Underlying Problems/Solutions

The impact of population decline was very much in the news at the end of last year, a reminder that, for all the accolades at the recent G-20 Summit about Pittsburgh having moved beyond its industrial past, painful choices still face the region, particularly its local governments and major service institutions.

I have in mind three events: Pittsburgh Mayor Luke Ravenstahl’s attempt to enact a college tuition tax; the University of Pittsburgh Medical Center’s announcement that UPMC Braddock is not cost-efficient and will no longer be operated as a general hospital; and the Carnegie Library’s unsuccessful attempt to shut four of its Pittsburgh branches. Look at figure 1 if you are in any doubt about why these events occurred and why other tough choices just like them are coming.

The strong negative reactions they evoked in many quarters were attributed to “business as usual,” the existence of a deep-seated conservative political bent in the region that rejects new ways in most things. But I prefer a different explanation—simple surprise. Demographic change and its consequences, physical neglect and capital redeployment, come gradually and creep up on you. The result is that it is usually well past the time for action before the consequences of malfunction are even grudgingly acknowledged.

Consider those branch libraries. This year, the Regional Asset District has budgeted $17.6 million for the Carnegie and its 18 branches and just $5.6 million for the Allegheny County Library Association and its 44 branches. (Another $3.1. million in mostly RAD funds will go through the Carnegie for countywide Internet access and library catalogs of the Carnegie and the county association.)

A rationale for this more than 3-to-1 spending disparity is that the Carnegie’s core services, including its Downtown business branch, are used by not only county residents but also by residents of the Pittsburgh region whose tax dollars help fund RAD. But the case for the neighborhood branches is weak. How else to argue with a straight face that 310,000 residents of core city neighborhoods need access to 19 facilities within walking distance to support their reading habits while the other roughly 910,000 county residents need only 44? If you do the math, that is about 20 percent more reading opportunities inside the city than outside. And my calculations ignore comparable branch/resident ratios in the other 21 counties of the region for want of accurate data. But what would you bet a regional count would show?

In the end, however, this “save the branches” debate has not been about public access to knowledge as much as keeping community centers open, which is what Carnegie branches really are in many instances. (A 2006 study of the Carnegie estimated that of the 40.8 million visits that year, approximately 55 percent were for personal and family issues, entertainment and work-related activities.) Community centers are particularly valuable where social distress is significant, as in this instance.

Enter Boys and Girls Clubs, YMCAs and YWCAs, Senior Centers, the Salvation Army, and the multitude of other nonpro-fits that have long been the private sector’s generous response to the regional need for social services. Rooted in the unique American tradition of offering a hand up, such facilities abound. But also true to years of tradition, the match between need and the deployment of private resources is left to the free market, despite the best efforts of organizations such as the United Way to better match private dollars with public needs.

The situation in Braddock is a variation on the same theme.

A straightforward proposition about providing health care in the right form (outpatient services, not beds) in the right place (neighborhood population centers) is compromised by another compelling reality: Decades of blight and residential abandonment have eliminated any tolerance for contraction, rational or not. But the sad truth is that, if Braddock and its sister communities of North Braddock and Rankin are to be “saved,” it will only be as part of some larger redevelopment strategy for their Mon Valley neighborhood (figure 2). Such a strategy would finally need to address the need for a viable new mix of industrial and residential life.

If the Regional Indicator project were further along, better measures of the cumulative and comparative needs in each of the region’s 22 counties would be available. This data would be accompanied by an inventory of the capabilities of private charities to respond to documented needs and how those capabilities compared with the best practices in other regions against which we measure Pittsburgh. The availability of such information would not end helter-skelter local politics like those surrounding the Carnegie branches and the Braddock Hospital, but an informed consensus would be more likely.

The region’s malfunctioning system of local governments and the disconnect between mandated expenses and income are what prompted Mayor Ravensthal’s abortive tuition tax initiative. While this is a much larger and more complicated matter than the Carnegie Library and Braddock Hospital situations, it is driven by the same forces; smaller populations, working at different jobs, and under indifferent circumstances. The city’s fiscal dilemma is simply the regional fiscal dilemma from McKeesport to New Castle to Mount Lebanon writ large. (See figure 3, an excerpt from an update on the epidemic of red ink in local government, which can be found by clicking Government indicators at www.pittsburghtoday.org.)

The tuition tax was a new wrinkle, but the Pittsburgh fiscal and pension albatross that prompted it have long been with us, as have pleas for nonprofits of a certain size to kick in money for the good of the cause. Other old business is the accompanying consensus that “merging” the Pittsburgh city government with the Allegheny County government would be an important positive step in dealing with these financial issues. I am sympathetic to the thinking that drives both initiatives but not convinced. There is too much of the branch library/Braddock hospital nostalgia about them, of not biting the bullet and facing the new realities.

First, Pittsburgh is much more than Allegheny County—see Southpointe, Cranberry and Morgantown. Second, property taxes and wages, the two primary sources of revenue for local government, have fallen victim to new population patterns and a scandalous property assessment system. Third, Pennsylvania state government, now in the hands of suburban and rural legislators, holds the hammer in all the key areas, with pensions being Exhibit A. Complicating the situation further is the redistribution of commerce and industry away from the rivers and towns to the Interstate crossroads and also the advent of technologies that have facilitated significant changes in the way work is organized. Service calls are being taken in Calcutta, the CFO’s accounting team is housed in offices near his home, and UPS each Tuesday is delivering a key component of your final product that is manufactured in Salt Lake City.

You will notice that I did not mention “tax exempt land.” That is because it is not a cause, but a consequence. As service work has flourished and manufacturing and retailing jobs have moved out of the city or disappeared, there have been land-use changes. But parks, hospitals, campuses and government facilities generally remain where they have always been. When they have expanded, in most cases it is onto land abandoned by businesses or residents or into tracts in government-sponsored redevelopments. It is huge investments in facilities more than in land acquisition that has driven “nonprofit” real-estate growth.

So what to do? I paint with a broad brush, but I would work for fundamental change in the local revenue mix through a radical increase in fees for service. No one thinks twice about nonprofits paying electric and gas bills, so let them and everyone else pay for the benefits of Pittsburgh living when those benefits can be accurately measured and priced, which current technologies make very possible. Some fees would be fixed, such as trash collection, snow removal, public safety and pro-rated overhead. Some would be optional, such as insurance, energy and materials. “Local service function” budgeting of this sort is the rule in many parts of the country where there has been explosive growth. Small new communities are offered choi-ces, usually by their county, from a menu of public services that they can buy with additional taxes. If they opt out, they get no services and pay no tax. For the few major basics there is a countywide levy.

CONNECT, the fledgling congress of 35 communities that have a common border with the city of Pittsburgh, would be a good place to introduce the concept of having a choice in what Pittsburgh services your community would buy from Pittsburgh or what service you might sell to Pittsburgh residents and institutions. Finally, I would seriously revisit the subject of a separate levy on land, as was the rule in Pittsburgh before the Murphy administration took a step backwards. I would make the levy applicable to all land, regardless of ownership or use. I am sure there would be litigation and legislation proposed to stop this initiative (particularly a land tax).

The same tack of one-for-all-and-all-for-one could be go for costs, starting with the hundreds of separate pension and benefit plans for public employees. The easiest place to begin would be with the schools, where there should be one basic wage, benefit and pension level for all the districts in the region. If a school district wanted to offer higher insurance or pension or additional compensations it could, but it could not offer less than the mandated Pittsburgh regional minimums. If the idea worked for schools—and it should because it would be fair and save money—a variation could be worked out for the complicated subject of the 540 local governments in greater Pittsburgh.

Government mergers get nowhere in most instances for two reasons. First, there are no immediate tax savings, only a promise that taxes will not grow as rapidly in the future. Second, residents value intimacy in their relationship with local government—their high school band, their policeman, their borough manager. I agree. Let them have it as long as what they propose is fair and they are willing to pay the extra freight. At the same time, everyone has the benefit of a basic, tiered local government wage and benefit program that is regionwide.

As I said, this is broad brush, but working incrementally toward a rational sorting out of those tasks that are most appropriately performed by states and regions, while retaining “little” government of the town-meeting genre of which we Pittsburghers are so fond, makes most sense to me. I would arm everyone who stands up to speak at council sessions with access to the best information available on the subject at hand—regional indicators that tell the truth and which they are perfectly free to ignore.