New union contracts will make state government more expensive, according to two analyses released by the Independent Fiscal Office (IFO).
The IFO projects contracts negotiated by the Wolf Administration with the state’s two largest unions—AFSCME and SEIU—will cost taxpayers an additional $507 million over three years.
Prior to this law, neither lawmakers nor the public knew the true cost of these contracts.
In the near term, the contracts will add to the state’s challenging fiscal predicament. The current budget is “balanced” by borrowing money and counting on unreliable revenue from harmful tax increases and other changes to state law.
Add to this the additional costs of the new contracts, which will require an estimated $61.4 million more in General Fund spending (plus another $100 million in other funds) in 2017-18, and Pennsylvania’s budget picture now looks even bleaker.
Note, in addition to the cost estimates calculated by the IFO, the Office of Administration estimates the savings due to higher employee health care contributions would be $4.7 million for SEIU and $13.6 million for AFSCME. The IFO says each of these is “a reasonable estimate.”
Currently, the wage base (not including benefits) of affected workers is $1.835 billion. The IFO represents the increase in costs, both salary and benefits, above this baseline resulting from the new contracts.
The IFO did not consider savings from administrative changes to the PA Employees Benefit Trust Fund (PEBTF), as these savings are irrespective of the union contracts.
The lack of legislative oversight over the collective bargaining process is a glaring problem. This is why Rep. Garth Everett is sponsoring HB 2289. The legislation, which passed the House State Government committee just yesterday, would give the General Assembly the authority to rescind state labor contracts negotiated by the governor.
The proposal would provide a much needed check on the governor, who has the power to negotiate contracts with campaign contributors behind closed doors.
RELATED : ACCOUNTABLE GOVERNMENT, TRANSPARENCY, UNIONS & LABOR POLICY
Yesterday was an emotional day for many. Hundreds of people from Pennsylvania’s vaping community traveled to Harrisburg to save their livelihoods and their way of life.
The rally to repeal a 40% wholesale tax on vaping products featured many speakers, including vape shop owners and consumers—all of who had one overarching message for anyone willing to listen: vaping changed their lives for the better.
Opinions on the health affects of vaping vary. But there should be no debate about every person’s right to choose to vape. Harrisburg’s fiscal irresponsibility threatens to take away this right, or, at the very least, make it harder to exercise.
The 40 percent vape tax scheduled to take effect on October 1 has already shut down at least 50 vape shops. Many more will close their doors if the General Assembly fails to replace the tax. Seeking to avoid further harm, Rep. Jeff Wheeland has introduced HB 2342, which passed the House Finance Committee today. Sen. Camera Bartolotta has also announced her intention to introduce a similar bill in the Senate.
Both lawmakers appeared at the rally yesterday and spoke passionately in favor of small business owners who are working hard to serve their communities. Rep. Kate Klunk also spoke on behalf of the vaping community. She specifically talked about Tony Myers, who is a vape shop owner in Hanover, PA. His shop employs adults with special needs. He also devotes some of his shop’s proceeds to autism and breast cancer support as well as epilepsy awareness.
For many owners like Tony Myers, the vaping industry isn’t about dollars and cents. It’s about improving the well-being of customers and providing people with an opportunity to live purposeful lives.
Saving this industry isn’t just about money or scoring political points. It’s about protecting Pennsylvanians freedom to pursue their happiness.
RELATED : SMOKING, TAXES & SPENDING, TAXATION
Americans finally got a raise! That's the gist of recent headlines hailing significant economic growth in 2015, but in Pennsylvania the economy is still struggling.
From 1991 to 2015, Pennsylvania ranked 46th in job growth, 45th in personal income growth, and 46th in population growth while the size and scope of state government grew dramatically.
Consider the state's unemployment problem:
- Pennsylvania’s unemployment rate rose again in August—the fourth time in the last six months.
- The unemployment rate now sits at 5.7 percent, which is nearly 1 percentage point above the national average.
- Of all 50 states, Pennsylvania experienced the second largest increase in the unemployment rate over the last year.
So what’s the solution to the state’s decades-long stagnation? Some have proposed government mandates like a minimum wage hike and raising taxes to pay for more government spending.
Neither will solve our economic challenges.
Let’s take the minimum wage first. In practice, it harms the very people it intends to help.
For example, Chicago restaurant owners Mark Robertson and Mike Sullivan recently closed their Mexican restaurant because of the city’s wage mandate. The owners stated,
Unfortunately, the rapidly changing labor market for the hospitality industry has resulted in immediate, substantial increases in payroll expenses that we could not absorb through price increases” … “In the last two years, we have seen a 27 percent increase in the base minimum wage, a 60 percent increase in kitchen wages, and a national shortage of skilled culinary workers.
Increasing government spending is another popular proposal that harms the economy. States with the highest tax rates experience slower income growth and job growth than states with the lowest tax rates.
The commonwealth must head in a new direction.
The first step is restraining government spending—starting with $800 million in corporate welfare—and lowering taxes to put more money in the pockets of working people.
Another critical step is improving the quality of education. Increasing school choice options—such as expanding tax credit scholarships is critical to creating a society where all Pennsylvanians can seize economic opportunities.
Together, these solutions will empower Pennsylvanians and reinvigorate the state's economy.
RELATED : SCHOOL CHOICE, JOBS & ECONOMY, ECONOMY, MINIMUM WAGE, TAXES & SPENDING, TAXATION
David Smith and Donald Lambrecht were up against a powerful foe: Gov. Wolf and an executive order that granted a sweetheart deal to a union at their expense. In a huge win, the Commonwealth Court today issued a ruling invalidating Wolf’s executive order unionizing home care workers.
Shortly after he took office, Wolf handed down an executive order that would have let the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME) unionize thousands of home health care workers in Pennsylvania—and take millions of dollars in union dues each year from their paychecks.
Most of these home health care workers are taking care of a family member or loved one. This order would have wreaked havoc on the relationships between recipients and providers—while padding union pockets.
We’ve shared the story before of Dave and his home care provider, Don. Homebound with muscular dystrophy, Dave has relied on Don for more than 25 years. Far beyond an employer-employee relationship, Dave and Don are like family. Wolf’s order would have forced Don to unionize against Dave, effectively stripping Dave of many of his rights as an employer.
With the help of the Fairness Center, Dave and Don challenged Wolf’s order in court. Today’s ruling, which is in a similar case challenging the same executive order, is a victory for Dave, Don, and thousands of other home care providers and recipients across the commonwealth.
Beyond the overreach of the order, the deal was particularly suspicious considering the cozy relationship between Wolf and the SEIU. As we noted in a previous blog:
Michael Brunelle, the former executive director of SEIU's PA State Council, is now special assistant to the governor and regularly collaborates with his former employer. Emails between Mr. Brunelle and union officials show the administration sharing news releases, talking points, and other documents before they are published.
…Most worrisome is the collusion over a controversial executive order.
SEIU officials helped draft an executive order that enabled SEIU and AFSCME (American Federation of State, County & Municipal Employees) to rapidly unionize tens of thousands of home health care workers—and deduct union dues from their paychecks. These dues can be spent on political activity and lobbying to push the governor's agenda.
What’s more, AFSME and SEIU were two of Governor Wolf’s largest campaign contributors during the 2014 election cycle.
Wolf’s executive order was a stealth attempt to help the unions collect millions of dollars. Now, we can add one more court-approved word to describe the order: illegal.
RELATED : UNIONS & LABOR POLICY, HOMECARE WORKER UNIONIZATION
As I pointed out earlier this week, Pennsylvania public school spending is at an all-time high. In fact, the state's per student spending is significantly above the national average.
James’ analysis adds that the latest state budget represents yet another increase in state funding for public schools, building on the all-time high established during the 2015-16 fiscal year.
Even the Secretary of Education recognized the commonwealth's education spending is high—relative to other states—and represents increases rather than cuts to funding levels. Detractors normally concede this point, but they respond with “it’s not the amount of funding, it is the inequality.”
They cite data showing a large gap in spending between wealthy (low-poverty) and poor (high-poverty) districts. Here’s the rub: That data shows Pennsylvania spends more per student in every category of districts. That is, even Pennsylvania’s high-poverty districts spend more than high-poverty districts nationally.
What does this mean? If greater “equality” is the goal, we could cut spending by wealthy districts (caps on local school property taxes would be a way to do this) and spend at the national average. These two changes would produce greater equality between districts.
Ironically, government unions, the school boards association, and their allies have lobbied against efforts to control property tax increases.
These statistics aren't meant to downplay or ignore the equity in education funding. As we've made clear in the past, Pennsylvania’s practice of “hold harmless” has created a vast disparity in state funding per student. Hold harmless is the practice of guaranteeing each school district at least the amount of state funding they received in the prior year—regardless of enrollment changes.
The result—over decades—is that districts with declining enrollments receive far more aid per student. Meanwhile, areas with growing student populations have not gotten increases to match their enrollment.
Phasing out the “hold harmless” formula so all state aid is distributed using the new student-based funding formula would fix this problem—without requiring a multibillion dollar tax increase.
RELATED : EDUCATION, EDUCATION SPENDING
In Pennsylvania, 130,000 kids attend public charter schools—about 5 percent of the state’s schoolchildren.
For many of these kids and parents, charter schools are a lifeline to a safer, better education. Unfortunately, demand for charters continues to far exceed supply, resulting in thousands of students languishing on waiting lists—subject to the whims of a lottery to determine their future.
In this week's episode of Commonwealth Insight, we talk with Nina Rees, president & CEO of the National Alliance for Public Charter Schools, about why charter schools matter, what to do about failing charter schools, and the elements that bring success to a charter school.
Regarding charter school oversight, Nina says charters are, “given a degree of autonomy and freedom in exchange for accountability.” What level of accountability? “A charter can be closed if it doesn’t live up to expectations in its contract or attract enough students.”
The truth is, no one is forced to attend a charter school—they truly are schools of choice. The fact that thousands are lining up to choose them speaks volumes about the value parents see in these alternatives to local school districts.
Later in the podcast, James Paul, CF’s senior policy analyst and education expert, joins to discuss school choice in Pennsylvania—and addresses claims that choice drains resources from school districts.
“If you believe, as I do, that these funds belong to children and families, then any objections to draining funding simply don’t pass muster,” James says.
Indeed, the first goal of public education funding should be to serve the next generation of Pennsylvanians, not to simply maintain the status quo in an educational system or institution. When funds follow families, everyone wins.
RELATED : EDUCATION, EDUCATION SPENDING, SCHOOL CHOICE
"The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth." So reads the Constitution of Pennsylvania under its section on Education.
As Nate mentioned earlier this week, a recent lawsuit seeks the Supreme Court to force the legislature to increase school funding by billions of dollars — primarily on the grounds that Pennsylvania is failing to honor its constitutional mandate. Is it true that the commonwealth is failing to provide a "thorough and efficient system" of public education?
State support of public schools is at an all-time high in Pennsylvania, recently eclipsing $11 billion. Claims of "cuts" from state taxpayers are simply without merit. And remember: average per-student funding in the commonwealth exceeds the national average by more than $3,000.
RELATED : EDUCATION, EDUCATION SPENDING
The House will return to session later today, with the Senate to follow early next week. The two chambers are in session for a total of nine days. This gives lawmakers a limited amount of time to address Pennsylvanians' priorities.
The repeal of the 40 percent vape tax is one such priority. The tax is scheduled to go into effect on October 1, but it has already inflicted immense harm on the business owners, employees, and customers in the vaping community. Approximately 50 shops have shut their doors, according to industry experts. More closures are inevitable if lawmakers fail to repeal this punishing tax.
The 40 percent tax is levied on products purchased and on shop owners’ existing inventory. If a shop holds $100,000 in inventory, the owner would be required to cut the state a check for $40,000. Is this a reasonable demand?
The answer is no. And that's why entrepreneurs like Dori Odosso and Amy Crivella are speaking out. It's why Scottie Freeman had to close down his business, and why Chris Hughes is planning to do the same. These people—and countless others—have been adversely affected by Gov. Wolf’s insistence on raising taxes.
Fortunately, lawmakers have introduced varying pieces of legislation to prevent further harm. Here are the legislative options offered thus far:
- HB 2339, which is sponsored by Rep. Joseph Petrarca, repeals the tax outright.
- HB 2342, sponsored by Rep. Jeff Wheeland, repeals the excise tax and replaces it with a 5 cent-per-milliliter tax. Sen. Camera Bartolotta has announced her intention to introduce similar legislation in the Senate.
- Sen. Thomas Killion has introduced SB 1362, which would delay the payment of the tax from 90 days after it takes effect to 180 days.
Complete repeal is preferable and practical. The tax itself is estimated to bring in just $13 million—a relatively small sum in the context of a $79 billion budget. Lawmakers could replace this revenue by cutting less than 2 percent of the current budget's $800 million in corporate welfare spending.
If lawmakers won't support spending reductions, creating an alternative tax structure that keeps vape shops open is the next best option. This solution was the subject of our Philadelphia Inquirer op-ed published just this morning. The issue is clearing gaining momentum. Now is the time to act.
Vape shop owners and their customers deserve a government than protects their right to do business—not one that tramples on it.
RELATED : TAXES & SPENDING, CORPORATE WELFARE, SPENDING LIMITS, TAXATION
Should the Pennsylvania Supreme Court order the Legislature to give billions more dollars to school districts? That's what a recent lawsuit demands. But to make their case to the public, the lawsuit's advocates are repeating the widely discredited myth that the state once—but no longer—funded 50 percent of public school spending.
In reality, the state share of education spending never reached 50 percent. Records from the Pennsylvania Department of Education show that it peaked at 44.7 percent in 1974-75.
While the state share declined from 45 percent to 36 percent of total school district revenue, this was not due to a reduction in state subsidies for education. State aid—adjusted for inflation—increased by 41 percent since 1974. The state “share” only declined because local tax revenue—also adjusted for inflation—increased 98 percent over that time frame.
Pennsylvania actually provides more state funding than the national average on a per-student basis. The “state share” as a percentage only appears low because Pennsylvania schools receive about $3,000 more per student from local revenue, and in total revenue, than the national average.
That is, if Pennsylvania reduced local public school taxes to the national average, the “state share” would reach this mythical 50 percent.
(Note: The charts below are interactive. Touch or click on the tabs at the top or the bars to see more information.)
RELATED : EDUCATION SPENDING, PROPERTY TAXES
Last week, the Commonwealth Court ordered the Pennsylvania Labor Relations Board to investigate Mary Trometter's allegation that the Pennsylvania State Education Association (PSEA) used her union dues to support Tom Wolf's run for governor.
That's illegal in Pennsylvania, according to section 1701 of the Public Employee Relations Act, but it hasn't stopped government unions from pouring dues money into politics.
PSEA spokesman Wythe Keever denied his union engages in politics, stating to the Associated Press:
“The truth is no dues dollars are contributed to political candidates or spent on public communications about candidates. Communicating with members and their families is not the same as contributing to candidates."
But Keever's "truth" isn't as it seems. Union dues deducted from teachers’ paychecks go to local unions, the PSEA, and the National Education Association (NEA) via the PSEA.
Since 2013, the NEA has sent $36 million from union dues to the NEA Advocacy Fund (the NEA’s SuperPAC). This fund supports presidential candidates, like Hillary Clinton, and other SuperPACs, like Pennsylvanians for Judicial Reform—which ran multiple attack ads influencing last year’s Pa. Supreme Court race. The NEA Advocacy Fund also funded the political ads of America Works USA, an arm of the Democratic Governors Association.
National affiliates aside, the PSEA admits spending dues on politics and lobbying. Here's the fine print from their member magazine:
In 2015, PSEA reported sending $14,000 in union dues to Governor Wolf’s Inaugural Committee and about $85,000 to partisan and left-wing groups such as Keystone Progress and Keystone Research Center.
Based on their own reports to the U.S. Department of Labor, the PSEA and many other government unions use union dues for political activities:
Union members should know their hard-earned paychecks are being spent on political activities—without their permission. Voluntary PAC contributions are one thing. Forcing teachers to fund political causes they don’t support is another. It’s wrong, and it’s illegal. It’s time PSEA officials come clean about their abuse of teachers and taxpayers.
RELATED : TAXPAYER FUNDED LOBBYING, UNIONS & LABOR POLICY, UNION DUES AND POLITICS
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