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Commonwealth Foundation


Public-Private Parking Prevents Tax Hikes

by Elizabeth Stelle
 

Facing immense fiscal and political pressures, many local governments are looking for ways to fund services without raising taxes. But officials need not curb their enthusiasm for fiscal responsibility if they simply put the brakes on being in the parking business.

Pennsylvania has 41 special government parking authorities; the rest of the nation, combined, has five. Despite their abundance, few can explain exactly why Pennsylvania relies on government-run parking monopolies.

From selling parking facilities to leasing (where a private company pays a lump sum to manage a facility), governments outside the Keystone State collect large sums of cash to serve taxpayers. In Chicago, for example, former Democratic Mayor Richard Daley signed a 99-year lease for four underground parking garages in 2006, reaping $563 million to pay down the city's debt plus another 75-year, $1.15 billion lease for the city's parking meters. Moreover, at no additional cost to the city, the private operator agreed to replace over 30,000 coin meters with 4,000 high-tech meters, saving the city untold amounts in future maintenance and operations costs.

Cities like Pittsburgh could learn from Chicago's success. The former flirted with a parking lease deal for almost two years. About one year after turning down a $451.7 million parking lease offer, citing concerns over rising parking rates, Pittsburgh City Council raised parking rates and expanded enforcement hours to bolster the city's ailing pension system.

After intense political backlash which saw the parking authority refuse to turn over additional revenues, the City Council is reversing the extended enforcement hours, further jeopardizing an already shaky plan to save the pension fund from state takeover. Ironically, the original lease deal could have paid off the parking authority's debt and netted about $350 million to shore up the city's depleted pension fund, all with limitations on raising parking rates.

Harrisburg may repeat the Steel City's fiscal folly. Under the state's recommended Act 47 plan, the capital city would lease their parking facilities to pay off massive debts that are jeopardizing vital city services like trash collection. Unfortunately, Harrisburg City Council settled for a short-term infusion of cash, via a loan from the Parking Authority, instead of long-term improvement of parking services and millions of dollars interest-free.

Improved efficiency is a common goal of public-private partnerships, but cities can establish different goals when it comes to specifics like parking rates. In Chicago, city officials decided to significantly increase parking rates in the first five years to pay down the debt and plug budget holes. In contrast, the City of Indianapolis pursued a lease of downtown parking meters primarily to divest operations and maintenance responsibilities. Since their main objective was not to increase revenue, they opted to cap rate hikes at a modest 75-cent increase over two years.

Finally, public-private partnerships can spare taxpayers the costs of corruption and patronage. The Philadelphia Parking Authority has been an infamous haven of corruption and a patronage mill with little accountability. From 2001-2007, the number of authority employees doubled. Just last year, three employees were fired and three resigned or retired after the Inspector General discovered parking-violation hearing examiners were dismissing parking tickets for friends and family. In 2007, the Philadelphia City Controller tried to audit the authority but was stonewalled by management. He concluded that the organization needed to clean house.

By selling or leasing parking, local governments benefit from upfront lump sum payments and reduced maintenance costs, and taxpayers get a better return for their money. No matter which political side of the street you park your car, it helps to have a prudent parking policy.

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Elizabeth Stelle is a Policy Analyst with the Commonwealth Foundation (www.CommonwealthFoundation.org), Pennsylvania's free-market think tank that crafts free market policies, convinces Pennsylvanians of their benefits and counters attacks on liberty.


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