State Must Act Now to Fix the Port Authority

The Port Authority (PAT) is bankrupt. It is bankrupt financially, intellectually and morally. PAT’s board and the elected officials who appoint the board members refuse to listen to suggestions of steps to preserve some bus service, choosing instead to make massive cuts; the transit workers union would rather see fellow members lose their jobs than make any concessions on compensation or work rules; and the state continues in its role as enabler of irresponsible behavior.

By refusing to eliminate the right of transit workers to strike, the state has created an obscene imbalance of bargaining power in favor of the unions. By involving itself in negotiations and causing scarce highway funds to be diverted to PAT operations and agreeing to fund 16 percent of the North Shore Connector as part of the required local match to qualify for Federal funding, the state has promoted PAT irresponsibility. Indeed, cumulatively, such actions over many years convinced the board and unions the state would always be there with a bailout regardless of how recklessly they behaved. Clearly, that scenario is rapidly coming to an end with predictable disastrous consequences for transit users.

In short, PAT is dysfunctional and cannot carry out its mission of providing affordable transit service to the residents of Allegheny County who need and depend on public transportation. Therefore, it is imperative that the government in Harrisburg take action without delay to repair public transportation in Allegheny County.

Step one: address the bankruptcy issue. As matters now stand contractual benefit and legacy costs are swallowing up more and more of PAT’s revenue and creating a death spiral for the organization. Only bankruptcy provides a way for PAT to deal with the ever increasing and ruinous burden of pay and benefit costs. Under the Pennsylvania Constitution, benefits promised under contract cannot be taken away by legislation or unilateral actions by public officials. Bankruptcy under Federal statutes is the only avenue open to local governments to get needed relief. Unfortunately, under current Pennsylvania law, authorities are not permitted to file for bankruptcy. Therefore, the Legislature must amend relevant statutes to allow PAT to enter into Chapter 9 bankruptcy.

Step two: the General Assembly should pass accompanying legislation creating an independent oversight board for PAT. The Legislature should give it the power to force the transit agency to file for bankruptcy if the existing board of directors refuses to do so. The oversight board would also have veto power over all major capital projects.

Step three: the Legislature should rewrite the act creating the Port Authority to remove PAT’s monopoly over transit services in Allegheny County. Further, the newly created oversight board would have the authority to work with regional agencies or private transit companies to begin providing service on routes PAT has discontinued. This should also include the authority to lease surplus PAT equipment to these agencies for a dollar a year as an inducement to offer service. No other state subsidy would be forthcoming.

Step four: eliminate the right of transit workers to strike. Strikes or threats of strikes have been a major factor in the all too generous compensation and work rule settlements over the years that are largely responsible for PAT’s horrendous financial situation.

Step five: empower the oversight board to impose a complete hiring freeze. As retirements and other attrition of workers occur, begin outsourcing the service previously covered by the former employees. In effect, over time continuously reduce PAT’s payroll and legacy cost buildup. Because of terms of the Federal Transit Act, any worker displaced by having his/her job outsourced would be entitled to a year’s wages for each year of service (up to six years wages) in a severance package. Thus, retirement and attrition offer the only financially viable path to privatization or other outsourcing of service.

These steps will require much fortitude in the face of union and local official pushback. However, as can be seen plainly from the recent announcement of a 35 percent cut in bus service with more likely coming in less than a year, it is time for Harrisburg to act decisively, forcefully and expeditiously.

To be sure these steps are not a magic wand that will make everything enormously better immediately. But taken together they offer a path to opening the County to more service, relieving some of PAT’s most onerous legacy cost burdens and changing fundamentally the power and intransigence of the unions in controlling PAT operations and finances. By allowing other agencies to offer service in the County, and a long term strategy of continuous outsourcing, union leaders and members will have to become more cooperative in making PAT efficient and competitive or lose their jobs. At the moment, the unions are willing to take job losses because they believe service cuts will push the General Assembly into handing over more money. That gambit must be shown to be a losing proposition once and for all.
________________________________________

Jake Haulk, Ph.D., President
________________________________________

For updates and commentary on daily issues please visit our blog at alleghenyinstitute.org/blog.
If you have enjoyed reading this Policy Brief and would like to send it to a friend, please feel free to forward it to them.

For more information on this and other topics, please visit our web site: alleghenyinstitute.org

If you wish to support our efforts please consider becoming a donor to the Allegheny Institute. The Allegheny Institute is a 501(c)(3) non-profit organization and all contributions are tax deductible. Please mail your contribution to:

The Allegheny Institute
305 Mt. Lebanon Boulevard
Suite 208
Pittsburgh, PA 15234