew more specifics three months ago, just in time not to be able to answer specific questions about the Pittsburgh Promise and the contributions non-profits make to the city accurately during the debates. By the way, I characterized this as lying to the voters, perhaps that was a bit harsh, although I’m not sure how th-Our Mayor would suggest it be framed. But however you describe it, Outted Mayor … I mean Our Mayor did not give details with (what he describes as) the best of intentions – because UPMC told him not to release those details, presumably until December 5th. I believe th-Our Mayor suggested UPMC would have pulled their donation if he had spilled the beans early, although that stretches the bounds of credibility. Stiil, the question is, what did those interim specifics consist of? It’s possible they did not include UPMC’s request for a future tax credit on hypothetical (state legislature generated) taxes on non-profits. It’s just as possible that Jeffrey Romoff called th-Our Mayor and Roosevelt over to his place on Sunday and told them UPMC was going to make this demand, tax credits one for one on the future UPMC donations to the PP from both the city and the school board. Th-Our Mayor could be entirely blameless (this time) in terms of revealing the truth to the citizens of Pittsburgh. There is, literally, no way to know short of getting (time stamped) internal documents from UPMC or the Mayor’s office showing that, probably emails. But even without this “evidence”, I think its important to consider all the possibilities. Th-Our Mayor may have turned over a new leaf, and be trying to provide his constituency with the best governance he can. At an affordable price. I hope.
By the way, I wanted to repeat an idea I raised in my response to Char’s comment on my previous post. I suggested other non-profits, such as Highmark or Pitt or CMU, might want to try donating to the Pittsburgh Promise after next year on the off chance the state legislature might create a tax on non-profits after next year. If the legislature decided to make the tax effective the year they passed it, then these non-profits might greatly reduce their expose, by possibly taking advantage of UPMC’s deal, and avoiding both city and school board taxes. Such action by other nonprofits would greatly increase UPMC’s matching gift in the future, for the next nine years. Possibly all the non-profits in the city would do this, or perhaps many would not. But all that did would be doing the city a fair service, with UPMC’s dollar match on their dollar fifty.
And for those people who wonder why the legislature might even consider such a tax, I suggest that the issue of how poorly Act 47 addresses the long term problems of the city was raised in the last election. Our Mayor largely ignored those questions, but DeSantis raised them at least obliquely, and some blogs have talked about them. I think they got into some newspaper stories too, but those stories stopped showing up once it was clear the debates were going to be fluff pieces. The legislature could raise (yet another) special tax just for distressed cities, one on non-profits. It could be payroll, property or the legislature could just tax donations to non-profits. The tax could be used to apply specifically to long term issues, or it could just go into the legislature’s bonus fund. Personally I don’t think its going to happen soon, but if the city stays in Act 47 for another couple of years, and slips back into deficit, the legislature might start to get tired of us, and punish us by hurting our non profits.
Friday, December 21, 2007
How much in tax savings?
So no one will confirm this to me, and I always mis-trust things that seem to be simple math. Plus we are talking about hypothetical, future dollars that are in fact likely never to be an issue. Still ...
UPMC put a tax agreement related to the Pittsburgh Promise in front of the school board a couple of days ago, which it immediately passed.It is apparently similar to the one currently in front of city council. Of course these agreements give UPMC a dollar for dollar tax credit (on future, hypothetical taxes on non-profits from the state legislature). I do not know of any current dollars UPMC gives to the school system, by the way. Since both the school board and the city have been asked for these (hypothetical, future) tax credits, that means (to me) that UPMC's PP dollars will do double duty, one dollar of donation counting for one dollar of taxes in two places. It's not like the city will lose two dollars of tax (nor the school board), but UPMC is saving itself twice as much tax money.
A couple of observations. I noticed, second hand, that Robert Cindirch, the UPMC lawyer (and former federal judge), claimed not to know anything about the city agreement. Cindrich said something about reducing Pittsburgh Promise donations by the amount of future tax liabilities, the opposite of the written agreement (could we have Judge Cindrich's proposal in writing? I thought not). George Specter said he also knew nothing about the UPMC tax resolution, but that's not as surprising.
And starting next year, the money UPMC donates will be dependent on other donations. If there was a tax on non-profits, UPMC would have no control over how tax it could save.
No matter what, by the way, the city has lost the million and a half UPMC would have donated to the Pittsburgh Service Fund (or whatever it's called). I believe UPMC says the donation to the PP will take the place of the donation to the PSF. (c'mon, you guys could spare another million and a half...please?)
The Post-Gazette thinks that council should agree to the conditions, and I tend to agree. Maybe the agreements won't stand up in court, or (more likely) the state legislature won't try to tax non-profits. In fact, these agreements might influence the legislature, might cause them to set this issue aside in favor of finding more ways to get themselves more bonuses. Or the Act 47/ICA teams will simply nulify the city's agreement with UPMC, say it doesn't have the authority to do it. At the end of the day, I can't help but say more power to UPMC. They took a small risk in trying to avoid some future taxes, and if they can get away with it, I think city council should let them. If taxes on non-profits come down the pike, the city will still have more money than before, anda flagship scholarship program.
I still say ten thousand dollars is not enough for Ethics Board to investigate this Mayor.
UPMC put a tax agreement related to the Pittsburgh Promise in front of the school board a couple of days ago, which it immediately passed.It is apparently similar to the one currently in front of city council. Of course these agreements give UPMC a dollar for dollar tax credit (on future, hypothetical taxes on non-profits from the state legislature). I do not know of any current dollars UPMC gives to the school system, by the way. Since both the school board and the city have been asked for these (hypothetical, future) tax credits, that means (to me) that UPMC's PP dollars will do double duty, one dollar of donation counting for one dollar of taxes in two places. It's not like the city will lose two dollars of tax (nor the school board), but UPMC is saving itself twice as much tax money.
A couple of observations. I noticed, second hand, that Robert Cindirch, the UPMC lawyer (and former federal judge), claimed not to know anything about the city agreement. Cindrich said something about reducing Pittsburgh Promise donations by the amount of future tax liabilities, the opposite of the written agreement (could we have Judge Cindrich's proposal in writing? I thought not). George Specter said he also knew nothing about the UPMC tax resolution, but that's not as surprising.
And starting next year, the money UPMC donates will be dependent on other donations. If there was a tax on non-profits, UPMC would have no control over how tax it could save.
No matter what, by the way, the city has lost the million and a half UPMC would have donated to the Pittsburgh Service Fund (or whatever it's called). I believe UPMC says the donation to the PP will take the place of the donation to the PSF. (c'mon, you guys could spare another million and a half...please?)
The Post-Gazette thinks that council should agree to the conditions, and I tend to agree. Maybe the agreements won't stand up in court, or (more likely) the state legislature won't try to tax non-profits. In fact, these agreements might influence the legislature, might cause them to set this issue aside in favor of finding more ways to get themselves more bonuses. Or the Act 47/ICA teams will simply nulify the city's agreement with UPMC, say it doesn't have the authority to do it. At the end of the day, I can't help but say more power to UPMC. They took a small risk in trying to avoid some future taxes, and if they can get away with it, I think city council should let them. If taxes on non-profits come down the pike, the city will still have more money than before, anda flagship scholarship program.
I still say ten thousand dollars is not enough for Ethics Board to investigate this Mayor.
Thursday, December 20, 2007
The Mayor admits ....
From the Busman’s Holiday’s post on the Mayor’s statement concerning UPMC, the Pittsburgh Promise and City Council:
“The two biggest questions I got asked when I was running for office was, non-profits don't give enough, and you failed on the Pittsburgh Promise. And guess what, I had the answer to those questions in those debates, but I kept my mouth shut. Because I didn't want to jeopardize this program, just like council did yesterday with their actions.”
Actually, Mr. Mayor, you did more than keep your mouth shut. When Dr. DeSantis proposed using the voluntary contributions from non-profits to increase the funding level of the city’s pensions or pay down our debt, you asked Dr. Desantis how he would make up the budget shortfall. You knew then you were going to do the same thing, reduce the city’s revenue to the tune of a million and a half, and now you stand here today and say you kept your mouth shut? You intentionally misled the voters. And you are hiding behind UPMC, saying you keep your mouth shut for their benefit, even though in fact you did much more than keep your mouth shut.
Its actually incredible, we find ourselves right back at January 2007, with the Mayor lying and blaming everyone else. He keeps telling us, month after month, that he has learned so much, and then he turns around and pulls another stunt, tells city council it must do his bidding without question or hesitation. Mind you, someone like Doug Shields doesn’t make council look any too good either, but the Mayor has to bear the bulk of the blame for this one. If he had announced the tax and voluntary contribution component of UPMC’s Pittsburgh Promise donation on December fifth, and asked council to hold hearings shortly and consider the package within a couple of weeks, people might have decided (calmly and deliberately) that 10 million in scholarship dollars is worth the tax or contribution hit the city and school board would take. But to take up the issue on December 17th and demand quick passage of the tax credit resolution guarantees that people will balk.
Ten grand is not going to be enough for the Ethics Board.
“The two biggest questions I got asked when I was running for office was, non-profits don't give enough, and you failed on the Pittsburgh Promise. And guess what, I had the answer to those questions in those debates, but I kept my mouth shut. Because I didn't want to jeopardize this program, just like council did yesterday with their actions.”
Actually, Mr. Mayor, you did more than keep your mouth shut. When Dr. DeSantis proposed using the voluntary contributions from non-profits to increase the funding level of the city’s pensions or pay down our debt, you asked Dr. Desantis how he would make up the budget shortfall. You knew then you were going to do the same thing, reduce the city’s revenue to the tune of a million and a half, and now you stand here today and say you kept your mouth shut? You intentionally misled the voters. And you are hiding behind UPMC, saying you keep your mouth shut for their benefit, even though in fact you did much more than keep your mouth shut.
Its actually incredible, we find ourselves right back at January 2007, with the Mayor lying and blaming everyone else. He keeps telling us, month after month, that he has learned so much, and then he turns around and pulls another stunt, tells city council it must do his bidding without question or hesitation. Mind you, someone like Doug Shields doesn’t make council look any too good either, but the Mayor has to bear the bulk of the blame for this one. If he had announced the tax and voluntary contribution component of UPMC’s Pittsburgh Promise donation on December fifth, and asked council to hold hearings shortly and consider the package within a couple of weeks, people might have decided (calmly and deliberately) that 10 million in scholarship dollars is worth the tax or contribution hit the city and school board would take. But to take up the issue on December 17th and demand quick passage of the tax credit resolution guarantees that people will balk.
Ten grand is not going to be enough for the Ethics Board.
Wednesday, December 19, 2007
The other, other shoe ...
I think it is possible to be of two minds on this UPMC Pittsburgh Promise/Pittsburgh Service Fund thing. On the one hand, we are talking about 10 million dollars this year for the Pittsburgh Promise. That will be a very good start for the program. The whole amount will probably not be used by 2008 graduates, so the remainder can generate interest for future years. By comparison, the million and a half the city is giving up is only a small part of the budget, which is in surplus anyway this next year and for a few years to come. The lack of the million and a half will accelerate the coming shortfall, but it would come anyway. And the city’s pension shortfall and other debt dwarf the million and a half; UPMC would have to start kicking in its entire “excess margin” to make much of a difference there.
The Pittsburgh Promise program could have a very beneficial effect on the city as well. If the students police themselves, control their behavior issues with an eye towards getting a college education and a way out of poverty, a lot of the problems in the city’s schools will go away. It may increase parental involvement in the schools as well. I realize I am implying that only poor kids have behavior problems, and I’m sure that’s not the case. But it may be that schools in poorer neighborhoods have more problems because the students don’t feel like they have much of a future, and rich kids who do have behavior problems have better access to treatment and tend to get passed along as merely “eccentric” anyway. If the Pittsburgh Promise succeeds it may not replace the million and a half lost to the city, but people may feel a bit better about the city.
On the other hand, it is possible to conceive a scenario where the Mayor and the School Superintendent had prematurely announced a program last December, were handed an incredible gift by UPMC (possibly at the Mario Invitational), sat on the details during the election and even through the announcement of the gift five weeks after the election. Now the messy details come out as council is set to adjourn for the year, and the Mayor tries to ram UPMC’s conditions through council. The Mayor had stated that he did not give UPMC or the Pens anything in exchange for the admission to play golf with Joe Theismann and Sidney Crosby. In fact, he suggested he was having business meetings while playing golf. Because this Mayor has lied to the press and reacted hostilely to their questions in the past, it is not hard to believe e could be concealing information in this case. He may have known the whole details of UPMC’s intention to donate up to a hundred million and the conditions attached since June, and this young Mayor may have been so dazzled by the size of the donation that he was distracted from what he was committing the city to give up.
Did this Mayor know, in August, when he talked to the Ethics Board, about UPMC’s gift to the PP, and its included conditions, that let UPMC off the hook if the State Legislature passes legislation taxing non-profits? Did the Mayor know about UPMC’s gift and its conditions when he asked Mark DeSantis, in the debates, how he would replace lost revenue if the Pittsburgh Service Fund was used to pay down debt and/or fund the pension fund to a higher level? Apparently, by agreeing initially to UPMC’s conditions with no open debate or public comment, the Mayor has placed City Council in the position of dashing the hopes of hundreds or thousands of High School Seniors or helping to expedite the financial ruin of the city.
Speaking of which, a commenter on the Burgh Report asked whether the Act 47 team should reopen the budget process. I believe it was the ICA team that signed off on the budget, or possibly both, but it is a good question. Maybe the ICA should come forward and make public the consequences of this situation. At least Luke can take his place among the people who got us into this mess.
The issue of why UPMC is pressing to be absolved from having to pay taxes in the future is a bit puzzling. Is there bipartisan support in the legislature for such a law? Is the support strong enough a bill is imminent? Maybe UPMC figures the only reason to pass such a law would be to help the states two largest (and struggling) cities, and if Pittsburgh say it doesn’t need tax revenue from its largest non-profit, the reason to pass such a bill would go away. I wonder if such a resolution would be legal, apparently UPMC thinks so (and I suspect their legal advice is really good).
The Pittsburgh Promise program could have a very beneficial effect on the city as well. If the students police themselves, control their behavior issues with an eye towards getting a college education and a way out of poverty, a lot of the problems in the city’s schools will go away. It may increase parental involvement in the schools as well. I realize I am implying that only poor kids have behavior problems, and I’m sure that’s not the case. But it may be that schools in poorer neighborhoods have more problems because the students don’t feel like they have much of a future, and rich kids who do have behavior problems have better access to treatment and tend to get passed along as merely “eccentric” anyway. If the Pittsburgh Promise succeeds it may not replace the million and a half lost to the city, but people may feel a bit better about the city.
On the other hand, it is possible to conceive a scenario where the Mayor and the School Superintendent had prematurely announced a program last December, were handed an incredible gift by UPMC (possibly at the Mario Invitational), sat on the details during the election and even through the announcement of the gift five weeks after the election. Now the messy details come out as council is set to adjourn for the year, and the Mayor tries to ram UPMC’s conditions through council. The Mayor had stated that he did not give UPMC or the Pens anything in exchange for the admission to play golf with Joe Theismann and Sidney Crosby. In fact, he suggested he was having business meetings while playing golf. Because this Mayor has lied to the press and reacted hostilely to their questions in the past, it is not hard to believe e could be concealing information in this case. He may have known the whole details of UPMC’s intention to donate up to a hundred million and the conditions attached since June, and this young Mayor may have been so dazzled by the size of the donation that he was distracted from what he was committing the city to give up.
Did this Mayor know, in August, when he talked to the Ethics Board, about UPMC’s gift to the PP, and its included conditions, that let UPMC off the hook if the State Legislature passes legislation taxing non-profits? Did the Mayor know about UPMC’s gift and its conditions when he asked Mark DeSantis, in the debates, how he would replace lost revenue if the Pittsburgh Service Fund was used to pay down debt and/or fund the pension fund to a higher level? Apparently, by agreeing initially to UPMC’s conditions with no open debate or public comment, the Mayor has placed City Council in the position of dashing the hopes of hundreds or thousands of High School Seniors or helping to expedite the financial ruin of the city.
Speaking of which, a commenter on the Burgh Report asked whether the Act 47 team should reopen the budget process. I believe it was the ICA team that signed off on the budget, or possibly both, but it is a good question. Maybe the ICA should come forward and make public the consequences of this situation. At least Luke can take his place among the people who got us into this mess.
The issue of why UPMC is pressing to be absolved from having to pay taxes in the future is a bit puzzling. Is there bipartisan support in the legislature for such a law? Is the support strong enough a bill is imminent? Maybe UPMC figures the only reason to pass such a law would be to help the states two largest (and struggling) cities, and if Pittsburgh say it doesn’t need tax revenue from its largest non-profit, the reason to pass such a bill would go away. I wonder if such a resolution would be legal, apparently UPMC thinks so (and I suspect their legal advice is really good).
Tuesday, December 18, 2007
The other shoe ...
Despite the posting date of Tuesday, it took a full day of editing to get this actually onto the blog.
I wanted to post on the KD/PG Sunday Edition of a week and two days ago, about gun control. The guy from Butler county basically said to David Shribman, if you don’t understand what’s wrong with limiting handgun sales to one a month, I can’t explain it to you. Kind of a perfect Catch 22.
But then the Mayor had to raise the specter of the Mario Invitational, which he was invited to by UPMC and the Penguins. First, the Mayor has started to say he will give no cash to CDC’s on the Hill, only buildings. Specifically he is advocating a grocery store, a community center and some kind of YMCA. But no cash. This is the old argument against providing cash to the poor, instead advocating food coupons (food stamps) and housing assistance. If you give the poor money, they will spend it on alcohol and drugs. We don’t want them to do that with our money (we can’t control what they do with their money), so we put the assistance in a form that pleases voters. Not just food assistance, specific boring food assistance (no junk food). Not just housing, specific modern projects in their neighborhoods. I guess Luke figures he has the black vote sewed up, and can afford risking pissing them off in order to pander to some of the white vote.
Second, there was this business with UPMC and the Pittsburgh Promise. The Mayor wants to count UPMC’s donation to the PP as a tax credit. Of course, since UPMC pays no property tax now, that’s actually just a smoke screen. (Actually, UPMC does apparently pay some property taxes through its affiliates, but that won’t stop as a result of this donation, so that’s not a concern) But the donation also covers payments made in lieu of taxes, the Pittsburgh Service Partnership something or other. You may remember that during the campaign the Mayor made a big deal about how necessary this fund if to balance the city’s (shaky) finances. Mark DeSantis had proposed using non-profit contributions to specifically pay down the city’s debt and pay up the City’s under funded pensions. The Mayor asked which city services would DeSantis cut, because the city needs every dollar. (Of course, the Mayor waited until after the election to buy himself a new SUV on the city’s dime) Now the city is down a million and a half dollar. Which services will you cut, Mr Mayor.
So the city will have lost a million and a half, probably each year for the next few. Bill Peduto is still offering dire warnings about the city’s finances, but he did manage to get the Ethics Board ten grand, to pay for legal fees and whatever else. I wonder if the Ethics Board will reopen the issue of the Mayor and the Mario Invitational. No quid pro quo, the Mayor said in September. No deals with UPMC or the Pens. I don’t think ten grand is going to be enough.
I wanted to post on the KD/PG Sunday Edition of a week and two days ago, about gun control. The guy from Butler county basically said to David Shribman, if you don’t understand what’s wrong with limiting handgun sales to one a month, I can’t explain it to you. Kind of a perfect Catch 22.
But then the Mayor had to raise the specter of the Mario Invitational, which he was invited to by UPMC and the Penguins. First, the Mayor has started to say he will give no cash to CDC’s on the Hill, only buildings. Specifically he is advocating a grocery store, a community center and some kind of YMCA. But no cash. This is the old argument against providing cash to the poor, instead advocating food coupons (food stamps) and housing assistance. If you give the poor money, they will spend it on alcohol and drugs. We don’t want them to do that with our money (we can’t control what they do with their money), so we put the assistance in a form that pleases voters. Not just food assistance, specific boring food assistance (no junk food). Not just housing, specific modern projects in their neighborhoods. I guess Luke figures he has the black vote sewed up, and can afford risking pissing them off in order to pander to some of the white vote.
Second, there was this business with UPMC and the Pittsburgh Promise. The Mayor wants to count UPMC’s donation to the PP as a tax credit. Of course, since UPMC pays no property tax now, that’s actually just a smoke screen. (Actually, UPMC does apparently pay some property taxes through its affiliates, but that won’t stop as a result of this donation, so that’s not a concern) But the donation also covers payments made in lieu of taxes, the Pittsburgh Service Partnership something or other. You may remember that during the campaign the Mayor made a big deal about how necessary this fund if to balance the city’s (shaky) finances. Mark DeSantis had proposed using non-profit contributions to specifically pay down the city’s debt and pay up the City’s under funded pensions. The Mayor asked which city services would DeSantis cut, because the city needs every dollar. (Of course, the Mayor waited until after the election to buy himself a new SUV on the city’s dime) Now the city is down a million and a half dollar. Which services will you cut, Mr Mayor.
So the city will have lost a million and a half, probably each year for the next few. Bill Peduto is still offering dire warnings about the city’s finances, but he did manage to get the Ethics Board ten grand, to pay for legal fees and whatever else. I wonder if the Ethics Board will reopen the issue of the Mayor and the Mario Invitational. No quid pro quo, the Mayor said in September. No deals with UPMC or the Pens. I don’t think ten grand is going to be enough.
Saturday, December 15, 2007
Sic transit Gloria, or Laura Brannigan, or sumpin' ...
Another topic I have been thinking about recently is Public Transit. You may remember back at the end of last year and the early part of this year, the buzz was all about PAT’s proposal to drop 25% of its routes, unless it got more money. This was accompanied by a threat to raise fares at the beginning of next year (2008), ditto ditto more money. I sent a letter to the Port Authority through their public comment mechanism, and I emailed my State Senator (Ferlo) and State Rep (Lisa Bennington). By the way, both replied, and reflecting the fact that both have districts that extend far into the boonies/hinterlands, both complained about overpaid managers and drivers and years of mis-management. In fact, both wanted to see PAT “Right-size” itself, which I suppose means stopping service to the very poor, who are not in their districts and don’t vote much anyway. So much for reformers and populists.
So, of course, PAT did cut itself back 15%, although surprisingly it did not cut the 28X as threatened (I missed the explanation for how that changed, although I am sure there is one, released to the media very quietly). And a fare hike for January suddenly appeared last month, with no public comment period this time (I guess PAT learned its lesson there). This happened even though PAT is due to get new, additional funding from both the State and the County. I had sort of thought the point was that PAT would only increase fares and cut routes if it didn’t get enough funding. I guess the all Allegheny County-appointed board of directors of PAT might have heard the strident complaints from state legislators from far away places like Scranton or York (or places with towns too small to remember). Which is, of course, the point. PAT’s board of directors needs to prove to state legislature that they are just as or more responsive to the concerns of a citizen and (more important) a representative or senator from clear across the state. The Port Authority board, which lives in Allegheny County, is not affected by the fact they live in Allegheny County. The important thing is how people in Wyoming, or Potter, or Lycoming Montour County feel. Because otherwise the state legislature will take its magic club (wands are too prissy) and decide to appoint half of PAT’s board. Probably not with Allegheny County residents.
This also explains why Dan Onorato has declared the drivers’ and mechanics’ union bad guys. Which is the other piece of this. In a complicated, cascading house of cards, the extra money the state legislature found for PAT is based on a tolling arrangement on I-80, plus some raised toll rates on 76. That was passed by the state legislature, but is by no means a done deal since the Feds think they have a say in what happens on Federal highways. A couple of (republican) US representatives from that part of the state have started whining to the US Department of Transportation, and the Federal Highway is looking at it. By the way, the plan is apparently to only have a few toll booths, at places where out of state trucks tend to exit the highway (such as the Ohio and New York borders on I-80). I guess if a Pennsylvania resident should get a toll ticket from a toll booth, they will not have to pay a toll as long as they exit I-80 at a non toll exit. I guess the idea is out of state truckers would never do that.
Even though the money for PAT may not materialize, the state legislature went ahead put conditions on it. The county had to raise an additional amount of its own for PAT. After all, county citizens are the ones who benefit from public transportation, why shouldn’t they contribute (I think that is actually a quite valid point, one of the few in this sorry saga). Onorato is playing his property tax games, keeping it static so it benefits his aging voter base, so an increase in the property tax rate is out. In fact, Onorato has already planned to lay off a couple of hundred county workers to demonstrate his fiscal responsibility (only in Pennsylvania would a democrat do something like that). What to do, what to do … Fortunately our friends in the state legislature had the solution. Philadelphia has had a drink tax for a few years, so why not Pittsburgh? Of course, it will have to pass the county council, but if they want to be seen raising taxes on their own citizens, so much the better (at least I assume the state legislature doesn’t actually like the state's two largest cities). But the story doesn’t end there. Whether Onorato or someone on PAT’s board or management thought of it, the drivers are still the highest paid in the US (adjusted for regional conditions), the managers and secretaries having been forced into give backs last year or before. So Onorato gets the bright idea that he will hold up the state funding and the drink tax money (plus a $2 a day rental car fee from our one visitor a year) until the drivers union agrees to a wage freeze (which is to last only until Hell also freezes) and to contribute to their own health care. I think retiree benefits are on the chopping block too. This is a clever move, it satisfies people in Lycoming Montour county, if the state doesn’t have to give us the transit money they will gladly use it for bonuses for themselves, it makes the drivers union the bad guys and no one of consequence gets hurt (only nursing home aides, low paid retail staff, waitresses, bus boys and dishwashers, you know, the sort of people who would buy a car if they had any consideration for the rest of us). In retrospect, maybe it was a good idea for PAT to make the moves it has, with the route cuts and the fare hike. At some point, the state may tell us we are now getting (phantom) money from (still hung up in hearings) toll roads and the county may tell us we are getting (phantom) revenues from (uncollectible) taxes on (scofflaw) bars. Around about the time this gets sorted out (the casino will be halfway built at that point), PAT will announce it is out of money again, having bought everyone in the county a Segway.
Yeah, I know, lame ending.
So, of course, PAT did cut itself back 15%, although surprisingly it did not cut the 28X as threatened (I missed the explanation for how that changed, although I am sure there is one, released to the media very quietly). And a fare hike for January suddenly appeared last month, with no public comment period this time (I guess PAT learned its lesson there). This happened even though PAT is due to get new, additional funding from both the State and the County. I had sort of thought the point was that PAT would only increase fares and cut routes if it didn’t get enough funding. I guess the all Allegheny County-appointed board of directors of PAT might have heard the strident complaints from state legislators from far away places like Scranton or York (or places with towns too small to remember). Which is, of course, the point. PAT’s board of directors needs to prove to state legislature that they are just as or more responsive to the concerns of a citizen and (more important) a representative or senator from clear across the state. The Port Authority board, which lives in Allegheny County, is not affected by the fact they live in Allegheny County. The important thing is how people in Wyoming, or Potter, or Lycoming Montour County feel. Because otherwise the state legislature will take its magic club (wands are too prissy) and decide to appoint half of PAT’s board. Probably not with Allegheny County residents.
This also explains why Dan Onorato has declared the drivers’ and mechanics’ union bad guys. Which is the other piece of this. In a complicated, cascading house of cards, the extra money the state legislature found for PAT is based on a tolling arrangement on I-80, plus some raised toll rates on 76. That was passed by the state legislature, but is by no means a done deal since the Feds think they have a say in what happens on Federal highways. A couple of (republican) US representatives from that part of the state have started whining to the US Department of Transportation, and the Federal Highway is looking at it. By the way, the plan is apparently to only have a few toll booths, at places where out of state trucks tend to exit the highway (such as the Ohio and New York borders on I-80). I guess if a Pennsylvania resident should get a toll ticket from a toll booth, they will not have to pay a toll as long as they exit I-80 at a non toll exit. I guess the idea is out of state truckers would never do that.
Even though the money for PAT may not materialize, the state legislature went ahead put conditions on it. The county had to raise an additional amount of its own for PAT. After all, county citizens are the ones who benefit from public transportation, why shouldn’t they contribute (I think that is actually a quite valid point, one of the few in this sorry saga). Onorato is playing his property tax games, keeping it static so it benefits his aging voter base, so an increase in the property tax rate is out. In fact, Onorato has already planned to lay off a couple of hundred county workers to demonstrate his fiscal responsibility (only in Pennsylvania would a democrat do something like that). What to do, what to do … Fortunately our friends in the state legislature had the solution. Philadelphia has had a drink tax for a few years, so why not Pittsburgh? Of course, it will have to pass the county council, but if they want to be seen raising taxes on their own citizens, so much the better (at least I assume the state legislature doesn’t actually like the state's two largest cities). But the story doesn’t end there. Whether Onorato or someone on PAT’s board or management thought of it, the drivers are still the highest paid in the US (adjusted for regional conditions), the managers and secretaries having been forced into give backs last year or before. So Onorato gets the bright idea that he will hold up the state funding and the drink tax money (plus a $2 a day rental car fee from our one visitor a year) until the drivers union agrees to a wage freeze (which is to last only until Hell also freezes) and to contribute to their own health care. I think retiree benefits are on the chopping block too. This is a clever move, it satisfies people in Lycoming Montour county, if the state doesn’t have to give us the transit money they will gladly use it for bonuses for themselves, it makes the drivers union the bad guys and no one of consequence gets hurt (only nursing home aides, low paid retail staff, waitresses, bus boys and dishwashers, you know, the sort of people who would buy a car if they had any consideration for the rest of us). In retrospect, maybe it was a good idea for PAT to make the moves it has, with the route cuts and the fare hike. At some point, the state may tell us we are now getting (phantom) money from (still hung up in hearings) toll roads and the county may tell us we are getting (phantom) revenues from (uncollectible) taxes on (scofflaw) bars. Around about the time this gets sorted out (the casino will be halfway built at that point), PAT will announce it is out of money again, having bought everyone in the county a Segway.
Yeah, I know, lame ending.
Tuesday, December 11, 2007
Laziness incarnate ...
Well, I continue to be spectacularly lazy about posting. The short reason is that the results of the election took a lot of the wind out of my sails. Not that they weren’t unexpected, but I was dismayed to see that so many of my fellow Pittsburghers were willing to place party over a good resume.
The longer reason is that I am also trying to do some of the things I wasn’t during the campaign, like get away on a weekend (and not post from the Bed and Breakfast), read books (instead of posting from the B & B) and get sick (while away at the B & B). I seem to have picked up some sort of eye (tear duct) infection, and I am not sure whether I should stay home or not. I start out fine, but as the day wears on my left eye starts tearing and then gets sore. Ah well, let’s hear it for Presenteeism.
There are lots of things out there well worth talking about, including the newly funded Pittsburgh Promise. Matt H asked where all the nay-sayers are now, and I would like to respond. I think the naysayers did not object in principle or theory to the idea of the Pittsburgh Promise. They objected to announcing an ambitious program before funding was in place. I gather someone was going to leak the news of the program and that’s why Roosevelt and Ravenstahl made the announcement, or at least that is their story. Even if that is true, how long where R & R going to sit on the PP before announcing it? The funding has come literally a year later.
And it came a month after the election. Does anyone wonder what that means? When did UPMC decide to make this donation? Was it truly after the election that they realized they had extra money and needed to do something with it? I find the timing interesting. I don’t think UPMC had some ulterior motive, like denying Ravenstahl the bump that would have come with having a funded Pittsburgh Promise. In fact, my guess is that UPMC had decided some time ago (in the summer, at the Lemiuex thing?) to make the donation, but wanted to avoid being seen as trying to influence the election.
The only thing we know for sure is that UPMC now has a bulletproof argument for avoiding any further Payments In Lieu Of Taxes, or any paying any property taxes. Of course, the state legislature could ignore those arguments and do what it wants to UPMC and Highmark, but the city and the county have lost a lot of leverage. Let’s hope it is worth it.
The longer reason is that I am also trying to do some of the things I wasn’t during the campaign, like get away on a weekend (and not post from the Bed and Breakfast), read books (instead of posting from the B & B) and get sick (while away at the B & B). I seem to have picked up some sort of eye (tear duct) infection, and I am not sure whether I should stay home or not. I start out fine, but as the day wears on my left eye starts tearing and then gets sore. Ah well, let’s hear it for Presenteeism.
There are lots of things out there well worth talking about, including the newly funded Pittsburgh Promise. Matt H asked where all the nay-sayers are now, and I would like to respond. I think the naysayers did not object in principle or theory to the idea of the Pittsburgh Promise. They objected to announcing an ambitious program before funding was in place. I gather someone was going to leak the news of the program and that’s why Roosevelt and Ravenstahl made the announcement, or at least that is their story. Even if that is true, how long where R & R going to sit on the PP before announcing it? The funding has come literally a year later.
And it came a month after the election. Does anyone wonder what that means? When did UPMC decide to make this donation? Was it truly after the election that they realized they had extra money and needed to do something with it? I find the timing interesting. I don’t think UPMC had some ulterior motive, like denying Ravenstahl the bump that would have come with having a funded Pittsburgh Promise. In fact, my guess is that UPMC had decided some time ago (in the summer, at the Lemiuex thing?) to make the donation, but wanted to avoid being seen as trying to influence the election.
The only thing we know for sure is that UPMC now has a bulletproof argument for avoiding any further Payments In Lieu Of Taxes, or any paying any property taxes. Of course, the state legislature could ignore those arguments and do what it wants to UPMC and Highmark, but the city and the county have lost a lot of leverage. Let’s hope it is worth it.
Wednesday, December 05, 2007
More on Act 47 an' N'at
I don’t watch City Council on the TV as a rule, mostly because a) I don’t know when the interesting (or any) programming is on and b) because watching in the evening would mean convincing the wife and step-daughter that City Council is actually interesting compared to the Korean melodramas I have occasionally caught recently (Air City?). But I did catch a repeat of *the* recent significant hearing, the one where Shields introduced his request to Yablonsky (the state Secretary of Community and Economic Development) to a) have the city taken off Act 47 status or b) explain why not (or what we should do to get there). What was so interesting about this was to hear Shields give his reasons for thinking that the city could exit Act 47, and then later to hear Doug Peduto’s take on the issue. Frankly, I trust neither man, but watching each speak to their constituencies in a planned and carefully orchestrated fashion was really quite interesting and educational.
So Shields talked about what was in an old Act 47 document about exiting the distressed city status. I couldn’t find the particular document he referred to (on the city's website), and I can only remember one of the three conditions he listed for terminating Act 47 status, that of having a balanced city budget. I do remember that Shields pointed there is nothing in the Act 47 document he was reading about long term debt. Shields added that he viewed the municipal debt and the pension shortfalls as similar to a mortgage. Banks never call in the mortgage to be paid all at once, so as long as the city is making payments, it is doing exactly what it should be and in the long run all will be well. What Shields was saying is if Act 47 did mention long term debt, Pittsburghers might expect the state to help the city address these issues. Now, to be fair, the 240 page Act 47 document I could find on the city’s website, the one prepared by Eckert Seamans in 2003, does mention the city’s long term debt. On the other hand it also mentions a $145 Occupational Privilege tax, the thing we know as the $52 tax. So it obviously does not reflect a current or final official position.
Which brings us to another thing Doug Shields said at this hearing. He noted that Act 47 had envisioned a lot more or at least larger sources of revenue for the city. Specifically property taxes were supposed to go up by an estimated five percent a year; instead they have not gone up any since (I believe) 2002. Casino revenues, figuring in the Act 47 projections, have not materialized. And the contribution by non-profits has been smaller than projected in the Act 47 document. So the city has achieved its balanced budget in spite of the overly optimistic projections contained in the Act 47 report.
Peduto’s response to Shields was equally interesting. He planned to send his own, independent letter to Yablonsky, and ask specifically about things like long term debt. He was also worried about the coming shortfall the Mayor had projected in 2010. By contrast, Shields made of point of saying early that we can’t really know about the future, if you look how differently things have turned out in 2007 versus what was projected in 2004, you can see how little we really can say about 2010 (according to Shields).
While Shields was talking purely to make political points, it seems likely he was exposed a short term orientation to Act 47 that isn’t really good for the city. We really need the governor to step up here and tell Pittsburgh that it needs to get it’s long term issues resolved. That expecting the state to fix our pensions and debt issues is essentially a cop out.
So maybe some good will come out of this City Council resolution. Maybe Yablonsky will come back with some longer term issues the City needs to resolve before exiting Act 47. And Council might be spurred to action when Yablonsky gets back to us.
So Shields talked about what was in an old Act 47 document about exiting the distressed city status. I couldn’t find the particular document he referred to (on the city's website), and I can only remember one of the three conditions he listed for terminating Act 47 status, that of having a balanced city budget. I do remember that Shields pointed there is nothing in the Act 47 document he was reading about long term debt. Shields added that he viewed the municipal debt and the pension shortfalls as similar to a mortgage. Banks never call in the mortgage to be paid all at once, so as long as the city is making payments, it is doing exactly what it should be and in the long run all will be well. What Shields was saying is if Act 47 did mention long term debt, Pittsburghers might expect the state to help the city address these issues. Now, to be fair, the 240 page Act 47 document I could find on the city’s website, the one prepared by Eckert Seamans in 2003, does mention the city’s long term debt. On the other hand it also mentions a $145 Occupational Privilege tax, the thing we know as the $52 tax. So it obviously does not reflect a current or final official position.
Which brings us to another thing Doug Shields said at this hearing. He noted that Act 47 had envisioned a lot more or at least larger sources of revenue for the city. Specifically property taxes were supposed to go up by an estimated five percent a year; instead they have not gone up any since (I believe) 2002. Casino revenues, figuring in the Act 47 projections, have not materialized. And the contribution by non-profits has been smaller than projected in the Act 47 document. So the city has achieved its balanced budget in spite of the overly optimistic projections contained in the Act 47 report.
Peduto’s response to Shields was equally interesting. He planned to send his own, independent letter to Yablonsky, and ask specifically about things like long term debt. He was also worried about the coming shortfall the Mayor had projected in 2010. By contrast, Shields made of point of saying early that we can’t really know about the future, if you look how differently things have turned out in 2007 versus what was projected in 2004, you can see how little we really can say about 2010 (according to Shields).
While Shields was talking purely to make political points, it seems likely he was exposed a short term orientation to Act 47 that isn’t really good for the city. We really need the governor to step up here and tell Pittsburgh that it needs to get it’s long term issues resolved. That expecting the state to fix our pensions and debt issues is essentially a cop out.
So maybe some good will come out of this City Council resolution. Maybe Yablonsky will come back with some longer term issues the City needs to resolve before exiting Act 47. And Council might be spurred to action when Yablonsky gets back to us.
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