Governor-elect Tom Wolf has recently made headlines for urging a gift ban, prohibiting executive branch officials from accepting gifts from lobbyists, and indicating he would end "no-bid" legal contracts. He is also requiring his transition team members to sign an ethics pledge to avoid conflicts of interest. Here is the pledge:
I will not solicit or accept a gift, loan of money, goods, services or other things of value for the benefit of any person or organization, other than the Commonwealth of Pennsylvania, which could influence the manner in which I perform my duties.
This pledge raises an important question: Will Governor-elect Wolf abide by it? As Pittsburgh Tribune-Review reporter Melissa Daniels notes, the governor-elect has his own conflict of interest on the horizon as he will soon be negotiating new terms for state labor contracts with some of his largest campaign donors.
Pennsylvania government unions contributed almost $2.8 million to Wolf's campaign in 2014, representing four of his ten largest donors. Now, the representatives from his largest campaign contributors (union executives from AFSCME, SEIU and, UFCW) will soon be sitting across the table from Governor-elect Wolf to hammer out a new deal on state contracts.
Obviously there is a clear conflict of interest in allowing elected officials to negotiate contracts that include collection of union campaign money, money which can then be given back to the campaign of the same official involved in the negotiations.
If we are serious about ethics reform and removing conflicts of interest, paycheck protection must be adopted.
On February 2 of each year, all eyes are on Punxsutawney Phil. The famous groundhog is responsible for predicting the duration of winter-like weather. If Phil sees his shadow, we’re stuck with six more weeks of winter; if he doesn’t, expect an early spring.
While the predictive powers of Punxsutawney Phil are up for debate (I’m not taking a position), there's no debating the validity of Independent Fiscal Office (IFO) prognostications. In the past few years, the release of the IFO's annual budget outlook report has made one thing certain: We have seven more months of debating the best ways to close the budget deficit.
This year is no different. The IFO is projecting a combined budget deficit of $1.85 billion for this fiscal year (2014-2015) and next (2015-2016), rising to more than $2.5 billion through 2019-2020. This is simply unsustainable.
As we detailed last year, welfare spending and state pension contributions are the main drivers of the budget deficit. Not much has changed. In fact, pension contributions from the state general fund are scheduled to increase by nearly $1.7 billion over the next five years. This rate of increase in state costs is mirrored by the increase for school district pension costs.
If we're going to improve our fiscal situation, pension reform must be part of the solution. As the chart above indicates, we can’t just "let Act 120 work" as many have suggested. The crushing burden of pension costs are already being felt right now across the commonwealth.
Pension reform would be a good start, but only scratching the surface of what is needed to control spending and prevent massive tax hikes on already overburdened families and businesses.
In our Blueprint for a Prosperous Pennsylvania, we detailed a number of short-and long-term solutions that will save taxpayers billions of dollars and put Pennsylvania on the fast track to prosperity.
With the IFO's report providing the extent of our fiscal troubles, now is a great time to adopt these solutions and avoid the fiscal winter the IFO has forecast.
RELATED : TAXES & SPENDING, SPENDING LIMITS, TAXATION
Today, Commonwealth Foundation released a new summary of election-related spending by Pennsylvania's government unions.
In 2014, the seven largest government unions in the state gave $7.3 million directly to candidates—nearly $3 million more than in 2012. Not surprisingly, much of this money ($2.7 million) went to Tom Wolf, representing four of his 10 largest donors.
As we noted last week, government union political spending dwarfs that of gas companies, giving four times as much in direct campaign contributions.
In addition to PAC contributions, government unions gave $1.6 million—directly from union dues—to PA Families First "Super PAC" for election attack ads.
Our summary includes videos of these ads along with numerous examples of union dues being used on “soft” political contributions—including mailers and TV ads in support of candidates.
There is a story on the complaint in the Tribune Review today, with the PSEA both admitting they were wrong to send such a dishonest mailer, and finally confessing that they do use union dues to support candidates.
Unions may legally spend dues "to communicate with members and their immediate family" about a candidate their boards recommend, Pennsylvania State Education Association spokesman Wythe Keever said.
Keever said this particular type of communication wouldn't happen again.
It was the first time the union had attempted to personalize such letters, and Trometter wasn't the only PSEA member who was upset.
Keever said the union has apologized to about 30 members who complained about the personalized mailers, which were sent to at least 20,000 households.
Keever noted that the United States Supreme Court's decision in Citizens United lends a First Amendment protection to that communication over and above state statute. Citizens United is generally understood to have conferred First Amendment constitutional rights upon corporations. It applies to unions as well, specifically in Pennsylvania under the terms of a separate case, General Majority PAC v. Aichele, so long as the union does not coordinate with the campaign.
These blatant examples of partisan political spending—with funds collected at taxpayer expense—demonstrate why we need paycheck protection.
RELATED : UNIONS & LABOR POLICY, UNION DUES AND POLITICS
Regina Weinhardt handles benefits for her family’s plumbing business in Delaware County. In business since 1962, providing health care to their employees has always been a priority, “My father started his business and prided himself on offering health care. Now I feel like we are being punished for doing the right thing.
While Obamacare advocates breathe a sigh of relief because Saturday's relaunch of Healthcare.gov went relatively smoothly, the law is still harming rather than helping Americans. And the website is still far from perfect—many seeking to re-enroll ran into issues as documented by the New York Times. But apart from the health care exchange, many individuals and employers like Weinhardt are facing Obamacare's labyrinth of regulations and price hikes for the first time.
This is the first year Weinhardt's small business had to deal with ACA regulations since they renewed their current plan in December of 2013, a month before new regulations kicked in. If Weinhardt had stayed with their old insurance carrier they would have been hit with an 80 percent increase.
Instead, she worked with an insurance broker to find an Independent Blue Cross plan with a slightly less dramatic 23 percent increase.
Weinhardt's company pays the entire premiums for their basic plan, so any increase in the premium is completely shouldered by the business.
But her employees are still dealing with higher costs through soaring deductibles. This year their basic plan’s deductible more than doubled from $1,500 to $5,000 for an individual and rocketed from $3,000 to $10,000 for a family.
When she broke the news to her employees they were “worked up,” she said. “Some of my guys can no longer afford to buy up to more generous plans. Everything went up, premiums, co-pays, deductibles. This law is topsy-turvy, it’s upside down.”
Asked what the business has to sacrifice for rising health care costs, Weinhardt explains that she’d like to give her employees higher rates, pay her suppliers on time and contribute more to a 401K plan she started last year. “There are so many things we could do, but I would never stop offering health care, ever.”
Weinhardt wants to see real health reform where people pay for the care they use. “Most of my guys are young and single, they don’t need maternity care or pediatric dental care—they’ll never use it."
Getting rid of mandates like pediatric dental or maternity care for all is one way to drive down costs for businesses and individuals on the exchange. Learn more about real health care reform solutions and hear more stories like Weinhardt's here.
RELATED : JOBS & ECONOMY, REGULATION, HEALTH CARE
A recent episode of Last Week Tonight with John Oliver highlights the problem of asset forfeiture, with specific references to the city of Philadelphia.
Philadelphia has seized more than $64 million in property since 2002, much of which is turned over to the prosecutors responsible for seizing the property. Critics dub this "policing for profit."
One recent instance resulted in a lawsuit filed by the Institute for Justice. Chris and Amy Sourovelis had their home seized because their son had been caught with $40 worth of narcotics. The parents had committed no crime, but prosecutors determined their house may be guilty.
Read more about the case and asset forfeiture in Philadelphia at EndForfeiture.com
RELATED : PROPERTY RIGHTS
A rehashed report from Common Cause PA and Conservation Voters of Pennsylvania assert that Marcellus Shale drillers spent $8 million on campaign contributions and $41 million on lobbying in Pennsylvania since 2007. But is that a lot?
When compared to government unions, it's a drop in the bucket.
In terms of campaign expenditures, just a handful of the largest state government unions spent nearly 4 times what Marcellus shale drillers did.
|Political Action Committee (PAC) Expenditures of Government Unions|
|Union PAC||Total, 2007 to Oct 2014|
|Pennsylvania State Education Association (PSEA)||$12,880,837|
|Philadelphia Federation of Teachers (PFT)||$1,718,274|
|American Federation of State, County and Municipal Employees (AFSCME) Council 13||$4,113,578|
|PA Service Employees International Union (SEIU)||$4,368,111|
|United Food and Commerical Workers (UFCW) 1776||$1,216,863|
|PA American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)||$613,344|
|American Federation of Teachers Pennsylvania (AFT-PA)||$138,324|
|PA Families First*||$2,916,561|
|American Federation of Teachers, AFL-CIO COPE (National)||$337,900|
|* PA Families First is an Independent Expenditure Committee, or Super PAC, funded primarily through national government unions|
In terms of lobbying, it is difficult to do an apples to apples comparison.
As Media Trackers reported this past summer, many government union leaders are ignoring the state lobbying law by failing to register as lobbyists with the state. What's worse, unions like UFCW spend millions in union dues on TV commercials asking voters to call their lawmakers and even hire contract lobbyists, but they don't count that spending as lobbying (rather, they categorize it as "representational activities").
Based on the limited reporting of union lobbying available—and missing 2014 information in most cases—just six government unions matched the $41 million in lobbying spending by gas drillers.
|"Political Activities and Lobbying" from Union Dues by Government Unions|
|Union||Total, 2007 to 2014|
|AFSCME Council 13||$9,042,586|
|* Totals for PSEA, PA SEIU, SEIU Healthcare, and UFCW are through 2013 only|
Combined—noting this is far from a complete picture—government unions spent a whopping $71 million on politics since 2007, dwarfing the spending of gas companies.
Ironically, Common Cause, which co-wrote the piece on Marcellus Shale political spending, has stated that "Public resources are not supposed to be used for partisan political purposes." Yet, they take no position on using public resources to collect bigger campaign money for government unions.
RELATED : UNIONS & LABOR POLICY, UNION DUES AND POLITICS, TAXPAYER FUNDED LOBBYING
Last year, my colleague Dawn did us all a favor by providing a summary of the Pennsylvania Liquor Control Board’s (PLCB) annual report. This year, I drew the short straw.
Similar to last year the PLCB is once again touting record sales, but the agency is a monopoly. If the government granted one company the exclusive right to sell shoes, and the company reported record sales, would you be impressed?
Aside from a monopoly posting record sales, there are a number of red flags to note.
The first, and most important fact, is the PLCB’s fiscal health. The agency’s net income declined from $128.4 million in 2012-2013 to $123.7 million in 2013-2014. Back in September, the PLCB said the drop in net income should be attributed to a credit from 2012-2013, which inflated the net income figure. However, mention of this credit was conspicuously absent when the PLCB reported a 24 percent increase in net income for 2012-2013. In fact, the PLCB credited the growth in net income to “strong sales and expense control.”
While the PLCB’s net income is technically at an all-time high, its fiscal future looks bleak. If you remember, back in August, the PLCB floated the idea of increasing the mark-up price for its products due to growing operating costs. This past fiscal year, operating costs, driven by pension contributions, increased by more than $20 million or 5.24 percent. According to the Tribune Review, the increase in operating costs for this fiscal year (2014-2015) will result in a net income drop of more than 20 percent.
One argument consistently used against privatization is that the government-run liquor stores are an asset for Pennsylvania and privatization would reduce revenue to the state. Yet, taxes comprise nearly 85 percent of the PLCB’s transfers to Pennsylvania’s Treasury. If the system were privatized, the revenue derived from the current tax structure would continue to flow to state coffers.
Our government-run liquor system is both a promoter of liquor consumption and discourages alcohol abuse. In the last year, the PLCB monopoly spent $5.1 million advertising its products. At the very same time the PLCB spent other tax dollars to encourage responsible alcohol use through education and regulation. It appears there’s a slight conflict-of-interest here.
RELATED : PRIVATIZATION, LIQUOR STORE PRIVATIZATION
Only three days until the Obamacare exchanges open for 2015 enrollment. Last Sunday, the federal government released preliminary rates for window shopping.
We compared the cheapest insurance plans in 2013 (the year before the exchange) to 2015 exchange rates in Philadelphia and Pittsburgh. Overall, rates continuine to rise.
|Plan Type||2013||2014||2015||Increase since 2013||Percent|
|27 year old male||$49||$171||$203||$154||314%|
|50 year old male||$111||$332||$306||$195||176%|
|Family of 3 (single mom)||$154||$391||$412||$258||168%|
|Family of 4||$182||$576||$606||$424||232%|
|Plan Type||2013||2014||2015||Increase since 2013||Percent|
|27 year old male||$45||$104||$131||$86||191%|
|50 year old male||$111||$203||$212||$101||91%|
|Family of 3 (single mom)||$154||$238||$286||$131||85%|
|Family of 4||$182||350||$420||$238||131%|
While this year's rate increases are not as dramatic as last year, young adults continue to bear the burden of higher prices.
- Since 2013, premiums have increased 314 percent for 27-year old males and 217 percent for 27-year old females in Philadelphia.
- Since 2013, premiums have increased 191 percent for 27-year old males and 105 percent for 27-year old females in Pittsburgh.
Two years into full implementation of the "Affordable Care Act," it's clear that health insurance is not, in fact, becoming more affordable.
Note: 2013 rates come from the least-expensive plan available on ehealthinsurance.com. We assumed individuals do not smoke and do not have pre-existing conditions. In most cases, catastrophic plans are no longer available for individuals over 30. For older adults and families we compared 2013 catastrophic plans to the cheapest bronze plan. The comparison does not take into account the tax credits available to individuals and families making between 100% and 400% of the federal poverty level. This comparison does not take into account out-of-pocket costs, including co-pays and deductibles.
RELATED : JOBS & ECONOMY, HEALTH CARE
The Daily News editorial on charter schools ("Frankencharters") includes scary Halloween analogies but does a disservice to genuine efforts to improve education in Philadelphia. Referring to charter schools as "fiscal monsters" flatly ignores that charters spend and receive fewer dollars per student than district schools.
Despite significantly less funding, Philadelphia charters outperformed district schools on the 2012-13 State Performance Profile. Charters actually operate with maximum accountability, since poor academic performance or financial mismanagement will result in closure - a fate that rarely, if ever, befalls district schools. Will the Daily News similarly refer to failing district-run schools as "monsters" that need to be "reined in" when the next cheating scandal occurs?
It should come as no surprise that charters receive their funding from school districts, since charters are public schools, too. That so many families have opted for charters reflect their success - it illustrates the overwhelming demand for expanding school choice.
Continued oversight and transparency is an appropriate policy goal for charter and district-run schools alike - especially in light of the closure of Walter Palmer, which is indeed devastating to the students and families involved. But the unique circumstances surrounding Walter Palmer do not justify demonizing largely successful charters citywide.
The 34,000 students currently languishing on charter waiting lists illustrate the urgent nature of school reform. Denying them more educational options - just to prop up the failing status quo - does not serve the best interests of Philadelphia.
RELATED : ACADEMIC ACHIEVEMENT, SCHOOL CHOICE, EDUCATION SPENDING, EDUCATION
This week a “Republican wave” swept the country and propelled many fiscally conservative governors to reelection. And in Pennsylvania, candidates that ran on pension reform, liquor privatization, choice in education, and paycheck protection were elected—expanding Republican control of the state Legislature.
So, why did the same voters hand the keys to the governor’s mansion over to a candidate promising higher taxes and more spending?
Matt Brouillette, discussing the election results on WSBA’s The Gary Sutton Show on Wednesday, offers an explanation:
Ultimately it was [public sector union leaders] using tax payer collected union money that framed that narrative of billion dollar cut in education, a lack of a severance tax—these were the things that unfortunately Tom Corbett was not able to counter, nor did he confront it head on.
Matt says governors in other swing states took a more direct approach to combating government union leaders’ undue influence and were rewarded by voters:
This biggest takeaway I think, and we certainly see this in the context of nationally, where you saw Republican governors in blue states—such as Scott Walker in Wisconsin, Rick Snyder in Michigan, as well as Bruce Rauner who is the governor elect in Illinois—these folks took head on the opponents of the taxpayers and that was the public employee unions. When you have bold leadership and you fight those battles that are absolutely necessary, you will win!
Listen here or below:
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.
RELATED : GENERAL, UNION DUES AND POLITICS
Total Records: 5332
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.