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.


Adam said...

Since I know you're for the poor having as much service as possible, I'm sure you'd be all for this idea:

Allow private bus companies to operate the routes that PAT says it can't operate because of large financial losses incurred with the unprofitable routes. Then we'd see if a private company can operate with better service and more efficiency.

EdHeath said...

Well, I think the people who actually use public transportation have had the least amount of effective input into its changes in the last year. That’s just my opinion, of course. What I think about government aid to the poor is a topic for another day, but as public transportation provides a means for many people to get to work, I think the city and county benefit by having more wage earners to pay taxes and buy goods and services in the county.

As for private industry having a chance at PAT's abandoned routes, I believe it has already happened, although perhaps not in a manner you would approve of. The jitney industry in poorer neighborhoods would seem to be a text book reaction of the market to an emerging need. I have to say I have never ridden in a jitney and know little about them. But it seems to a convenient and cost effective method for less wealthy people to get where they want to go. I assume that the taxi companies in Pittsburgh have complained about jitneys, but apparently not that much, probably because jitney’s pick up passengers who don’t want to pay taxi fare rates, possibly passengers some taxi drivers are not comfortable with, and because jitneys go where cabs may not want to.

I like it when ad hoc markets show up to address needs. The larger labor market (as a whole), on the other hand, seems rigged to meet the needs of the wealthy at the expense of the poor.

Adam said...

If the public transportation market is rigged (and it is) it's rigged by the unions.

As for private industry being allowed a shot at taking over what a government operation readily admits it can't do well (but still won't allow anyone else to prove it can be done)...saying the private industry has been given a chance because there are lots of criminal enterprises doing the job the government can't is just ridiculous and it isn't even a coherent argument.

As for government aid to the poor, the ironic thing here is that the best thing government could do with those routes is get out of the way so more capable companies could actually provide a service to the poor. But then people may see that when it comes to providing service at prices the market will bear (and without unreasonable union contracts weighing it down) much more efficiently than government could ever hope to do. And government could never allow that.

Oh and thanks for not actually addressing whether you'd be in support of private companies actually being allowed to drive buses (or mini-buses) to service those routes.

EdHeath said...

What does that even mean, the transportation market is rigged by the unions? The unions have certainly asked for too much for their members, but management and the board were the ones who gave it to them. And my understanding is the state distorted funding by not adjusting state funding for inflation, so that initial unions gains were not sustainable in the years that followed.

So the jitney industry is lots of criminal enterprises. Do you ever speed, or glide through a stop sign? Criminal behavior is not uncommon, but again it is apparently perfectly acceptable for some people and apparently well worth prosecuting for others. The fact that , for example, sentencing guidelines for different types of drug offences were just adjusted for fairness shows how institutional racism is in our system.

I did look around a bit and found an interesting article on Wikipedia on deregulated bus service started in England during the Thatcher era. The article may certainly reflect a bias on the part of the author, and Wiki notes citations are needed. The article states that in some highly traveled areas fares have fallen, but on less traveled routes fares have risen and service has been cut back. Which is not surprising; as the market takes over from a regulated, subsidized industry, market forces take over. So in areas with low demand, the supply of bus service will be reduced (but fares will rise on the routes that aren’t eliminated).

Which is why I didn’t really address your idea of private companies stepping in to take up the slack from PAT. First of all, there would be a considerable initial investment in mini buses needed. Drivers would have to be found. And if the private company is using routes that PAT dropped because they were (supposedly) unprofitable, well, the private company would have to find ways of making them profitable. I doubt that a higher fare than PAT’s would really be a way to attract many riders, for example. It is hard for me to believe private companies would make back their initial investment, much less set up a sustainable revenue stream. By the way, I assume that jitney’s charge more than PAT, but I believe the service is door to door (although jitney’s may take on several riders going to multiple destinations, to maximize revenue).

What I was trying to say about jitney’s was that free markets tend to spring up to meet needs that bureaucracies can not. There were small, personal gardens on Collective Farms in the old Soviet Union , and it turned out the gardens would the most productive and (per unit) profitable parts of the collective. Similarly, where buses provide poor or non-existent service and taxi’s refuse to go, jitneys have sprung up to meet the transportation needs of people in poor neighborhoods. Yes, they are unregulated and therefore illegal. The fact that they continue to operate suggests to me that the police would rather pursue other lawbreakers, other criminals that have truly victimized people.

Adam said...

There are two reasons PAT's routes were unprofitable. One is low ridership, an issue that may or may not be able to be solved by a private company by offering better service or running smaller vehicles that cost less to transport fewer riders, or many other possible solutions. The second reason is that they are paying bus drivers that drive those routes an unbelievable amount of money/health care/pensions/etc...that just isn't anywhere near reasonable.

The jitney drivers are a criminal activity, that is very plain to see. To argue that since other crimes are taking place on city roads, we should let the unions tell us that no one else is allowed to drive an actual bus on city streets is nonsensical. You suggested the labor market may be rigged against the poor. I would suggest that there are many poor people willing to do some menial tasks currently only allowed to be done by union workers at inflated wages that poor people would be glad to do for less money. But they aren't allowed to perform that job for the lower wage they would gladly accept because of unions.

I took that to the discussion we were having about public transportation, since the larger labor market has nothing to do with allowing private buses to run on routes PAT refuses to run. THAT would help poor people by at least giving them a choice of paying a higher (if it was indeed higher) fare, instead of having PAT tell them too bad you can't ride a bus from there even if you wanted to.

The WORST case scenario in letting some private companies run those routes would be that few people would ride them and maybe rates would go up and less people would continue to ride them and the private company would eventually stop running the routes as well. How is that worse than PAT just saying nope you can't ride a bus from there because we can't do it profitably?

EdHeath said...

Well, clearly you blame the unions for most if not all of PAT's ills. There is, as far as I am aware, no objective way to establish who should be blamed for PAT's budget problems. Personally I think PAT's management and board bear responsibility for not standing up to the unions when they made their outrageous demands. To the extent arbitration may have been involved, the issue may have been out of the hands of management and the board (although I don’t think arbitration was involved). But except in the former Yugoslavia and with some ESOP’s, the employees do not determine the direction of a company. If a company refuses to stand up to a union, it usually means the managers are incompetent or don’t care.

You suggest that there are people willing to drive buses for less than what the union wants for wages for bus drivers, and I’m sure that’s true. In theory you could fire all the current drivers and then offer them or anyone else the job at a lower wage (although I suspect that violates some federal laws). But make no mistake that the job is pretty difficult and the hours long (many, probably most drivers work the rush hours, with a few hours down time in between, and of course some have to work early in the day or late at night). In theory you could pay drivers $10 an hour and no benefits, but many would leave for other jobs after a few months. At $15 an hour with benefits more would stay longer, but I think most would leave after no more than a few years. You could, of course, offer a tiered wage system, so drivers could go from $10 an hour up to $15 (with benefits), and probably retain a few more. You could also possibly put a few more buses in service with the savings in wages, maybe a 100. Not much of an effect on the unemployment rate (although the restored routes would be appreciated by the riders). And of course you could cut PAT retirees pensions and health benefits by whatever fraction. Never mind that the retirees had made the decision to work for the Port Authority based on the statements made about their pensions when they were employed. They have been judged too greedy (apparently) and should be punished, to benefit the rest of us.

The retirees are, probably, the biggest problem for PAT. I think the union is going to have to give into Onorato’s demands, because he can make them the villain (collectively) and use that as a reason to stand fast if they strike. A transit strike would probably improve Onorato’s (slight) chance to be governor, showing how he holds to fiscal responsibility. So drivers wages will freeze, health benefits will be cut and retirees pensions and health benefits will be reduced (the health benefits might be eliminated for retirees). As I say, though, I think the union, in this case, is being made the scapegoat for the sins of PAT’s management.

Meanwhile, I am not sure why the whole jitney concept is offending you so much.
“The jitney drivers are a criminal activity, that is very plain to see. To argue that since other crimes are taking place on city roads, we should let the unions tell us that no one else is allowed to drive an actual bus on city streets is nonsensical.” My argument was that we ought to be careful who we call criminal. Speeders and people who park illegally are also criminals, that should be plain. I was advancing the argument that jitneys serve, in part, a population that no one else serves, since they go to neighborhoods where bus service has been cut and taxis refuse to go. Obviously they go other places too, so both PAT and the taxi companies are hurt by the competition from jitneys. Of course, the higher fares of both buses and taxis probably compensate for this (depending on the slope of both the demand and supply curves) so it is hard to feel much sympathy for PAT and Yellow Cab. And the Unions are not making any argument about other buses, regardless of the amount of speeding taking place on Pittsburgh streets.

And allowing private companies in to take over bus routes PAT isn’t running, or even to compete with PAT head to head would be fine with me. I just don’t think you would find any takers. As I said, there would be a high cost to enter the market in the form of expensive mini-buses. After that, if the private company only paid its driver $10 an hour, they would get $10 an hour quality drivers. After a few high profile accidents, the company would be forced into bankruptcy by lawsuits and debt payments.

Adam said...

The last paragraph is all I was really looking for in the first place. Just allow the freedom to try the private companies if there are takers. That's what's best for poor customers, at least they'd have the freedom to choose.

As for jitney drivers, they don't offend me and I don't even think their actions should be criminal. However, given present laws...equating someone speeding with someone running an illegal business is a stretch to say the least. I feel pretty comfortable calling someone who runs an illegal business a "criminal". Can we not call crack dealers criminals because at some point in our lives we've sped on the highway? That's a ridiculous argument.

My offense with teh jitney driver argument was that you saw it as an acceptable way for the free market to have a chance to work in providing transportation to poor citizens. I think there are much much better alternatives than criminal activities.

As for your observations of PAT, most are very valid and I agree. The one difference we seem to have is that you are looking at PAT as some sort of company. It's not a company, it's a government agency. Government differs from private enterprise, as I'm sure you know, in that private companies goals are to save as much money as possible and make a profit. Government entities goals are to spend as much money as possible and thereby ensuring equal or greater funding in the next fiscal year. That's the root of this problem, and the root of PAT's management's problem...they are spending someone else's money, and when that's the case concern for how it is spent goes down significantly.

As for driver's pay, a private company would use the market to find fair market value wages that would retain an acceptable % of their drivers. Raises would be merit-based and not based on who can keep their job the longest. That would benefit customers.

But all in all, it seems like we agree that private companies should at least be given a chance at those nonexistent routes.