The Consequences of Concentrated Power

MAY 4, 2016  | by BOB DICK

We aren't the type of people to begrudge anyone a well-deserved raise. But when it's a $9,000 raise for an inessential position running a government booze monopoly...well, that raises some eyebrows.

The Pennsylvania Liquor Control Board (PLCB) recently gave its executive director John Metzger a 6.2 percent raise, bumping up his salary to $154,035 a year.

A PLCB position commanding a six-figure salary might appear to be essential to the functioning of a government agency. But is this position needed? Gov. Ed Rendell created the controversial position just 10 years ago for former state senator Joe Conti. The PLCB’s Chairman at the time, Jonathan Newman, resigned in protest because he thought the position was unnecessary.

Ignoring the controversy of the hiring, did Conti improve the management of PLCB? Not in the slightest, as this list of boondoggles makes abundantly clear. Additionally, Conti used the position to enrich himself at the expense of people stuck dealing with an inefficient yet powerful booze bureaucracy. And he continues to profit off the PLCB’s existence as a lobbyist for the local United Food and Commerical Workers union.

The source of all these problems—arbitrary raises, unwarranted positions, mismanagement, and corruption—is the control the PLCB has over the sale of wine and liquor. The system consolidates power among a handful of people, giving rise to abuses that every Pennsylvanian should find unacceptable.

The liquor monopoly is hanging on by a thread. Last year, the legislature passed a privatization plan for the first time in 80+ years. Unfortunately, Gov. Wolf vetoed it. But this should not dissuade lawmakers from sending it to his desk again.

Only full privatization can end cronyism and offer the choice, convenience and, competitive pricing consumers and entrepreneurs deserve.


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Tom Wolf vs. Barack Obama on Charters

MAY 3, 2016  | by JAMES PAUL

It’s safe to assume Governor Tom Wolf and President Barack Obama agree on many policy issues. But when it comes to public charter schools, Wolf and Obama are worlds apart.

The president recently issued a proclamation honoring May 1 through May 7 as National Charter Schools Week. In his statement, Obama explained the important role charters play in America’s education system:

Supporting some of our Nation's underserved communities, [charters] can ignite imagination and nourish the minds of America's young people while finding new ways of educating them and equipping them with the knowledge they need to succeed. With the flexibility to develop new methods for educating our youth, and to develop remedies that could help underperforming schools, these innovative and autonomous public schools often offer lessons that can be applied in other institutions of learning across our country, including in traditional public schools.

Although charter schools are lifelines for tens of thousands of Pennsylvania families, Gov. Wolf’s policies are decidedly hostile to charter students. Consider his actions since assuming office:

  • Last March, Wolf removed Bill Green as chairman of Philadelphia’s School Reform Commission (SRC) after the SRC approved merely 5 of 39 applicants from new charter schools. This was a clear message that even tepid support for charters will not be tolerated—and it prompted a lawsuit from Green seeking to regain his position as chair. According to the Philadelphia Inquirer—not exactly a bastion of school choice ideology—Green has a strong case.
  • Wolf’s budget proposals in 2015 and 2016 each includes massive cuts to cyber charter schools—reducing their revenue by one-third—and deny all charters the right to save new funds in their “rainy day” reserves.
  • Wolf undermined the recovery plan in York City School District, effectively forcing out the district’s chief recovery officer as retribution for his support of charter schools.  
  • Last summer, Wolf attempted to balance Chester Upland’s budget on the backs of special education charter students. Chester students are otherwise relegated to a school system Wolf admits “failed its students” and has been “mismanaged for over 25 years.”

A recent poll from the National Alliance for Public Charter Schools finds nearly 8 in 10 surveyed support parents being able to choose their child’s public school. Over half of parents surveyed who are supportive of charter schools cited lack of access as the main reason they don’t send their child to a charter.

Perhaps Gov. Wolf should pay heed to the thousands of families benefiting from charter schools—not to mention President Obama—and rethink his opposition to these effective educational options.   


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Pension Debt Grows by Another Billion

MAY 3, 2016  | by ELIZABETH STELLE

Last week the State Employees' Retirement System (SERS) announced its total unfunded liability increased from $18.44 billion in 2015 to $18.79 billion.

In truth, SERS' unfunded liability grew by about $1 billion this year due to artificially low employer payments. A more accurate calculation comes from the SERS actuary, The Hay Group. They estimate an unfunded liability of $19.45 billion as of December 2015.

Artificially low employer payments aren't the only reason the unfunded liability has grown. SERS assumes a 7.5 percent rate of return for investments, but the actual rate of return has been far less, only 0.4 percent in 2016.

Keep in mind that SERS liabilities represent less than half of the overall pension liability taxpayers will pay. The larger Public School Employees' Retirement System is carrying a $37 billion liability for a total of $56 billion.

Clearly, letting Act 120 work means more debt for taxpayers. Giving state workers greater control over their retirement is the only way to boost worker security and stop the flood of red ink.


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Making the Most of New Funding Formula

APRIL 27, 2016  | by JAMES PAUL

A recent report from ABC 27 asks: “Will lawmakers stick with new education funding formula next year?” At issue is whether Pennsylvania’s student-based formula will be retained in future state budgets. The ABC story raises an important concern—but it slightly misses the mark.

Here’s the question we should be asking: Will lawmakers stick with the new formula and ensure the formula is applied to all funding above 2014-15 levels?

The 2015-16 budget includes $150 million in new Basic Education spending. This funding will be dispersed to school districts based on a formula that accounts for enrollment—which is undeniably a positive step forward.  

But the formula only applies to 3 percent of Basic Education funding, the largest line item in the education budget. The other 97 percent is restricted by Pennsylvania’s “hold harmless” provision, which guarantees each district receive no fewer education dollars than it received the previous year—regardless of changes in enrollment

It is crucial that lawmakers do not apply hold harmless to the $150 million appropriated in 2015-16. Should the legislature increase Basic Education funding in 2016-17, the new formula should apply to all funding above 2014-15 levels, not merely the increase appropriated in 2016-17. 

Thanks to hold harmless, districts with declining enrollment received more than three times the state funding per student than growing districts since 1996. Until the student-based formula is applied to a larger portion of the Basic Education line item, hundreds of school districts will continue to be treated unfairly.


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Middle Class Loses Under Gov. Wolf's Budget

APRIL 26, 2016  | by BOB DICK

The Independent Fiscal Office (IFO) released a sober analysis of Gov. Wolf’s 2016-17 budget proposal. It examines the consequences of eight separate tax increases as well as a minimum wage hike. The 35-page analysis can be summarized in four major points.

1. Higher middle class taxes than New Jersey. The IFO produced hypothetical scenarios for families in 12 states to demonstrate the impact of the governor's 11 percent personal income tax (PIT) hike. A Pennsylvania family making $50,000 will pay higher taxes than the same family living in New Jersey and five neighboring states.

Proponents of a PIT hike emphasize the current rate is one of the lowest in the country. While true, it does not account for the fact that Pennsylvania's rate is among the highest for low-income families, and that the PIT does not exist in seven states.

2. The highest severance tax rate among major gas-producing states. If the governor gets his way, Pennsylvania’s gas industry would pay a 5.6 percent severance tax. The tax would be imposed in addition to the taxes gas companies already pay.

Supporters of a severance tax insist wealthy gas companies need to pay their “fair share.” But this punitive tax will also fall on people who depend on the natural gas industry for their livelihoods. A slew of jobs have already been lost as natural gas prices remain at 20 year lows.

3. The 10th highest state cigarette tax rate in the country. Philadelphia’s tax rate would be 2nd only to New York. Cigarette taxes affect a narrow population and garner more support than broad based taxes. However, cigarette taxes disproportionately affect the poor and encourage violence stemming from smuggling. In 2014, Philadelphia implemented a $2 tax on cigarettes. The tax drove Philadelphia residents to purchase cigarettes in nearby counties, which hurt small businesses in the city.

4. A minimum wage hike would erase nearly 30,000 job opportunities. The IFO predicts raising the minimum wage from $7.25 to $10.10 an hour would boost the incomes of some workers. However, the new mandated minimum wage would also force layoffs and slow hiring.

Everyone wants to reduce poverty, but forcing businesses to increase wages will harm the very people the policy is intended to help. Those with little work experience or education will find it more difficult to land that first job. For example, teenage unemployment rates are consistently higher in states with higher minimum wages.

All of Governor Wolf's proposals have one thing in common: They concentrate more money and power in Harrisburg. Yet, job growth and economic prosperity come from innovative people in the private sector, not from a large and removed state government.


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Budget Complete as Fiscal Code Becomes Law

APRIL 25, 2016  | by JAMES PAUL

Late on Friday afternoon, Gov. Tom Wolf quietly announced the fiscal code will become law without his signature. This significant development closes the door on a tumultuous year of state budget politics—and represents an important victory for public and private school children.  

Just last month Wolf opted to veto the fiscal code, which included a fair funding formula for education spending, language authorizing businesses to receive tax credits for their donations to private school scholarship organizations, and state funding reimbursing school districts for construction and renovation costs.

Lawmakers responded to the governor's veto by passing a stripped-down version of the fiscal code—this time with strong bipartisan support and veto-proof majorities. Apparently Wolf saw the writing on the wall and decided to refrain from yet another veto.

Thanks to passage of the fiscal code, education spending above 2014-15 levels will be distributed through a rational formula that accounts for student enrollment. This formula includes recommendations presented by CF in testimony to the Basic Education Funding Commission.

Ideally, the formula would apply to the entire Basic Education line item—not only the new education spending—but the fiscal code remains a step in the right direction. Certainly, the formula is an improvement over Wolf’s preferred funding scheme which funneled millions to Philadelphia, Chester-Upland, and Wilkinsburg at the expense of 423 other districts.

Further, the finalized fiscal code allows businesses that made donations to the state’s popular scholarship tax credit programs to utilize their tax credits in either 2015 or 2016. Recall that last year the Wolf administration put a freeze on the scholarship programs—claiming student hostages and causing confusion for participating businesses. The technical amendment in the code will reduce administrative headaches for businesses and allow more students to receive scholarships.  

A no-tax increase state budget, combined with a fiscal code that protects students, is a crucial victory for families and businesses in the commonwealth.


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Tomorrow's Two Ballot Questions for Every Party

APRIL 25, 2016  | by ELIZABETH STELLE

Pennsylvania Votes

Tomorrow's primary election is largely a partisan affair in which only registered Republicans or Democrats can vote for the presidential nominee and nominees for state office.

But there is one constitutional amendment on the ballot, that everyone—including independent voters—can vote on.

The ballot question seeks to eliminate the Philadelphia Traffic Court by striking all mention of the court  from the Pennsylvania Constitution. It reads:

Shall the Pennsylvania Constitution be amended to abolish the Philadelphia Traffic Court?

Why is this an issue? In 2013, the Philadelphia Municipal Court took over the functions of the Philadelphia Traffic Court after a damning report on corruption. The Post-Gazette summarizes the sorry history of the court:

For four decades, Philadelphia’s traffic court made headlines for all the wrong reasons. In 1978 the president judge was indicted, and later convicted, of taking $32,000 in bribes and gifts. In the 1980s a ticket-fixing scheme involving $100,000 in illegal payoffs ended in the conviction of 12 people. . . Finally, in 2013, three of the traffic court’s judges pleaded guilty to ticket fixing in exchange for gifts and four others were found guilty of lying to a grand jury or federal agents.

There's also a second ballot question that asks voters if they support raising the mandatory retirement age for judges from 70 to 75. The question will appear on Tuesday's ballot, but your vote won't count.

This spring, the state Supreme Court rejected a Senate Republican request to revise the wording of the ballot question.

In response, the legislature passed a resolution to move the ballot question to the November election. Here's the text that will appear on Tuesday's ballot:

Shall the Pennsylvania Constitution be amended to require that justices of the Supreme Court, judges and justices of the peace (known as magisterial district judges) be retired on the last day of the calendar year in which they attain the age of 75 years, instead of the current requirement that they be retired on the last day of the calendar year in which they attain the age of 70.

The question would affect several judges nearing the current mandatory retirement age of 70.


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(Un)Happy Tax Freedom Day!

APRIL 22, 2016  | by ELIZABETH STELLE

(Un)Happy Tax Freedom Day!

If you thought Tax Day was April 15, think again. Today, April 22, is actually the day by which Pennsylvanians have finally earned enough to pay their 2016 tax bill – a bill that exceeds housing, clothing, and food expenses combined.

Check out the non-partisan Tax Foundation’s report on Tax Freedom Day in Pennsylvania and nationwide.

Here in Pa., the shocking truth is that Pennsylvanians will spend nearly four months earning enough income to pay their federal, state, and local taxes.  

Why so much in taxes? In short, government spending growth at all levels. In fact, state government spending grew by 41 percent from 2005-2015. Our state and local tax burden alone, excluding federal taxes, now stands at an astounding $18,000 per family of four.

As we saw with last year’s budget impasse, Pennsylvanians simply have no appetite for higher taxes. Today’s Tax Freedom Day only underscores they were right to reject Gov. Wolf’s record tax increase plans.

Despite the heavy tax load Pennsylvanians already bear, Wolf still insists it’s not enough. His 2016-17 budget proposal would increase the tax burden by $850 per family of four, including raising the personal income tax by 11 percent—retroactive to January 1.

Taxpayers who spend 112 days a year just to fund government spending don’t want to hear they’re not taxed enough. They want to hear lawmakers are doing everything possible to spend responsibly rather than spend more.


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How Ridesharing Helps the Poor and Disabled

APRIL 22, 2016  | by NATHAN BENEFIELD

Earlier this week, I used Uber to get a ride in downtown Philadelphia. Curious, I asked my driver how long he’d been driving for Uber. “Two years,” he told me, noting that he used to drive a taxi. “I’m so much better off now,” he added.

This flies in the face of criticism that Uber and other ridesharing services—despite the numerous benefits they offer—harm taxi drivers.

Just yesterday, the Public Utility Commission (PUC) issued an $11 million fine on Uber (which will certainly be appealed in court). The fine stemmed for Uber operating without PUC approval, not from any harm to riders or threat to public safety.

In fact, several recent news stories highlight the many beneficiaries of ridesharing.

  • A recent Pittsburgh Post-Gazette story looks at how Uber, Lyft, and zTrip have increased transportation options to underserved neighborhoods in Pittsburgh.
  • Similarly, a Watchdog.org story shows the expanded economic opportunity generated by Uber and Lyft in Philadelphia.
  • The benefits extend beyond simply serving neighborhoods taxis don’t. A CBS Pittsburgh story explains how drunk-driving has declined in the city thanks to ridesharing services.
  • Another beneficiary of ridesharing has been disabled riders. An AP analysis looks at how major cities have utilized Uber and Lyft to provide transportation for residents with disabilities. Indeed, transit systems have actually saved money by using a voucher system to cover the fares of Uber and Lyft.

Certain special interests have thrown significant funds and manpower behind efforts to prevent Lyft and Uber from operating in the city. This would be most unfortunate for low-income residents of Philadelphia.

Emails uncovered by the Philadelphia Inquirer reveal the Philadelphia Parking Authority has conspired with the taxi industry to protect them from competition—at the expense of consumers.

Clearly, the PPA’s opposition to ridesharing services is about preserving its authority and regulatory powers. It has little to do with protecting consumers. Indeed, a study from the Cato Institute highlights that ridesharing services ultimately provide greater safety than taxis.

Given the need and numerous benefits of ridesharing, lawmakers should pass legislation authorizing ridesharing across the state, including Philadelphia.


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Changing Lives with Education Savings Accounts

APRIL 20, 2016  | by JAMES PAUL

Education Savings Accounts (ESAs) empower parents to personalize the academic experience for their children, as CF explains in a recent policy brief. But ESAs are about more than school choice.

They are changing lives for families in need.

ESAs have only existed for a short time—enacted in 2011 in Arizona and 2014 in Florida. But the stories of children served—and saved—by these flexible spending accounts are growing by the dozens.

Jordan Visser, a nine-year-old in Arizona diagnosed with cerebral palsy and dyslexia, was one of the first children to benefit from an ESA. Thanks to his ESA, Jordan receives more individual time with a reading teacher for the visually impaired, as well as his physical therapist:

When Katie Swingle’s son, Gregory, was eighteen months old, doctors worried that Gregory’s autism would prevent him from being able to speak. But thanks to Florida’s ESA program, seven-year-old Gregory is not only speaking, he’s writing in cursive. Watch Gregory’s mother describe the impact of ESAs on her family:

Consider Max Ashton, an eighteen-year-old in Arizona born legally blind, who used the ESA funding for specialized education and college tuition:

Eighteen-year-old Max Ashton is an ESA recipient in Arizona. Max is an exceedingly bright and ambitious young man. He was also born legally blind and has additional needs in school. This is why, when given the option to use an ESA in 2011, Max’s parents jumped at the chance. Marc Ashton, Max’s father, said of the decision:

A blind student in Arizona gets about $21,000 dollars per year to educate that student. We took 90 percent of that, paid for Max to get the best education in Arizona—the best education in Arizona—plus all his Braille, all his technology, and then there was still money left over—still money left over—to put toward his college [tuition]. And so he is going to be able to go on to Loyola Marymount University…and do extremely well, because we were able to save money even sending him to the best school in Arizona over what the state would normally pay for.

ESAs were also life-changing for Kasey Locke, a six-year-old diagnosed with autism who was not best-served by the local public school:

Rebecca Locke was frustrated with her daughter Kasey’s academic progress. Six-year-old Kasey is autistic, and when she started kindergarten at the local public school, her parents worked with school officials to incorporate a new learning method, applied behavioral analysis (ABA), into Kasey’s school work. “We were looking for different modes of treatment for her and came upon applied behavioral analysis, and that’s the only treatment that’s been empirically shown to cause improvement.”

But her parents were frustrated because Kasey’s school couldn’t incorporate ABA methods into her full school day. It really wasn’t the school’s focus to use this type of treatment.  “We did look into private schooling, but there was no way we could financially reach that.”

Then, when Arizona passed educational savings accounts into law, “it was almost too good to be true” for the Lockes. With an education savings account, Kasey’s portion of state education funding would be deposited into an account her parents could use for any educational services.

The education savings account has been life-changing for Kasey, who now attends Chrysalis Academy, a private school that incorporates ABA tools.  Recently, Kasey visited her speech therapist, who was “amazed” with Kasey’s progress. Her parents say the education savings account has been “a huge success for us.”

The experiences of Jordan, Gregory, Max, and Kasey must be replicated for all Pennsylvania families seeking the same type of educational opportunity. Everyone deserves access to this life-changing program.


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