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How much do potholes cost us? March 27, 2014

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We all know this winter has been brutal to roads, creating far more tire-popping potholes than we’ve seen in recent years.

But we also know our already above-average gas tax is climbing.  This tax is justified as necessary to maintain transportation infrastructure.  But as somebody whose family has lost five tires and two wheels in the last three weeks to potholes I wonder if government is up to the task?

Amusingly, according to this PennDOT page, “The law … prohibits the payment of property damage (tires, rims, etc.) as a result of a pothole. Because of this, no reimbursement has ever been made for a claim of this type.”

I can agree with the argument behind this law, since this would just be a transfer of public funds to unlucky individuals who can buy insurance against this particular peril if needed.  However we pay a substantial tax specifically to maintain public roads, and there should be some accountability for how those funds are being spent.

Because it doesn’t have to pay for it, PennDOT apparently doesn’t even want to know about property damage caused by road hazards.  But road damage to vehicles should be a key performance metric for PennDOT and any other contractor tasked with maintaining roads.

PA Government: Spending Money to Solve the Problems It Creates June 15, 2010

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When I first moved into the Commonwealth I was surprised to discover that the only practical way to register my cars was to pay a private “auto tag” service to submit forms to PennDOT on my behalf.  After some complaining to various government offices I discovered that there’s a lesser-known but free way to accomplish the same thing: by submitting the forms through your local legislator’s office.

Little did I know that PennDOT has maintained a separate “Legislative Services Section” for this purpose.

Governor Rendell is half right when he says, “A unit like that should never have existed. It’s inappropriate.”

Better yet, the Governor should require PennDOT to provide license renewals and car registration services directly to individuals, just like governments in every other state.

Municipal Bankruptcy Could Break Unions’ Stranglehold April 7, 2010

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It has not yet been tried in Pennsylvania, but eventually municipalities are going to realize that they can’t reasonably meet their obligations to the excessive defined-benefit pensions the unions have been demanding and the government has been mismanaging all these years.  What happens when push comes to shove?  Do the taxpayers get fleeced to maintain the plush retirement of union workers?

The Allegheny Institute offers the following summary of the current PA law on municipal bankruptcy:

In Pennsylvania the proceedings for bankruptcy flow through Act 47, the fiscal distress law, and authorities are prohibited from filing for Chapter 9.

That being said, bankruptcy may not be as harsh or draconian as one might think.  A municipality cannot be forced to liquidate assets to satisfy creditors, and a judge is prohibited from interfering with the day-to-day business of the municipality.

Municipal bankruptcy may be a vehicle through which municipalities begin to deal with pension obligations and other legacy costs that have become too burdensome.  The Pennsylvania Constitution prohibits the revocation of pension benefits through laws or ordinances, but this likely would not apply to proceedings before a bankruptcy judge.  A recent high profile case in Vallejo, CA dealt with the issue of whether collective bargaining agreements and constitutional provisions on contracts would hold in a bankruptcy proceeding.  The court held that they would not, noting that when a state permits municipal filings it is valuing the benefits of bankruptcy for its municipalities greater than its state laws.

Given the fact that public sector unions have demonstrated their resistance to pension reform in the recent effort to make incremental changes to municipal pension, municipalities in Pennsylvania may be advised to explore Chapter 9 as a way to get contractual changes in post-employment benefits.

You can visit the Pennsylvania Public Employee Retirement Commissionn (PERC) website for more details on PA pensions.

Dubious Distinction: PA’s Legislature March 11, 2010

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From the Commonwealth Foundation’s Policy Brief, “The Case for a Citizen Legislature:”

At 253 members and bearing a price tag of $300 million, Pennsylvania’s legislature is the most expensive and second largest in the country.

I suppose we shouldn’t be surprised that “professional” politicians are especially adept at promoting their own interests above all others.

PA Public Service Really Pays — Part II November 16, 2009

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This may explain why public sector pension costs are exploding in Pennsylvania: Our legislators enjoy a luxurious defined-benefit pension of their own.

… monthly pension payments that range from a high of nearly $11,000 for a veteran 30-year House member who retired in 2006 to the $2,000 range at the low end.

Unions don’t negotiate wages, they negotiate raises May 26, 2009

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SchoolSpending, a blogger who used to serve on a school board, has a fascinating post detailing the problem with public sector unions, and teacher unions in particular.  Noteworthy:

[W]e didn’t negotiate wages or benefits.  We negotiated raises and increases in benefit costs — and how we would account for them.  And folks, that’s the problem.

Teachers deserve to be well paid, but in this economy, it’s hard to define what that means.  College graduates are looking desperately for jobs.  Salaries reflect the numbers of applicants chasing few jobs.  The notion of an underpaid teacher is becoming  outdated — especially when contrasted with unemployed workers.  Teachers do not make hundreds of thousands of dollars, but they do make a very decent salary that is based on 180+ days of 7 hours and 35 minutes of work (that’s the contracted part).   They are paid by a taxing authority, so there is little fear of a pay check not clearing the bank.  Pink slips are virtually non-existent.  There is no mandatory retirement age enforced, and quality is what the individual teacher chooses to deliver.  TE is one of 6 districts in PA that has met the PSEA goal of a $50K starting salary. This starting salary  goes up every single year — and the salary for each teacher goes up every single year (and each salary step seems to increase with every single contract).  Districts (taxpayers)  pay for graduate education that triggers another form of raise for negotiated levels of achievement.  Teachers have a benefit plan that doesn’t resemble anything in the private sector in that the employer (again: taxpayer) pays virtually (and in some cases 100%) all of it.  And no matter what year it is, or how long the contract is, the above comments stay true.  The end of one contract simply  means you start talking about the new raises, and the new, higher starting salaries, and the new “top step” money….but rarely do you add any obligation to the process of teaching.  Sometimes they will add a non-teaching day (or even a teaching day) but that increases the salary and obfuscates the actual raise percentages.   Oh yes — you are tenured after 3 years…so performance isn’t a factor in your salary either.

PA Income Tax Law: Heads They Win, Tails You Lose May 6, 2009

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My tax return this year showed me something disturbing about the Pennsylvania Income Tax code:  You cannot use losses in one class of income to offset losses in another class.  Nor can you carry losses forward from one tax year to the next.  One might call this a tax on “long investment cycles.”  Here’s an illustration of why this law is perverse:

In 2008 you invest $100k to start a business, but by the end of the year you have only made $25k from it.  You have a net loss of $75k in the business, but at the end of 2008 that loss evaporates.  If during 2009 you net $150k from the business you pay taxes on the full $150k.  You never get to deduct the $75k you sunk into developing the business in 2008!  If, however, you managed to bring in $100k of income during 2008 you could offset that entirely with your startup expenses and pay no taxes.  I.e., you lose thousands of dollars in taxes just based on the fact that your business requires more investment than you can recoup in the same year.

Or consider the typical investor:  In 2008 you buy a security for $100k.  Like all investments in 2008 it tanks.  You see a more attractive opportunity, so you sell security A for $60k and buy security B for $60k, which you still own at the end of 2008.  You have just realized $40k in capital losses, but those do not reduce your 2008 taxes.  Of course, during 2009 you expect that your investment in Security B will appreciate.  If you sell it during 2009 for $100k you have realized a $40k capital gain.  Yet, again, the $40k capital loss in 2008 does nothing for you.  Because it took you more than one calendar year to recoup your investment the state taxes you on the upside without giving you any credit for the downside.  You’re no wealthier, but the state takes a cut anyway.  In contrast, if you had managed to recoup your loss before the end of 2008 you wouldn’t owe any taxes on the investments!

And then there’s the separation of income classes:  Employment, business, interest, dividend, and investment income are all segregated.  PA creates a total of eight classes of income and, even though the tax rate on each is the identical, a loss in one doesn’t reduce any of the others.  If you made $25k in business but lost $40k in investments and property, you pay taxes on the $25k.  The fact that you’re $15k poorer overall doesn’t matter to the PA DoR!  In essence, the state gets to cut up your gross income into eight separate parts, and then tax you on the positive pieces regardless of what the net is.

The federal tax code, for all its many, many complexity and shortcomings, at least doesn’t penalize individuals who make long-term investments.  You can almost always carry forward losses against future gains for federal tax purposes.  Nor does it compartmentalize income the way Pennsylvania does.

PA could end its bizarre tax on long-term investors simply by allowing taxpayers to carry forward negative numbers from each income class (clearly summarized on lines 1-8 on the front page of their PA-40 forms) to future years.

PA could also avoid taxing people who actually lose money over the course of a year by allowing them to sum their income across all classes — not just those with positive values — to arrive at the line 11 “Adjusted PA Taxable Income.”

Public School Teacher Pension Tsunami Imminent May 5, 2009

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Pittsburgh Tribune-Review raises the warning about the Pennsylvania Public School Employees’ Retirement System, known as PSERS.

Starting in the 2012-13 school year, when retirements are expected to accelerate, school districts and the state will have to pay an additional $2.5 billion annually into the fund, according to the Association of School Business Officials.

Of course, this is all thanks to the tradition of lavishing public employees with defined-benefit pensions (and then disguising the true cost of these liabilities to taxpayers).  Come hell or high water, taxpayers will be on the hook to ensure these retirees get guaranteed income for life.

Teacher retirement benefits are mandated by law. Courts have ruled they cannot be reduced for current teachers or state employees covered under similar retirement plans.

Update on Legislation to Stop Teacher Strikes May 1, 2009

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The Sentinel reports.  Also noted are the 37 states where it is illegal for teachers to strike.  A table listing the states with the highest public school teacher salaries shows no correlation between salary and the right to strike.

Public Service Can Really Pay April 7, 2009

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You don’t have to be a member of a union to enjoy exceptional compensation as a government employee.  Last month Main Line Suburben Life published details of the top Main Line town and school administrators.  Highlights:

  • Tredyffrin/Easttown School District superintendent Daniel Waters had gross compensation in 2008 of $293,192, as well as a car for personal use and reimbursement for all car expenses — including gasoline and insurance!
  • Lower Merion School District superintendent Christopher McGinley just signed a five-year contract with a base salary of $195,000 and 3.5% annual raises.
  • Radnor School District superintendent Linda Grobman just signed a three year contract for a $194,000 annual salary.
  • Radnor Township manager Dave Bashore earned $176,956 in gross pay during 2008, and enjoyed such additional perks as a car for personal use and home loan forgiveness.

Not covered in the article were defined-benefit pensions, which are bound to be equally lavish….

[Update: The Great Valley School District has an excellent watchdog site which reports that their Superintendent Rita Jones had a 2008 salary of $229,851, not counting extreme health benefits, all-expenses-paid car, and some bizarre provisions for “sabbaticals.”]

Why Public Union Contracts Should Be Negotiated In Public April 3, 2009

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Union negotiators represent a very vocal constituency with very strong interests in maximizing the union’s wins in contract negotiations.  Union workers enjoy a homefield advantage when it comes time to trot out human interest stories for the press and pundits to exploit.  Public boards and administrators, in contrast, represent the relatively poorly organized and unattentive constituency of “taxpayers.”

The prevailing custom is for public union negotiations to proceed in secret.  Fred at School Board Transparency explains how this “gives an immense and entirely unnecessary bargaining advantage to the union.”

The law allows (but does not require) school boards to conceal both how the union is proposing that they spend public money and how the board itself proposes to spend that money. Agreeing not to tell the public anything about this permits a union to prolong negotiations for as long as it wishes and then launch a PR blitz combining tributes to the dedication of teachers with threats of a strike. Unions can open negotiations with outrageous demands — not in the least “cognizant” of anything other than maxing out pay raises — stick with those demands for many months (or else lower them in tiny increments) and then complain that boards “aren’t negotiating.” Transparency is a dagger to the heart of this strategy.

He also offers a striking analogue:

Suppose that a school board in the newspaper’s area announces that it plans to put artificial turf on its athletic fields. The district negotiates with a sole-source contractor about materials and costs and promises to announce the results on the night of a board vote on the contract. (Meanwhile spokespeople for both the board and the contractor assure reporters that talks are “going well.”) It’s hard to believe that any self-respecting editor would shrug and say, “Well, I guess that’s how things are done.” Why apply a different standard to decisions that affect every family in a district, decide in advance the feasibility of plans to improve educational quality and cost many, many times more than laying down Astroturf?

Philly Newspapers: Red all over! February 15, 2009

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Earlier this month the Wall Street Journal devoted an editorial to the astonishing news that Pennsylvania’s government was discussing a bailout of the Philadelphia newspapers.

Taxpayer cash is going to rescue so many people these days that it is hard to sort the truly awful ideas from the merely terrible. Then we heard the doozy out of Pennsylvania, where Governor Ed Rendell has discussed a state bailout of the company that owns a pair of Philadelphia newspapers, the Inquirer and the Daily News.

[Rendell spokesman Chuck] Ardo told us the state has an interest in saving the paper to protect jobs as well as a free press. Newspapers are “the lifeblood of democracy,” he says. But newspapers aren’t the lifeblood of anything if they are merely an adjunct of the state. Independent journalism is valuable, but only if it is truly independent. A newspaper that is bankrolled by the state, even if it’s only a loan, is going to have a strong interest in not criticizing the state. Perhaps this is one of Mr. Rendell’s goals, since like all politicians he prefers a favorable press.

Brian Tierney, President and CEO of the papers, had his rebuttal printed this weekend, but to my ear he only made the affair look even worse:

[T]he overwhelming majority of our employees who would benefit from such economic development money have no influence on the editorial content of our newspapers and online properties. They are drivers, distributors, pressmen, advertising salespeople, mailers and paper handlers. These are all valuable, good jobs which our company wants to preserve.

Apparently Tierney is not familiar with the premises of capitalism and limited government.  When the free market no longer supports a company’s product, the company’s jobs are by definition not valuable.  A bankrupt company is supposed to go out of business, and its workers are supposed to find good new jobs that the market does value.

Hey Brian: There’s a political philosophy in which government both controls the media and chooses which goods and services are produced.  We don’t practice it in this country, but if you hurry you still might be able to enjoy it in North Korea….

Will Pennsylvania Assert its Sovereign Rights? February 12, 2009

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State Representative Sam Rohrer is circulating an excellent resolution putting the federal government on notice that the Commonwealth of Pennsylvania will no longer tolerate infringement of its sovereignty, and calling on the federal government to respect the U.S. Constitution’s plain restraint on its power.

The resolution is worth reading in full: At just two pages in length it is a potent reminder of the principles of federalism and limited government on which this country was founded.

All PA citizens should encourage their representatives to co-sponsor this resolution.

Government Employees Live in a Different World January 29, 2009

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An excellent new blog is digging into the finances and contracts of the Tredyffrin/Easttown school district.  The figures exposed here should outrage the taxpayers.

The new teacher’s contract, just recently finalized, gives a 4 year raise of at least 17.7% — and as much as 36.8% — to new teachers!  As this blogger asks, “Do you know ANYONE in industry that will get that kind of [guaranteed] raise over 4 years?”

Also noted is the fact that employees of the public schools enjoy uncapped and taxpayer-guaranteed pensions.

And don’t forget the job security that government employees enjoy: At a time when unemployment is breaking records, the unemployment rates of government workers are under 3%.

Government employees have managed to insulate themselves from the real world with our tax dollars.

Striking Teachers Can’t Lose September 16, 2008

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Under current law public school teachers can go on strike without losing any money.  Meanwhile, parents have to bear the costs of emergency childcare when teachers go on strike.  Simon Campbell explains:

Teachers don’t get paid while they are out on strike, but they get to make either 100% of salary for the year, or close to it, due to the requirement in law for students to still get 180 academic days completed by either June 15 or June 30 at the latest.

I say “or close to it” because technically, striking teachers might lose a few workshop days of pay since the union contract is for 192 days not 180 days.  But it is at the union’s discretion as to whether or not they strike for every last day possible.  So they could still end up with 100% of pay in a number of different scenarios.

Teacher unions derive an unfair advantage from this ability to impose striking costs unilaterally on parents.  Most other unions face two less palatable alternatives: Tax their members to create a “strike fund” to pay striking workers, or else the workers give up their wages for the duration of a strike.

The Audacity of Teacher Unions — Souderton Edition September 15, 2008

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Souderton Area public school teachers are on strike, demanding a 30% increase in compensation over the next 4 years. Simon Campbell, President of Stop Teacher Strikes in Pennsylvania, does a fine job of castigating the laws that allow public employees to hold taxpayers hostage.

The union’s shameless arguments in this case are noteworthy:

  1. They have the lowest starting salaries in the county, and are the lowest paid for the first 14 years. Of course, somebody has to be the lowest. Besides, as we noted in our previous post on this topic: Unions set the pay schedule. So if they’re underpaid for the first 14 years, it’s probably because the union is overpaying senior teachers.
  2. The school board will be forcing us into a situation that will make Souderton Area Education Association and Souderton Area School District uncompetitive with other districts,” warned Bill Lukridge, the mob boss — er, union president. Is this really a problem? Apparently not: Not only do existing teachers seem content to stay in their jobs (see item #1), but the district also has plenty of applicants for new positions.

How did the school district wind up in this mess? Thanks to extraordinarily pro-teacher union laws every Pennsylvania taxpayer is ultimately at the mercy of public school teachers. However, like all predators, unions are more prone to strike when they detect an easy target: This school district mismanaged its budget by overtaxing residents and generating a $17MM surplus. Let that be a lesson to all Pennsylvania school districts: Be diligent in your budgeting and don’t tax more than is strictly required. Any surplus just provokes the insatiable predators of the public purse.

[Addendum: Don’t miss the comments here!]

Public Pension Prejudice May 20, 2008

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Richard Dreyfuss from the Commonwealth Foundation describes the heads-I-win-tails-you-lose structure of the defined-benefit pensions enjoyed by PA government employees:

COLA proponents believe any pension surpluses belong to members in the form of better benefits, but pass along any pension deficits to the taxpayers. In other words, all the financial risks belong to the taxpayers and all the financial gains belong to the active and retired public employees.

Amend the Pennsylvania Constitution to Enable Judicial Recalls March 22, 2008

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Republican Pennsylvania State Representatives Rubley and Steil are getting behind a movement to amend the constitution to provide for “Merit Selection” of judges instead of direct election.  They raise some valid concerns with the present system: Overt electioneering does not do much to maintain the illusion of an impartial judiciary.  However, “Merit Selection” is fraught with even greater perils — described in some detail by Collin Levy in a Wall Street Journal Op-Ed this week.  Between the two alternatives our existing system is preferable since it maintains transparency and accountability, instead of shifting the selection of judges to back rooms dominated by trial lawyers and liberal judicial activists.

While we’re talking about amending the Pennsylvania Constitution, there is an important change to be made, and that is to enable the recall of state officials before their terms expire.  Under the present constitution state officials and judges — many of whom are elected to terms of as long as ten years — can only be removed by impeachment, and only for “misbehavior in office.”  When the Pennsylvania citizens feel that an elected official has betrayed their trust they have no recourse against that official until the next election.

More specifically: The PA Constitution provides for the removal of civil officers only by impeachment for “misbehavior in office” (Article VI Section 6).  Per Article V Section 18, judges can also be disciplined or removed by a Judicial Conduct Board or Court of Judicial Discipline, but both of these are institutions of the Judicial Branch (and they can only remove judges for violating rules that they establish).

OTHER STATES AND BACKGROUND

Eighteen other states have constitutional recall provisions. Although rarely used, the mere existence of recall authority helps to keep the government reasonably accountable and responsive to the citizens.

  • NCSL has an excellent background on constitutional provisions for recall in eighteen states. These provisions are rarely invoked at the state level, and have only extremely rarely resulted in the actual recall of an official. Of course, the mere possibility of a recall is an incentive for officials to be responsive to the voters.
  • AJS explains how impeachment of judges has been implemented and used in the states.
  • Here are some useful legal theories in support of recall provisions.

The Audacity of Teacher Unions February 4, 2008

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The more we learn about the teacher unions, the more astonished we grow. Downingtown teachers went on strike even though they were offered pay raises above the rate of inflation.  And the existing numbers are enough to make regular folks not in the public service reconsider their professions: Starting salary for a union teacher in the Downingtown Area School District (DASD) is $43,300, plus defined-benefit pension, excellent healthcare, and effective lifetime tenure in a job requiring only eight hours of attendance a day for 9 months a year. The top union wage in the DASD is already $81,815, and the average is $58,915.

Converting these salaries into annualized numbers for those of us accustomed to working full-time, year-round, we’d be looking at a fresh college graduate earning $57,700, the average teacher making $78,500, and some teachers making over $109,000! (Never mind trying to put a price on the extraordinary non-salary benefits.)

According to the Daily Local (1/31/08):

When the board’s negotiation team gave the union its final offer, the union rejected it and asked for both sides to enter binding arbitration. Binding arbitration brings in a third party to decide the outcome of the negotiations. Instead, the board rejected the idea of binding arbitration and asked for nonbinding arbitration without a strike. But the union rejected the offer.

Political insiders have explained that unions love binding arbitration because the arbitrators are notoriously biased in their favor. The school board issued a public letter explaining its reluctance to go this route:

It is important for the community to understand that in demanding binding arbitration, the union is asking the board to by-pass Pennsylvania law and take away our community’s right to have their elected officials make the ultimate decision in determining the district’s financial future.

The board’s letter also noted:

The board negotiates with the union a specific sum of money that will be used for salaries. It is the union leadership who determines what percentage each step on the teacher’s salary matrix.

That’s right: The teacher union is run like a gang of brigands. Union bosses are the ones who actually determine how the plunder gets divvied up.

Teacher unions are violently opposed to merit or performance pay. So if you wonder why paying the union more doesn’t buy better teachers, just ask the insiders who are raking in six-figure salaries how they distinguished themselves in the public service. And why they think they deserve even more.

Strike-Free Education Act January 21, 2008

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Check out StopTeacherStrikes.  Pennsylvania is one of only 13 states that still allow teachers to strike. The threat of a teacher’s strike in the Downingtown Area School District (DASD) offers an illustration of why this is such an unfair tactic: Parents are afraid to oppose the union in public because the union’s members control the lives of their children 180 days a year, as well as grades and recommendations that determine their children’s future. Parents are also held hostage because they are on the hook for contingent daycare expenses in the event that teachers do choose to strike. The pressure to mollify the teachers is both one-sided and overwhelming.

Reasonable people may disagree in principle about what is fair compensation for working in a union-protected job like that enjoyed by public school teachers. The best way to determine whether the union has obtained an unfair advantage is to look at the competition for membership: According to the Daily Local, the DASD received 4,627 applications for the 66 teaching positions that opened last year. In an economy like ours with record-low unem-ployment, seventy applicants for every open position indicates that the union is extracting excessive rents for its members. Those rents are at the expense of the taxpaying public.

Teacher unions across the state hold the public hostage using laws that give their members an unfair advantage of the taxpayers footing their manifestly lavish compensation. If this weren’t government-sanctioned we would call it racketeering and would expect a grand jury to be investigating the cartel perpetrating it.

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