Policy BriefAn electronic publication of
The Allegheny Institute for Public Policy
September 14, 2007Volume 7, Number 49
Let Pittsburgh Voters Decide City’s Financial FutureVery soon the City of Pittsburgh will be submitting preliminary budget numbers for 2008 and the years beyond to the oversight board. Based on its 2007 submission to the board, the City’s projections likely will show average growth of 3 percent in the budget every year. Thus, in 2011 the City is projected to spend $470.8 million, up from the $410.6 million in 2006. Holding the City’s population constant at 312,000, per capita expenditures will increase by nearly $200 to $1,510. In all reality, population will not stay at that level and will experience a net decrease, meaning per capita expenditure will stand even higher.
Given the fact that there have been no dramatic changes coming out of the recovery/oversight era to date, it is clearly time for a radical departure from the status quo. In that regard, it would be heartening to see a spending limit article adopted into the Home Rule Charter that will check spending growth and provide some relief to the City’s crushing tax burden.
In 2003 (Policy Brief Volume 3, Number 35) we documented how a spending cap would have affected the spectacular growth in public safety spending by the City which rose from $76 million in 1984 to $199 million in 2002 (162%). If the City had a spending cap tied to the change in the Consumer Price Index (66%), the 2002 level of expenditure would have been $123 million instead of $199 million, an enormous annual savings of $76 million. The savings would have been even greater if the spending cap included an adjustment for population change, which recorded a 19% decrease during the period.
Placing spending cap language on the ballot to amend the City’s Home Rule Charter could be done either by a petition of City voters (about 10,000 based on the 2006 gubernatorial election) or by an ordinance of City Council. While it is questionable whether any Council member would initiate such a measure, an analysis of potential benefits might change some minds.
Here is the trajectory of the City budget based on the 2007 data submitted to the oversight board:
Year
Expenditures (000s)
% Change
2008
$431,005
2009
$444,267
3
2010
$457,283
3
2011
$470,882
3
Since Pittsburgh’s per capita spending remains so far out of line in comparison to spending in other cities across the country ( $1,347 in Pittsburgh compared to $1,000 for our Benchmark City), it is crucial that Pittsburgh begin a trend of substantially reducing per capita outlays. If the City is to have any hope of providing room for tax rollbacks and becoming economically competitive, it simply must get per resident spending down to levels more in line with cities that are strong economic performers.
The spending cap should be set at no more than 2 percent per year plus the annual change in population. More generous cap limits will not bring spending per capita down in any reasonable time frame. Because population change has been negative year-to-year (it fell 1.1 percent from July 2005 to July 2006 according to the Census), spending increases would be quite small.
Now compare the projected out year expenditures, starting with the 2008 baseline, with expenditures capped at 0.9 percent per year (under the assumption that population continues to fall at its recent rate of decline).
Year
Estimated Population
Projected Expenditures (000s)
Per Capita
Expenditures Under Spending Cap (000s)
Per Capita Under Cap
Reduced Spending (000s)
Cumulative Savings
2008
312,000
$431,005
$1,381
$431,005
$1,381
n/a
n/a
2009
308,568
$444,267
$1,442
$434,884
$1,411
$9,383
$9,383
2010
305,173
$457,283
$1,499
$438,798
$1,438
$18,485
$27,868
2011
301,816
$470,882
$1,564
$442,747
$1,470
$28,135
$56,003
The spending growth differences are quite significant. By holding expenditures to a 0.9 percent annual increase, the City could achieve cumulative savings of $56 million through 2011, providing some opportunity to reduce taxes. Lowering taxes and strict adherence to the cap by Council would send a message to other cities and regions that Pittsburgh is on the right track.
As the table above shows, the savings really start to build in future years. In 2014, the reduced spending achieved by sticking to the proposed cap as opposed to 3 percent yearly increases would produce a yearly savings year of $60 million and a cumulative savings since 2008 of more than $200 million.
Further, the reduction in inflation/population adjusted spending would create the very positive additional benefit of forcing reductions in employment over time, which in turn will slow growth in pension and retiree health liabilities. This may be the single most important step the City can take toward addressing its unfunded liabilities.
All told, by trending in the direction of lower per capita spending and being able to cut taxes, Pittsburgh could well start to reverse its long slide in terms of population loss and begin to attract businesses and jobs in a much more robust fashion.
Of course, there will be resistance from powerful interest groups and there will be claims that the City’s hands will be tied, or that vital services would be cut. Clearly, a spending cap would force hard decisions and require the setting of priorities. That has to happen. If the City wants to continue to provide everything, there will never be enough revenues. To be sure, the City would have to look at cost saving methods such as competitive contracting. Maybe they could emulate Charlotte’s ongoing privatization effort that constantly looks for ways to save taxpayer dollars.
The question for the Council is very simple. Is it not time to allow residents and taxpayers of Pittsburgh to decide whether or not they want the City government to be put on a fiscal diet? After all, it is they who will pay the price in one way or another if the City does not get a firm grip on its long term financial problems. Whichever way the vote goes, it should be their prerogative to make the decision about something so vital to the City’s future. Moreover, the outcome of the vote will send an unmistakable signal to the world about where Pittsburgh is headed.
If Council will not do the right thing and set up the referendum, then concerned citizens will have to launch a difficult petition campaign.
Jake Haulk, Ph.D., PresidentEric Montarti, Policy Analyst
Note: Please visit our website to view the latest additions to the "Issue Summaries". The new issues review attendance
levels for the Pittsburgh Pirates in their taxpayer funded stadium, as well as the comparison of Pittsburgh's financial situation with that of our benchmark city. To read these summaries, please visit our website: http://www.alleghenyinstitute.org/summaries.php Please visit our blog at alleghenyinstitute.org/blog.
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Friday, September 14, 2007
Policy Brief from A.I. says: Let Pittsburgh Voters Decide City’s Financial Future
Laurel: To Matt Drozd.
He's likely spitting in the wind but we commend the Allegheny County councilman for proposing a voter referendum to allow the public to decide if new taxes should be adopted or existing ones modified. And should Mr. Drozd's proposal be defeated, we suggest he regularly introduce it as a matter of principle.
Thursday, September 13, 2007
What the heck is happening with the DIRCTOR of the City Law Department
Did he get hired? Is he still an acting director?
How is the search for that position progressing.
Did he submit his resignation -- call it what you wish -- perhaps a 'soft resignation.
Out of all the guys who were managers who were asked to resign -- he was one who should have been fired months ago. I asked, in public, for him to be terminated.
Well, what's up????
Given his track record, I don't think he is fit for the job. Catherine McN is proof positive. Nothing else needs to be said.
[412] Did you see the news and quote in Pittsburgh City Paper? Reporter called me a 'fixture.'
[412] Did you see the news and quote in Pittsburgh City Paper? Reporter called me a 'fixture.'
If you are not on my email blast list, I'd love to get your email address. And, if you know of others, especially if they live within the city, send those contacts along to me.
E-mail users bringing home the bacn
E-mail users bringing home the bacn: To me, it's a bit tastier than spam. It's relevant e-mail you've opted to receive either by signing up for a service, joining a Web site or subscribing to content,' said Andrew Foote, head of the digital marketing division of Peppercom, a New York-based public relations firm.Go figure. The first coverage of BACN from the P-G and it is ALL NEGATIVE. I'm not saying that bacn is the new granola, but come on P-G.
The term bacn is a relatively new expression first brought to life on Aug. 20 at a blog conference at the Art Institute of Pittsburgh -- PodCamp Pittsburgh 2. Almost instantly, the term spread across the Web and claimed a place in Internet lingo.
Bacn is theft just as "word of mouth" is theft to Madison Avenue.
Bacn is buzz. Bacn is sizzle. Bacn is how influence builds.
I made some bacn today with a posting to nearly 100 people on my Linked in network. I'm asking them how to put the heat on the mainstream media for the sake of political debate.
The P-G makes me giggle, as does most of the coverage from the Pittsburgh marketplace. It is sooooo negative.
Question: How do we get political debates for city-wide elections? And, can the media help at all?
Citizens and the mainstream media have shown some interest in hosting debates for 2008 presidential races. What works in other regions or are candidate debates rare (if not extinct) elsewhere too?
View question as posted at Linked in. (That is my first question with that service.)
Ex-Policeman sells a DVD -- and gives an interview
Ravenstahl fires two directors - Pittsburgh Tribune-Review
Personal story. We had a building inspector at our house today -- just about the same time of day as when Luke was swinging his ax or waving his light saber.
Luke has been trying to 'streamline' the process for business owners in the city. It is fine to want to cut red tape. However, the neighborhood groups are going to be out in the cold.
If you want to keep a nightclub in a residential area, and the neighborhood residents don't want it to re-open -- then what side is the mayor going to take? I expect that the mayor, in his pro business mode, is going to try to streamline the process. That also means citizens get tossed under the steamroller.
Ravenstahl shakes up staff, P-G A new Mayor's Office position, director of operations, will be filled by Art Victor, a veteran of Allegheny County Commissioner Bob Cranmer's staff who is now with Green Tree-based correctional medical firm Wexford Health Services.Where is the posting for the job called "director of operations?"
Alecia Sirk, a former reporter and communications professional who is also Mr. Ford's wife, will be press secretary.That move worries me. Why was Matt H overlooked? Could they not come to terms in the last 90 days? Is that why there was such a delay?
Neighborhood branch libraries are to close -- if they have their way
The City of Pittsburgh has a library system that includes many neighborhood branch libraries that are great community assets. The Carnegie Library of Pittsburgh runs the operation, but the buildings had all been owned by the city. Efforts throughout the system have been sour for years, in my opinion. A few libraries got physical overhauls and are now more modern and are looking great. But some of the decisions have been poor.
The library building in Hazelwood has been abandoned. It is a great building that is now in a serious state of decline and the library leadership and stewardship fails in my book.
Recently, running mate of the stars, Glenn Walsh, spoke to Pittsburgh City Council to warn them of a looming storm. In the grant application made by the Carnegie Library of Pittsburgh to the RAD Board (Regional Asset District), Library Administrators made mentions of their intentions to close neighborhood branches.
City Council has a big role in the library system. Most of all, the buildings that are home to these facilities are owned by the city and city council is responsible for them.
As a city councilman, and as a city controller, I'd be sure to fully investigate and report upon the efforts by the library administrators and board. These new leaders of the library system are often put in these roles despite them NOT being professional librarians.
Vote "NO" on the retention votes for judges in Pennsylvania
On July 7, 2005, the Pennsylvania General Assembly passed a bill providing pay raises for all three branches of government. The bill was passed at 2:00 a.m. with no public input and was an example of 'gut-and-run' legislation, in which a one-page bill was stripped of all text, replaced with a 22-page amendment in a conference committee and quickly passed without debate.
The bill contained a non-severability clause, meaning that if any portion was struck down in court, the entire pay raise would be struck down as well. This was an attempt to insure against any future lawsuits against the pay raise bill. In practice, if any single judge ruled against any part of the bill, every judge, legislator and executive branch member who received a pay raise would lose it.
What judge in their right mind would want to jeopardize the pay raise of every one of his or her colleagues? All for one and one for all.
By his own admission, Chief Justice of the Supreme Court Ralph Cappy was a chief proponent of the pay raise package and claimed the legislature showed "courage" in passing it. He also met privately with members of the other two branches of government to hammer out the details.
The bill did not adhere to the Constitution's 'original purpose' or 'three day' rules. Just weeks earlier, however, the Supreme Court sent a clear message to the legislature that such a bastardized process was acceptable in the Court's eyes - via a decision on a case regarding the bill that created the Commonwealth's slots industry, which was passed in much the same manner.
The public was outraged by the pay raise. Activist Gene Stilp filed suit against the bill and its clear violations of constitutional provisions for the legislative process. A four-month public outcry eventually led to a repeal of the pay raise by the General Assembly on November 16, 2006.
The pay raise repeal also included a non-severability clause, meaning that if any court struck down any small portion of the repeal, everyone would get their raises back. In for a penny, in for a pound.
Since the pay raise was repealed, Commonwealth Court dismissed Stilp's suit as moot. Two subsequent suits were filed by judges against the repeal, however. These cases revolved around the constitutional provision that judicial salaries cannot be cut unless the salaries of "all salaried officers of the Commonwealth" are also reduced.
There is no definition within the Constitution of what a "salaried officer" is. Short of a constitutional definition of the term, an act of the General Assembly is the next best thing - so the legislature created a definition within the repeal specifically to prevent court challenges based on this point.
While the Stilp case dealt with the procedural issues involved with the pay raise, the judges' cases against the repeal only sought to keep the money. In an extraordinary move, the Supreme Court used its King's Bench power to pull the two cases filed by judges directly to the high court for adjudication. In an even more unusual move, the Court brought the Stilp case back from the dead so they could rule on all the pay raise issues at once.
The case took an even more bizarre twist in January 2006 when state Treasurer Bob Casey, Jr. - who was named as a respondent in the both the Stilp case and one of the judges' cases - filed an amici curiae (friend of the court) brief siding with plaintiff Stilp. A similar brief supporting Stilp's procedural arguments was filed by activists Tim Potts, Eric Epstein and Russ Diamond.
Many Pennsylvanians quietly opined that the "fix was in" as soon as the Court decided to use its King's Bench power to combine the three cases into one. Because the salary of every single judge in the state was at stake, conflict of interest issues abounded. What state court could possibly give this case a fair hearing?
Oral arguments were heard on April 4, 2006, in Philadelphia and the Court handed down its opinion on September 14, 2006. The decision came as no real surprise, but Pennsylvanians were outraged nonetheless.
The Pennsylvania Supreme Court combined three separate cases - including one that was already DOA - in order to cherry-pick pieces from each to build a decision that would allow all judges in the Commonwealth to keep the loot. It was an act of legal gymnastics the likes of which no Pennsylvanian had ever seen.
Despite the non-severability clause in the repeal, the Court restored pay raises for the judicial branch only. The legislative procedural issues of the Stilp case were not resolved.
"This was a judicial swindle," Duquesne University Law School professor Bruce Ledewitz told the Pittsburgh Post-Gazette. "They went out of their way to uphold every other part of the constitutional challenge except the part that would have affected their own pay raises." Ledewitz later stated it was only the second time in American history a non-severability clause was ignored by a court.
Justice Ronald Castille, author of the Court's majority opinion, later wrote a letter to Duquesne University Law School that arguably threatened to bring Ledewitz up for disciplinary action due to his comments. With Ralph Cappy's recent resignation, Castille is due to become the Chief Justice of the Supreme Court in 2008.
Every single member of Pennsylvania's judicial branch now benefits from this judicial swindle. When they want to talk about "their record," they must first explain how they justify keeping the loot from what many non-judge and non-lawyer Pennsylvanians consider to be a disgraceful act of self-service.
Just because it has been deemed "legal" doesn't make it right. After all, how was it deemed "legal" in the first place? That's right - judges pushed for a pay raise, the top judge held secret meetings behind closed doors to get it, judges filed the challenges to the repeal and judges made the final "legal" decision.
Judges may decide the law, but We the People decide who the judges are.
What YOU Need to Do on November 6
PACleanSweep Judicial Retention Poll Results
Pennsylvania's Judicial Retention System
About PACleanSweepPACleanSweep is a non-partisan effort dedicated to reforming state government in Pennsylvania. For more information, please visit www.PACleanSweep.com.
| For more information: Russ Diamond, Chair 717.383.3025 |
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