Friday, January 05, 2007

Clarke Thomas: Some big bills are coming due

Clarke Thomas: Some big bills are coming due Oliver Wendell Holmes Jr. wrote in a 1904 case: 'Taxes are what we pay for civilized society.'
Is hockey civilized?

Are the owners of the Civic Arena slum landlords? Isn't that close to being uncivilized? Don't they already get a lot of taxpayer money from the RAD tax?

This would make an interesting concept map.

1 comment:

Anonymous said...

full article:

Clarke Thomas: Some big bills are coming due

Taxes will have to go up to pay for Pennsylvania's physical and human infrastructure

Wednesday, January 03, 2007
Pittsburgh Post-Gazette

Sorry to add to the pain of your post-Christmas bill-paying time. But, let's face it, governmental bodies have indulged in the same credit-card mentality and habits of spending today without regard for tomorrow as have too many of us citizens.

Clarke Thomas is a Post-Gazette senior editor (

No matter what politicians promise at campaign time, the truth is that more tax revenues, rather than fewer, will be needed in the years ahead to bring our infrastructure up to snuff, not to mention meeting pay-off-later obligations incurred over the years.

The due-bills mount to far more than the pension and health-care obligations outlined by The Associated Press series published by the Post-Gazette just before Christmas. They can be divided into two infrastructure sectors: bricks-and-mortar and human.


Transportation: A special transportation commission reports that "the crisis for both highways and public transit is real." More than one-third of Pennsylvania's 21,000-mile secondary system is rated as poor. The average age of our bridges is 50 years. An estimated $1 billion more a year needs to be invested in the system. Solution: new taxes or selling or leasing our turnpikes. (An alternative: making interstates such as I-80 into toll roads.)

As for transit, stopgap funding is running out. The special commission urged replacing the hodgepodge of existing public transportation funding sources with a dedicated tax that grows with inflation. After savings from right-sizing and other reforms, $589 million still will be needed. It would come from taxes at the state and local level on realty, sales and personal income.

Water and sewer: "The [11-county] region may need to invest as much as $10 billion or more on water and wastewater infrastructure. Past patterns of investment will not cover these needs." That's the verdict from a 2002 Clean Water survey by a 60-member committee of the region's private and public leaders

Overflows from combined rainwater-sewerage systems contaminate rivers when it rains. Southwestern Pennsylvania has more combined sewers than all but five states. Sewer pipes in many communities are 100 years old. Acid mine drainage affects many streams. Sewage treatment plants are aging.

The Institute of Politics at the University of Pittsburgh is shepherding dialogue sessions to determine future action.

Human Infrastructure

Pensions: As the AP series pointed out, this is problem at every governmental level, just as it has become in the corporate world. The difference is that corporations can and have cut back on their pension systems or pushed them off onto the federal Pension Benefit Guaranty Corp. Municipalities can't.

As to Pennsylvania, the AP reported that by 2012, the cost of subsidized pensions for state employees and teachers is expected to jump to more than $3 billion a year from the present $1 billion. The 3,129 local-government pension plans in Pennsylvania represent more than a quarter of the national total, a result of the fragmented system Pennsylvanians continue to love. About one-third of our municipalities have "unfunded actuarial accrued liabilities -- totaling more than $5 billion -- for which taxpayers could eventually find themselves on the hook."

Health care: Governments are facing the same problems with health-care costs as private citizens and businesses. But they have surfaced in a biting way because the federal Government Accounting Standards Board has just decreed that municipalities must use the same Generally Accepted Accounting Principles employed in the business world. This forces the revelation in budget reports of "post-employment benefits" -- health care, pensions and the like.

The switch to these rules has put dollar figures on what Pennsylvania taxpayers face at the state level alone -- a price tag of $33.8 billion over the next 30 years. According to the AP series, state government currently spends more than a half-billion a year on a pay-as-you-go basis for health care for retirees alone. But the latest analysis puts the state's annual benefit liability at more than $1.1 billion, meaning much of the accumulating costs of coverage for retirees is like that credit-card debt you've pushed off.

And, more bad news, the AP says most municipalities have just begun to apply GAAP yardsticks to their pension plans.

Medicaid: An ever-growing slice of the state's General Fund goes to the state's share of Medicaid. From 10 years ago, the figure has doubled to $5.1 billion, while the persons served has gone up 25 percent to 1,833,768. While many think of this as help for the poor and the disabled, it increasingly includes elderly citizens whose private savings are spent down and who have to turn to Medicaid.

And we haven't even touched upon the taxes necessary to achieve better school systems. Obviously, citizens will be demanding that governments at every level tighten the reins on spending. But a clear-eyed look at the lists above demonstrate that even savings from efficiencies of, say, 15 percent, still would leave heavy burdens ahead.

Another response is to foster economic growth and jobs. That often requires offering tax breaks and subsidies to corporations that increase the tax share of individuals. But putting off the evil day can mean broken road, water and school systems, with the resulting outflow of talented people if the quality of life deteriorates too much.

As U.S. Supreme Court Justice Oliver Wendell Holmes Jr. wrote in a 1904 case: "Taxes are what we pay for civilized society."