MARCH 2, 2012

Pop Quiz: Would You Pay $126 or $84 for the Same Product?

Yesterday, we noted how Pennsylvania's prevailing wage law is a "rent" for labor unions.  Here's an example of how it plays out in real life—when our schools are hit with higher construction costs because of the mandate. So, pop quiz: Would you pay $84 or $126 for the exact same product? 

When it comes to Pennsylvania's "prevailing wage" law, we force the taxpayers to pay $126. That's precisely what happened to taxpayers in the South Western School District in York County. But instead of it being $126 and $84, it was $126,825 instead of $84,504.

You see, when the South Western School District needed some roof repairs, the initial proposal from the contractor came in at $84,504. However, prior to obtaining Board approval, business officials inquired as to whether the proposal had used prevailing wage rates since the total cost of the project exceeded $25,000. The contractor indicated that the initial proposal did not include the artificially increased wage rates. He had used the wages being paid on a similar project in the private sector, like the roof of a large office building.

The contractor resubmitted the proposal for the exact same scope of work and included the payment of prevailing wages. Guess what: The total cost of the project increased from $84,504 to $126,825! That's an increase of $42,321, or 50 percent, for exactly the same product with the same skilled workers. The only difference is that the taxpayers in South Western School District got a 50 percent higher tax bill for the same work.

Thank goodness we taxpayers don't have to pay so-called "prevailing wages" on all the labor that government purchases from contractors. For example, when the state contracts with technology companies, law firms, food service companies or office supply vendors, we don’t mandate certain wage levels for computer techs, lawyers, food servers or Staples employees. So why do we do it only for public construction jobs?

The short answer is this is what happens when the Union Party controls Pennsylvania state government rather than the Taxpayer Party. Of course, we should end such unnecessary mandates such as prevailing wage entirely, but until the Taxpayers have a majority in the Pennsylvania General Assembly, we should at least increase the prevailing wage threshold from $25,000 to $185,000.

posted by MATTHEW BROUILLETTE | 08:00 AM | 0 comment

FEBRUARY 15, 2012

Will the Union Party Win Again?

On Tuesday, everyone in the Capitol anticipated a final vote in the Pennsylvania House of Representatives on a bill to increase the "prevailing wage" threshold for public construction projects from $25,000 to $185,000.

This bill would save state and local taxpayers an estimated $30-$60 million annually.  These saving would be minor in the context of the $4 billion in government construction spending, as costs for most new buildings or roads far exceed $185,000, but not insignificant. In contrast to the important reforms we've seen in other states, this is a minor tweak to a costly mandate, yet it has become a heavy lift in the House.  They are throwing around nickels like they are manhole covers.

True, this would be the first time in 50 years that Pennsylvania touched this union legislative carve-out that unnecessarily drives up costs for taxpayers at every level of government (school districts, counties, townships, boroughs and the state). But it's not even close to a full repeal of a law that only benefits unions at the expense of the taxpayers.  Yet the final vote got postponed last night.

Once more we were reminded that it is the Union Party that wields the majority in Pennsylvania, despite wide GOP majorities in both the House and Senate. The Taxpayer Party continues to be the oppressed minority with enough Union-Republicans joining the solidly Union-Democrats to stop every piece of legislation that would take the unions' boots off the taxpayers necks and out of our pockets.

Last month, GOP-controlled Indiana sent an "Open for Business" message across the nation when it became the 23rd state to end compulsory unionism.  Yet GOP-controlled Pennsylvania can't even get an inflationary adjustment to a law that should be repealed altogether.

To be sure, the Union Party has been losing its majority grip on Pennsylvania for a number of election cycles.  Some of its biggest apologists and defenders have been removed from office, are in prison or are on their way.  But as the threshold debate has revealed, the Taxpayer Party is still in the minority in Pennsylvania.

The good news, however, is that a vote will likely be taken and we will finally see which Party - Union or Taxpayer - every member of the House identifies with.  Then, finally, we the taxpayers can work towards becoming the majority party in our state rather than being the servants of the unions.

Will the Union Party win again?  You can help beat them by taking action NOW!

posted by MATTHEW BROUILLETTE | 08:58 AM | 0 comment

FEBRUARY 8, 2012

Don't Feed the Sharks!

Many Republicans, who once opposed raising taxes, are justifying their anticipated vote to increase taxes on the natural gas industry (it's not a FEE to pay for uncompensated costs...something we support) by claiming that if they don't vote for this now, the tax will only get worse.

We heard this before when Republicans helped Ed Rendell pass a 10% increase in the Personal Income Tax in 2003.  How'd that work for them?  They ended up passing even more taxes in the following years!

So, Don't Feed the Sharks!  The tax will never be enough.  The idea you are "getting it done" is wrong.  You won't be done at all as the tax-eaters will be back again next year looking for another increase!

Take, for example, the following taxes that were supposed to "get it done" but have only skyrocketed!

• The state Sales & Use Tax first appeared in 1954 at the rate of 1%, but increased by 500% over the next 14 years to its current rate of 6%.
• Lawmakers then added the Capital Stock and Franchise Tax in 1968, as consumers started complaining about increases in the sales tax, then doubled its rate over the next 14 years.
• Policymakers added the Personal Income Tax in 1971 at the rate of 2.3%, which has increased 35% since then, to its current rate of 3.07%.
• State government also implemented the Inheritance Tax in 1971 which began taxing the estates of the recently deceased.
• In 2002, the state began taxing cell phone use for the first time under the Gross Receipts Tax and increased the Cigarette Tax by over 300%.
• In 2009, Governor Rendell got yet another increase of the Cigarette Tax.

Don't Feed the Sharks!

posted by MATTHEW BROUILLETTE | 01:15 PM | 0 comment

DECEMBER 20, 2011

Union Party vs. Taxpayer Party: PA's Political Paradigm

If you don't receive our Weekly Update every Monday via email, here's what you missed yesterday.  If you want to get these updates directly, sign up here.

Dear CF Friend,

I imagine you feel disappointed right now, as I do.  A year ago, we had high hopes that by now we would have staved off a tax hike, cut the size of state government, put its spending online, greatly expanded school choice, removed government from the booze business, and protected the Marcellus Shale "golden goose."

To their credit, Gov. Corbett and the General Assembly delivered on the first three items on that list back in June.  That was a dramatic shift in the Harrisburg paradigm, and the kind of success we still haven't seen down in D.C.  But since then, our legislators seem to have spent most of their time crafting state legislative and federal congressional districts that protect incumbents – failing to pass a comprehensive education reform package, to privatize the state stores, or to resolve a Marcellus Shale bill.  And with historic Republican majorities in both houses and the most conservative governor in modern Pennsylvania history, it is more than reasonable to expect better.

Many people are rightly asking me why more hasn't been accomplished.  Here's why:  The reality is that on virtually every issue, the majority party isn't the Democrats or the Republicans.  The more accurate division in the legislature is the Union Party versus the Taxpayer Party.  And today it is the former that is dictating to the latter.  Just look at the political giving of the PSEA, SEIU, AFSCME, AFL-CIO and the many other labor unions who gave over $23 million in the 2010 election cycle to both Democrats and Republicans and you'll understand why reforming public schools and improving our tax and business climate is so difficult.

The next question you might rightly be asking is:  Should we give up, with odds these long and opponents this powerful?  Again, I both understand and share your disappointment.  But my answer is one word:  NO!

Despite hundreds of millions of dollars in compulsory union dues, fees and political action money, we have been able to take on – and beat – the Union Party on some very big issues (like raising your taxes).  Do we need to beat them again?  Sure.  And I'm convinced we can – that we will ultimately win the war for our future and our children's future.  I've been in this fight for 15 years, and I've never seen the unholy alliance of union-sympathizing Republicans and Democrats as exposed, and the Taxpayer Party as awakened to the threat from within, as I see today.  There are more of us (taxpayers) than there are of them (tax eaters), and we are waking up.

Indeed, when the history of our time is eventually written, I believe waking up the Taxpayer Party will prove to be President Obama's main achievement.  You know the old saw about boiling a frog:  If you throw him into a pot of boiling water, he'll jump out.  But if you heat it slowly, eventually you'll cook him.   Before President Obama came along, the Union Party – Democrats and Republicans – was boiling us slowly.  He turned the heat up too high, and we jumped out.  We're still a little disoriented, and he and his allies are still in the policy "kitchen" – including right here in Harrisburg.  But we're finally awake, and we will not rest until we've done what's right for our kids and their kids – that is, until we ensure they get to live in an America that is still the greatest nation on the face of the earth.

It's easy to forget, but that's ultimately what our day-to-day battles here in your State Capitol are all about.  And that's why I – and the awesome team you've given me here at CF – will never, ever give up...

Fighting for Your Freedom,

Matthew J. Brouillette
President & CEO

posted by MATTHEW BROUILLETTE | 06:39 AM | 3 comments

NOVEMBER 29, 2011

Owned or Rented by the PSEA?

A prominent politician (someone you'd recognize if I named him) reminded me yesterday that the primary obstacle in letting parents choose the safest and best school for their children is that too many Republicans are "rented" by the school labor unions for their purposes and most Democrats are simply "owned" by the special interest group.  Hence the difficulty in even getting a modest expansion of school choice through a Republican-dominated legislature.

Some House Republicans continue to think the PSEA and PFT labor unions will be their friends if they stand with them in preventing children from escaping violent and failing public schools.  Well, as one senator recently wrote back to me after thanking him for his vote to expand school choice, the unions demand nothing short of complete allegiance to their agenda.  He wrote:

Matt,

Thanks for the letter in regards to my continuing support of SB1.

Since I'm getting beat up back in my District pretty harshly, my only regret is that we "watered down" the Bill to only the worst performing [schools].

Was hoping for a statewide implementation to give the PSEA really something to complain about.

Still - Thanks for the kind words.

[Signed]

Is your Representatve owned or rented by the PSEA?  Ask them here, and then see how they vote.

posted by MATTHEW BROUILLETTE | 08:11 AM | 0 comment

NOVEMBER 17, 2011

House to Vote Marcellus Impact Fee

The Pennsylvania House of Representatives is expected to vote on HB 1950 today, which would enact an impact fee on "nonconventional gas wells," largely aimed at Marcellus Shale gas drilling.

The impact fee language in HB 1950 closely follows the Governor's proposal. You can read our assessment of that here. 

Under the bill, counties decide whether to impose a fee or not, and how much the fee should be, up to a set maximum. This allows counties to determine if local governments are bearing costs not being paid for with current taxes and fees, and to set the rate accordingly. It also ensures competition between local governments, discourages excessive fee rates, and reduces the threat of cross-subsidization and redistribution of fee revenues to unrelated purposes, and is in keeping with our principles that should guide an impact fee discussion. 

This represents a less onerous fee than that imposed under the Senate plan, which passed this week.  That bill cannot become law in its current form, as revenue bills must originate in the House under the state constitution.  But the Senate bill imposes a set fee statewide, would increase the "fee" with gas prices, and would first distribute $13 million to state projects and then keep almost half the remaining revenue at the state level.  In other words, it is a tax.

HB 1950 needs to be improved to be a true fee, and not be a tax by another name. The "impacts" the bill ties to a fee are currently too broad, and include things that are not direct costs of drilling or should be funded through general taxes and fees, as they are "impacts" not of gas drilling only, but of trucking or population growth. And given the amount of money the industry is already putting towards infrastructure, there should also be a credit for companies that are already paying for those impacts. Otherwise, the fee could encourage companies to stop voluntarily rebuilding roads, a concern raised by many local residents and officials.

HB 1950 will not likely be the final version of what reaches the Governor's desk, but it moves the discussion forward to allow Governor Corbett to keep his promise to voters not to raise taxes, and work toward a final piece of legislation that embraces the principles we laid out when this debate began.

posted by NATHAN BENEFIELD, MATTHEW BROUILLETTE | 02:13 PM | 0 comment

NOVEMBER 15, 2011

Rockin' Rally to Rescue Kids in Crime-Ridden Schools

I'm surprised the Capitol Dome stayed on its foundation this afternoon.  Hundreds of children filled the steps and balconies in the Capitol rotunda to call on the House of Representatives (controlled by Republicans with a 112-91 majority) to pass a school choice proposal that will will rescue thousands of children trapped in violent, failing schools.  The rally was rockin'!

Ironically, Gov. Rendell -- the former governor who increased state tax dollars into these violent, failing schools by nearly 50 percent in eight years -- held a news conference immediately afterward to defend the indefensible status quo.  Very few people even bothered to show up.  Not a single child was by his side.  It's a good thing, because the only answer he has for those kids stuck in Pennsylvania's worst performing and crime-ridden schools is "Suck it up!"

With the Senate passing SB 1 a few weeks ago, all eyes are now on the House.  Some members are still asking, "What's in it for me?"  Others, even though they may not be immediately affected, recognize that this is just the beginning of our continued efforts to make sure every parent has the right to choose the best schools for their children.

Where does your Representative stand?  Contact him or her here and find out if they will stand with Ed Rendell or with the thousands of children that are clamoring for more school choice.

posted by MATTHEW BROUILLETTE | 03:40 PM | 0 comment

OCTOBER 25, 2011

WIFM? All the Difference in the World

As Gov. Corbett and the General Assembly consider a package of education reform bills, some legislators are asking "What's in it for me?"  The WIFM question isn't necessarily selfish or self-interested, but given the limited scope of the voucher component - it applies only to schools scoring in the lowest 5 percent on state tests and is available only to low-income students - it deserves to be answered.  Here are three answers:

1.  Expansion of the EITC:  The Educational Improvement Tax Credit is providing scholarships to nearly 40,000 students throughout the Commonwealth.  The average scholarship amount is $1,100, and the average family income of those receiving a scholarship is $29,000 - which is below the qualifying level of for the voucher.  The combination of low-income vouchers and expanded EITC - from $75 million to $100 million - means many more parents currently unable to exercise school choice will be able to access a scholarship from the EITC program.  In short, the voucher component frees up more EITC money for children in your legislative district.

2.  Reduction of Welfare & Corrections Costs:  When we fail to prepare a student to go to Penn State, we are in essence preparing them for the state pen - at a cost to the taxpayer of more than $35,000 per inmate, per year.  And if they don't head to the pokey, they are likely to be in a welfare line.  In 2009, more than 35,000 students did not graduate from Pennsylvania's high schools.  The lost lifetime earnings for that class of dropouts alone?  More than $9.1 billion.  The good news is that school choice doesn't "cost" taxpayers more.  Indeed, school choice saves.  It saves children's lives and it saves taxpayers' money.

3.  It is a Moral Imperative:  Children are trapped in violent, failing schools through no fault of their own.  Low-income parents, who care for their children as much as you and I do, lack educational opportunities.  Yet they can't afford tuition at a safer, higher performing private school or afford to move to a better public school.  They are crying for your help.

As one legislator recently said to me, "It's like saving that one starfish."  What was he referring to?  It's the story about the traveling businessman  who left his hotel one morning to take a stroll along the beach.  He came upon countless starfish washed up from high tide the night before.  They were all struggling to make their way back to the ocean.  He knew they would all be baked by the sun in a short while.  He wished there was something he could do but there were thousands, and there was no way he could save them all.  So, he walked on. 

Further down the beach, he came upon a small boy who was frantically picking up the starfish, one at a time, throwing them like Frisbees back into the ocean, trying to save as many as possible.

The man, realizing what the boy was trying to do, felt responsible to share a harsh life lesson.  He walked up to the boy and said, "What you are doing is honorable, but you can't save them all.  There are thousands.  The sun is getting hot and they'll soon all die.  You might as well go on your way and play.  You really can't make a difference here."

The boy stared at the businessman for a moment.  Then he picked up another starfish, flung it into the ocean as far as he could throw, and said, "Well, I just made all the difference for that one."

WIFM?  The opportunity to make all the difference for that one child trapped in a violent, failing school. 

posted by MATTHEW BROUILLETTE | 03:05 PM | 0 comment

JUNE 28, 2011

Nation's Eyes upon PA GOP

With a Republican-controlled Senate and a Republican-controlled House, national news outlets are joining Pennsylvania citizens who are starting to wonder why Republican Gov. Tom Corbett isn't able to deliver on his campaign promises.  One of them -- expanded school choice -- is in jeopardy of being defeated right now.  The Wall Street Journal provides a good 11th hour analysis of where things stand right now.  WARNING: It is not too kind to the GOP.

The good news is there is still time to rescue kids from the commonwealth's most violent and failing schools.  But time is short.  So if our legislators need a little pep talk to get this done, I give you same charge as William Wallace!  It is not time for an army to run, it is time for the army to fight!

posted by MATTHEW BROUILLETTE | 08:12 AM | 1 comment