Wolf Tops $1 Billion in New Education Spending

FEBRUARY 12, 2016  | by JAMES PAUL

As expected, a cornerstone of Gov. Wolf’s budget proposal is a massive increase in state support of public schools. The administration seeks a $1.1 billion increase over the record-high funding levels passed at the end of 2015.

Wolf also demands supplemental spending in the 2015-16 fiscal year based on a “framework budget agreement” from last November. Seemingly everyone except the governor’s office knows the framework agreement has collapsed, yet Wolf is still baking these increases into his 2016-17 proposals.

The chart below demonstrates Wolf’s continued efforts to spend more money than Pennsylvania taxpayers can afford. When the governor finally signed the majority of HB 1460 at the end of December, the General Assembly agreed to significant increases in Basic Education, Special Education, and Pre-K programs. Still, Wolf clings to the more expensive framework budget—insisting that these supplemental appropriations be signed into law.

 

2014-15

HB 1460

(2015-16)

Framework

(2015-16)

2016-17

Basic Education

5,730,069

5,880,069

6,106,969

6,306,969

Special Education

1,046,815

1,076,815

1,096,815

1,146,815

Pre-K

136,462

166,462

196,462

256,462

Pensions

1,157,853

1,725,000

1,725,000

2,064,000

Total (thousands)

8,071,199

8,848,346

9,125,246

9,774,246

 

(Note: Basic Education includes the Ready to Learn Block Grant, and Pre-K includes the Head Start Supplemental Assistance and Pre-K Counts line items).

Contrary to the rhetoric from the administration, Pennsylvania schools are not underfunded. The commonwealth ranks 10th in the nation in public school revenue, with per-pupil spending exceeding the national average by $3,400.

 


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Wolf Will Veto Prison Funding, Send the Money Anyway

FEBRUARY 12, 2016  | by NATHAN BENEFIELD

In a bizarre news twist, Gov. Tom Wolf is threatening to veto a bill because...well, reasons. According to the AP:

Democratic Governor Tom Wolf says he will veto legislation passed by the state House to restore nearly $1 billion for state prisons.

...

The Wolf administration says payments for prison costs will continue, regardless of the veto.

Wait...what?

  1. To recap, Gov. Wolf line item vetoed more than $900 million in funding for prisons—nearly half of the entire Corrections budget.
  2. Wolf asked the State Treasurer to release that funding anyway.
  3. The House passed a bill to restore the funding.
  4. Wolf is promising to veto that funding again.
  5. Wolf is saying Treasury will send the money anyway, regardless of the veto.

It's a mystery why Wolf would choose to veto Corrections funding that was agreed to as part of the budget framework. 

On Monday of this week, the Senate held a hearing about the Governor's ability to fund programs without legislative approval—or even after he disapproved the funding.

The conclusion—that the Treasurer believes in areas affecting the "health, safety, and welfare" of the commonwealth, the governor can indeed spend beyond what has been approved—was baffling to many lawmakers.

Indeed, it would seem to threaten our constitutional balance of powers. If this is the case, why bother to have a state budget at all? 


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Deficit Hypocrisy

FEBRUARY 11, 2016  | by BOB DICK

Much has been made of the state’s structural deficit, which amounts to about 3 percent of Pennsylvania's total operating budget.

Unfortunately, Gov. Wolf can't envision a scenario in which government adopts reforms to bring expenditures in line with revenues, even if it means just a 3 percent "cut" (more on that below).  

Instead, the governor cites the deficit endlessly as a justification for imposing tax increases on working people. In fact, he issued a dire warning about the state’s budget deficit during his budget address on Tuesday:

This deficit isn’t just a cloud hanging over Pennsylvania’s long-term future. It is a time bomb, ticking away, right now, even as I speak.

He went on to reprimand the legislature for failing to deal with this “time bomb”:

But instead of finding a sustainable way to deal with our deficit, Harrisburg chose to paper over the problem with a series of budgetary gimmicks and quick fixes.

The two quotes above give the impression that the governor understands the deficit and has a real plan to eliminate it. However, a seemingly innocuous line from a Capitolwire story (paywall) shatters such an impression:

Budget Secretary Randy Albright did note that even if all of Wolf’s proposals are adopted, more work will be necessary to control growing government costs as a structural deficit is projected to return in the 2017-18 fiscal year.

This is an amazing admission. Even if the legislature agreed with Gov. Wolf’s plan to raise taxes by $3.6 billion, the projected deficit would return in the following fiscal year. And because Gov. Wolf has been unwilling to enact the reforms necessary to make government leaner, we should expect more tax increase proposals in 2017.

The governor’s nonexistent plan to eliminate the deficit isn’t the only problem. He’s also misrepresenting what the deficit is. Simply put, the deficit is the gap between projected revenues and spending. In the chart below, the blue shade represents the spending level for the 2014-15 budget year. The red shade represents all new spending above the 2014-15 level.

As the chart shows, the state could increase spending every year and still balance the budget. All lawmakers would need to do is slow the growth in spending. However, more can be done to reduce the cost of government. In a recently released policy memo, we suggest redesigning government not only to avoid tax increases but to start reducing Pennsylvania’s suffocating tax burden.

If Gov. Wolf wants to put Pennsylvania on a sound fiscal footing, raising taxes and increasing spending at the fastest pace in a quarter of a century is not the solution. As his own budget secretary admits, his plan will put us right back in the same predicament next year. How is that a break from the status quo?


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Five Facts about Wolf's Second Budget Proposal

FEBRUARY 9, 2016  | by NATHAN BENEFIELD

More of the same

  • Wolf’s proposed budget mirrors what he offered—and lawmakers repeatedly rejected—last year: Massive tax hikes and record spending increases.
  • It’s no surprise Wolf didn’t want to give this “repeat” speech on Groundhog Day.
  • Wolf’s proposed spending increases continue a long trend. Total state spending increased in 45 of the last 46 years for an inflation-adjusted total of $16,557 more per family of four.

Biggest spending increase in 25 years

  • Wolf’s $33.3 billion General Fund budget (including pension payments) represents a 10 percent increase over the budget passed by the legislature in December.
  • This is the largest spending increase since 1991-92.

Wolf’s tax hike = $850 more per family four annually

  • Including the tax hikes residents will pay in the first half of this year (for the 2015-16 budget), state government will take $1,129 more per family of four over 18 months.

Even more money for public schools

  • Wolf’s budget includes a $1.1 billion increase in support of public schools, on top of the record-high level of funding passed by the legislature in December. This increase comes with no accountability measures.
  • Wolf wants $400 million more in public school spending for the current school year—which is already more than halfway over.
  • Meanwhile, Wolf proposed arbitrary and punitive cuts for public charter schools, including cyber charters.
  • New data from the National Center for Education Statistics shows Pennsylvania already spends $3,400 more than the national average per student, including higher per-student funding from state tax dollars.

At least 8 different tax increases, including

  • An 11 percent personal income tax hike—retroactive to January 2016 (in other words, you already owe the state more taxes);
  • Sales tax expansion to cable TV, movie tickets, and digital downloads;
  • Higher taxes on natural gas production, even as the industry is laying off workers across Pennsylvania;
  • Higher cigarette taxes and new taxes on other tobacco products, hitting lower-income families the hardest;
  • Higher taxes on bank savings and home insurance premiums; and
  • New gaming taxes.

Wolf's 2016 Proposed Tax Hike


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Who is Wolf Giving Your Tax Dollars To?

FEBRUARY 5, 2016  | by NATHAN BENEFIELD

Next week Gov. Tom Wolf will unveil a “new” budget, with all expectations that it will be just like his first proposal—calling for new taxes on working families. In fact, you can participate in a new contest and guess just how high Wolf’s proposed taxes will be.

But while he’s claiming to need more of your money, Wolf's been busy giving away handouts in the form of corporate welfare.

Politicians enjoy issuing press releases when they use taxpayers money to fund projects. We refer to this as “press release economics.” In reality, these corporate welfare programs undermine economic growth—driving up taxes on everyone else, and hindering real jobs creation.

The real question is this: Do we need to ask working families to fork over more of their income while we are doling out hundreds of millions of dollars in corporate welfare?


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Audio: PA Budget Groundhog Day

FEBRUARY 3, 2016  | by JONATHAN REGINELLA

Groundhog Day has come and gone, but Gov. Wolf hasn’t stopped celebrating Punxsutawney Phil’s big day. Paying homage to the theme of the Groundhog Day movie, Wolf has trapped Pennsylvanians in a time loop similar to the one that imprisoned Bill Murray's weatherman character–only this time loop is budget-related.

CF’s Matt Brouillette was on the Gary Sutton Show discussing his recent op-ed on PennLive, which asks if Gov. Wolf's second budget address will give taxpayers déjà vu all over again. 

Matt notes that despite his pledge to be a “different kind of governor”, Wolf is “doubling down on the same rhetoric, the same approach that, frankly, failed in 2015”. He plans to propose the same historic, broad-based tax hikes on Pennsylvania families–proposals that have failed a total of five times.

What's more, in true Groundhog Day fashion, Wolf is repeating the myths that Pennsylvania’s education funding has been cut and the system is underfunded. Matt dispels this myth, noting Gov. Wolf is the one who “vetoed over $3 billion going to education” which would have “increased [education] spending by over $400 million."

Gov. Wolf also plans to re-propose hitting the flailing drilling industry with a severance tax to “fund education."­ Not only would this drive out more businesses from Pennsylvania but it would also add $180 million to taxpayers' utility bills. 

Instead of repeating past mistakes, Gov. Wolf should break the budget time loop by focusing on resolutions that benefit all Pennsylvanians–such as limiting the unconstrained growth of government spending and cutting corporate welfare subsidies­.   

Click here or listen below to hear more.  

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

For mobile listening, get the SoundCloud iPhone and Android apps.


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Groundhog Day: Wolf Demands Millions More for Education

FEBRUARY 3, 2016  | by JAMES PAUL

When Punxsutawney Phil casts a shadow, Pennsylvanians expect a long winter. When Gov. Wolf issues a press release, Pennsylvanians expect a massive tax hike.

How fitting that Wolf chose Groundhog Day to demand another $577 million in basic education funding—$377 million for the rest of FY 2015-16 and an addition $200 million in the next fiscal year. The governor’s demands are rooted in the “framework budget” from last November, which was rumored to include $350 million in new basic education funding.

Unfortunately for Wolf, the framework budget has been dead for months [paywall]:

“I believe they may be the only party that does not believe the framework is dead,” said Senate GOP spokeswoman Jenn Kocher of the Wolf administration. “I'm sorry but it died the day that pensions did.”

The administration provided no explanation for why the $350 million figure increased to $377 million. Perhaps this was intended to offset the $50 million in borrowing costs incurred by school districts as a direct result of Wolf’s budget vetoes. Nonetheless, the administration seeks to distribute the 2015-16 funding through a hyper-political “formula” that ignores the recommendation of the state’s Basic Education Funding Commission.

Wolf continues to demand more spending while placing little value on smarter spending, which is exactly what the Funding Commission was created to ensure. The governor is not demonstrating a willingness to compromise, either: his education spending requests are not much different than his original proposal last March.

Rather than a $377 million windfall, what schools really need is the $3.1 billion that Wolf vetoed in December.

Of course, Pennsylvania revenue per-student already exceeds the national average by $3,400. Even when looking solely at state funding, Pennsylvania schools are better-funded than average.


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Wolf to PERC: "You're Fired!"

FEBRUARY 2, 2016  | by NATHAN BENEFIELD

Gov. Wolf has a history of trying to fire individuals who won’t kowtow to his agenda. He tried to remove Erik Arneson as head of the independent Office of Open Records—a move the state Supreme Court ruled illegal; he replaced David Meckley as the chief recovery officer in York; and he demoted Bill Green as chair of the School Reform Commission in Philadelphia.

Now, Wolf is targeting the Public Employee Retirement Commission (PERC), trying to shut down the entire agency. What’s PERC’s great ‘crime’? Apparently, evaluating pension legislation before lawmakers vote on it. In other words, if Wolf can eliminate PERC, he can effectively roadblock pension reform.

But there’s a problem. The law establishes PERC as an independent agency to evaluate state pension systems and legislation and offer cost and benefit assessments. While PERC members are appointed by legislative leaders and the governor, Wolf has no legal authority to unilaterally disband PERC. But Wolf seems focused on retribution against PERC for refusing to bow to his dictates.

As Capitolwire (paywall) reported last month, when Wolf line-item vetoed PERC’s funding:

According to the aforementioned sources, the Wolf administration wanted PERC to hold a meeting early in December, well before the commission could have an actuarial analysis done on the pension reform proposal…

In the absence of an analysis done by Milliman, PERC’s contracted actuarial firm, the commission was supposed to accept the figures offered by the pension systems and the Wolf administration.

[PERC Executive Director Jim] McAneny refused to do that – allowing Milliman to subsequently find a few errors within the legislation, including one that erased an estimated $630 million in long-term savings – instead pushing for his agency to do one of its many important jobs. However, his decision appears to have put in jeopardy PERC’s ability to do much of anything going forward.

PERC’s function as an independent arbiter serves—and protects—taxpayers. Relying solely on actuaries who are on the payroll of the same system they’re charged with evaluating is hardly a winning strategy for government accountability.

Wolf’s dictatorial actions clearly undermine the prospect for future pension reform, while sending the clear message: If you don’t do the governor’s bidding, he will simply eliminate your job.


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The Trouble with Medicaid Expansion

FEBRUARY 1, 2016  | by JAMES PAUL, ELIZABETH STELLE

As yesterday's deadline to enroll in an Obamacare marketplace insurance plan quietly passed, Gov. Wolf is boasting about Medicaid expansion—a major component of the federal government's health care overhaul. Unfortunately, the first year of full-blown Medicaid expansion will not result in better outcomes for the most vulnerable Pennsylvanians. 

The administration is celebrating 500,000 new Medicaid beneficiaries—many of whom are childless adults earning up to 138% of the federal poverty line—and a modest decline in the state's uninsured population. Fewer uninsured Pennsylvanians is a good thing, but too often Medicaid coverage doesn’t translate into accessible health care. If past experience is any guide, these new Medicaid patients will face long wait times and poor quality care thanks to low provider reimbursement and a maze of red tape

Worse, Obamacare's perverse incentives make the neediest Medicaid patients (children, pregnant women, the blind, and the disabled) most vulnerable to benefit cuts. While states receive roughly half of their funding for traditional Medicaid patients from the federal government, newly-enrolled beneficiaries are entirely funded by the federal government until 2017. This means that traditional Medicaid patients will be squeezed out in the event of state-level program cuts. 

Consider the experience of Arizona, a state that expanded Medicaid to able-bodied, childless adults in 2000.

The state quickly discovered its Medicaid expansion would cost taxpayers four times what was initially expected, forcing policymakers to cut other areas in order to maintain the expansion.

In 2010, Arizona eliminated Medicaid coverage for heart, liver, lung, pancreas and bone marrow transplants in order to pay for the growing costs of its Medicaid expansion.  As a result, truly vulnerable Medicaid patients in desperate need of life-saving organ transplants died so able-bodied adults with no disabilities keeping them from employment could keep receiving free, taxpayer-funded Medicaid coverage.

Advocates of Medicaid expansion also claim budget savings, such as when Gov. Wolf estimated more than $500 million in savings in his 2015-16 state budget. The administration is expected to tout more Medicaid cost savings in next week’s 2016-17 budget address.

There are two problems with counting Medicaid expansion as “a savings to the taxpayers.” First, the money “saved” by Medicaid expansion is better described as money “shifted” from state to federal taxpayers. One way or another, Pennsylvanians are footing the bill for expansion.

Secondly, short-term savings will likely be eclipsed by long-term cost increases. A recent report from the Independent Fiscal Office projects a 7.2 percent growth in Human Services in 2016-17, largely due to Medicaid cost growth—despite the federal government picking up 100% of the cost of new Medicaid enrollees. Starting in 2017, a portion of these costs will be shifted back to Pennsylvania—with state taxpayers assuming 5 percent of the burden in fiscal year 2017-18 and 10 percent by 2020.

Our Medicaid program fails patients and taxpayers alike. Giving patients more control over their care, regularly reviewing eligibility, and making it easier for mid-level providers to serve low-income patients are a few responsible ways to give more Pennsylvanians access to high quality health care. 


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PPA Picks Cartels over Consumers

JANUARY 29, 2016  | by ELIZABETH STELLE, NATHAN BENEFIELD

Transportation

Jon Brennan’s Audi S4 was impounded by Philadelphia police because he’s an UberX driver.

Emails uncovered by the Philadelphia Inquirer reveal that the Philadelphia Parking Authority (PPA) has thrown significant funds and manpower behind efforts to prevent companies like Lyft and Uber from operating in the city. Officials have actively conducted “sting” operations to discourage ridesharing, and sent out messages to approved Uber Black drivers asking them to report UberX drivers.

Moreover, the emails show that the PPA has been conspiring with the taxi industry to protect them from competition—at the expense of consumers.

While PPA officials claim their concerns revolve around safety, one can’t ignore the enormous financial stake the authority has in the traditional taxicab industry. Taxi cabs pay a slew of fees and tariffs along with a yearly $1,000-plus assessment per cab. In contrast, most ride sharing drivers pay nothing.

The emails between PPA and taxi medallion owners reveal a lobbying campaign costing at least $565,000 to protect the lucrative traditional taxi cab business.

In other words, Philadelphians' tax dollars are being spent to stall legislation that the majority of Philadelphians support!

Talk about a conflict of interest. Government authorities that are captured by the industries they are supposed to regulate are robbing the public of better service, and present ethical questions.

The PPA's arbitrary rule over ridesharing companies needs to come to an end. As James previously noted, ridesharing services provide greater convenience, more service, and more safety for riders.

Beyond allowing ridesharing companies the freedom to service consumers in Pennsylvania and statewide, lawmakers should look at dismantling the Philadelphia Parking Authority itself—long a haven for corruption and patronage—and turning parking facilities over to private operators


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