Tuesday, July 20, 2004

Don't shoot the messenger

The conservative Allegheny Institute issued a report in which it said, compared to four other cities, Pittsburgh spends too much money, has too many employees and overtaxes its residents. Given the city's dire fiscal straits, none of this should be surprising. What also isn't surprising it that Mayor Murphy, based on his spokesman's reaction, is dismissive of the report, and will likely go on blaming suburban commuters and nonprofits (full disclosure: I work for one, though I speak only for myself) instead of the man in the mirror. 


Blogger fester said...

Jonathan, I will not try to shoot you or the Allegheny Institute for the city does spend a lot of money and its tax burden is fairly high. However, I have a major methodological issue with the most recent study: the Allegheny Institute is comparing Pittsburgh with three very dissimiliar cities, therefore the amount of learning that can go on is fairly minimal. My problem with the four chosen comparisons is that none have had to significantly deal with the massive relocation and transition costs of deindustrialization where you now have 2x as much infrastructure per capita than when the infrastructure was built.

Now if you look at the May 2004 Allegheny Institute benchmarking report against Northern Rust Belt cities, then we can learn a little bit more of what is immediately achievable.

First from the May report we see that Pittsburgh has a significant but not an overwhelmingly large debt load compared to the worst cities. The July report recommends that Pittsburgh seek to reduce its debt service costs from 23% of the budget to 12% of the budget. Off the back of my envelope, that would cut the debt load per-capita by $143 which would put Pittsburgh in the area of St. Louis in terms of debt service. Now this is a good idea, however, there is no way for the city to do this because almost none of its current long term debt is callable due to previous refinancings. So 23% of the budget is off the table. It can not be cut in significant way.

Now onto police protection: Pittsburgh, using the May report as my data source, gets real good value for its money. 1% more crime per 10,000 than Philadelphia for 61% of the costs and against the average, 33% less crime for onyl 75% of the cost. So there is a good argument that Pittsburgh receives great value for its police dollar. There is a trade-off (most likely non-linear) between police spending and crime control, so Pittsburgh may be willing to tolerate more crime to save a couple of bucks but the police department seems to show good results.

I agree with the Allegheny Institute that fire expenditures in the city are way out of line of service needs. The study performed by Amy Jo Wendholt(disclosure, she was a classmate of mine, and also the file is a large PDF) is a damm good starting point of a discussion and decision system for sizing the fire department to our current needs. Those cuts can only come at the next collective bargaining round. There is very little to no money to be saved from the firefighters for this fiscal year. Between debt service and fire which can not be touched this fiscal year, 45% of the budget is off limits. We seem to get good service from the current level of police spending, and I am hesitant to recommend deep cuts in the capital maitenence of the city's parks and roads as that is a long term destructrive course. Next year we should get some significant breathing room for additional spending cuts from fire beyond the general personal cuts and city wide employee compensation reductions that are already in place.

4:41 PM

Blogger fester said...

PS: I am cutting and pasting the above and moving it to Fester's Place.

4:41 PM

Blogger Jonathan Potts said...

There are some other things to consider. First, the city has about 600 clerical employees whose jobs are protected by a no layoffs clause, same as the city firefighters.

Also, the city's FOP has resisted calls to give clerical positions to civilians, instead of police officers, who are more expensive.

Then there are the crossing guards, who are unionized, receive health care benefits and paid time off. They formerly cost the city almost $5 million a year. The city school district has assumed that cost, but that saves taxpayers almost nothing, because, execpt for residents of tiny Mt. Oliver, school district taxpayers are city taxpayers.

As far as recreation, I agree that any more cuts there must be made carefully. But let's ask ourselves, how many pools do we need? Did we have too few pools 10 years ago, when the population was greater, or did we have too many when they were closed last year? And why isn't the city charging admittance to the pools rescued by the foundation community?

11:49 AM

Blogger Jonathan Potts said...

This comment has been removed by a blog administrator.

11:50 AM

Blogger Jonathan Potts said...

I removed a post because I inadvertenly posted my comments twice.

1:44 PM


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