Pennsylvania State Budget




Audio: Bills Shine Light On Union Contract Negotiations

MAY 13, 2015

Public sector union contracts are a huge cost for the state government, and they have also become a conflict of interest for Gov. Wolf. He will be negotiating contract deals with 16 unions­–which contributed millions of dollars to his gubernatorial campaign–behind closed doors, but some legislators want to open these doors to the public.

CF’s president & CEO Matt Brouillette recently spoke with Dom Giordano on Talk Radio 1210 WPHT in Philadelphia about several transparency bills that passed in the state Senate.

As Matt points out, SB 644, would put "a price tag on what the governor and the unions have negotiated” by empowering the Independent Fiscal Office to estimate the costs of public sector union contracts prior to ratification.  

The second bill, SB 645, requires public sector collective bargaining agreements to be posted on state, school district, or local government websites two weeks prior to signing–giving the taxpayers a chance to see government union contracts before they have to pay the bill.

Listen below or click here for the interview. 

The Dom Giordano Show airs every weekday from 9 am – 12 pm. 

Read Matt's op-ed Wolf Negotiates Billions with Unions Who Gave Him Millions for more.

posted by JONATHAN REGINELLA | 08:28 AM | Comments

It's Not Enough Just to Say No...

MAY 11, 2015

"It's not good enough to just say no and continue with the same old same old." So said Gov. Tom Wolf during his budget address, making clear his administration is committed to finding solutions, compromising, and working with both Republicans and Democrats to improve Pennsylvania. 

Unfortunately, the governor isn't practicing what he's preaching. 

Angela Coloumbis of the Inquirer reports that Wolf's spokesman Jeff Sheridan has emphatically repeated Wolf's opposition to Senate pension reform legislation and other Republican ideas to end business as usual in Harrisburg. 

As I point out in a recent letter to the editor, Gov. Wolf needs to stop blocking transformative reforms—like liquor store privatization, pension reform, and the Taxpayer Protection Act—critical to achieving prosperity for all Pennsylvanians.

I’m disappointed to see Gov. Wolf’s spokesman Jeff Sheridan accuse Sen. Bartolotta (Governor wants to reinvest in higher education, April 29) of having a “profound misunderstanding” of middle class families, while at the same time misleading readers about how Gov. Wolf’s proposal harms those same middle class families.

Sheridan conveniently fails to mention that Wolf proposed taxing university fees, textbooks, and meal plans—to the tune of $150 million per year.

Middle class students will pay the brunt of that burden—as will middle class families paying more for nursing home care, day care, diapers or utility bills. A recent study by the Independent Fiscal Office notes that every income group will pay more under Wolf’s tax increases.

While Sheridan repeats campaign slogans about changing the status quo and blames the previous administration, Wolf’s budget calls for more of the same. Following decades of spending increases and tax hikes, Pennsylvania’s tax burden rose to the 10th highest in the nation. As a result, Pennsylvania has ranked among the worst states in job, income and population growth for 40 years.

Ironically, it is Gov. Wolf who is saying “no” to needed reforms to get our state on the right track. He has already threatened to veto liquor store privatization and has indicated opposition to pension reform. Wolf has also been silent on Sen. Bartolotta’s own Taxpayer Protection Act—which would limit the growth of state spending and unleash the private sector.

Higher taxes and spending won’t fix Pennsylvania’s economy, and it’s time for Gov. Wolf to stop blocking reforms that will offer prosperity for all Pennsylvanians.

posted by NATHAN BENEFIELD | 08:26 AM | Comments

Natural Gas Severance Tax: An Economy Killer

MAY 6, 2015

From labor unions to local chambers of commerce, community leaders are expressing a lot of anxiety over Governor Wolf's natural gas severance tax proposal.

The proposed tax “is a Wyoming County economy killer,” says Gina Severcool Suydam, executive director of the county’s chamber of commerce, in a letter to the Scranton Times Tribune.

Ms. Suydam attributes to the gas industry impressive economic gains in the county between 2007-2012:

  • 29 percent in average weekly wages — from $700 to $904.
  • 148 percent in average weekly wages in the natural resources and mining industry — from $642 to $1,594.
  • 134 percent in annual payroll — from $273 million to $639 million.

The biggest threat to the industry now is the proposed severance tax, says Ms. Suydam. It would be a serious additional cost burden in maintaining the competitiveness of Pennsylvania gas, consuming any advantage our producers currently have over gas from other areas.

Then there is Dennis Martire, vice president and Mid-Atlantic regional manager of the 40,000-member Laborers’ International Union of North America, who is quoted in a recent news release:

We already have seen a reduction in pipeline man-hours over the past two years related to falling gas prices,” reports Mr. Martire. If you excessively tax the shale industry, you risk hurting employers, workers and communities across the state.

The economic depression of the gas industry noted by Mr. Martire continues to be manifested in cutbacks in southwestern Pennsylvania: 220 jobs lost at Noble Energy and 170 jobs at Consol Energy.

Adding a tax to the current economic struggles of a promising industry would be ill advised. Or as Speaker of the House Mike Turzai (R-Allegheny) says:

The governor’s approach on a severance tax is punitive in nature and threatens to severely hurt hard-working Pennsylvania laborers, negatively impact family-sustaining jobs and shut down production and downstream benefits for all Pennsylvanians.

posted by GORDON TOMB | 01:25 PM | Comments

30,000 Jobs that Won't Pay

MAY 5, 2015

Gov. Wolf's tax plan would result in 30,000 jobs not created next year, according to a new analysis we released yesterday. Using the STAMP model, developed by economists at the Beacon Hill Institute at Suffolk University, we estimated the impact of Gov. Wolf's proposed tax increases over the next few years.

The model projects 29,408 fewer jobs in Pennsylvania next year, versus the baseline estimates, and 38,313 fewer the following year, after all tax changes take effect. The projections are more dire when you exclude government employment and look solely at the private sector: 39,209 fewer private sector jobs created next year, and 40,399 the following year.

This marks a sharp contrast to Gov. Wolf's "jobs that pay" sound bite.

Total Employment 

 

Without Wolf Taxes

With Wolf Taxes

Jobs Not Created

2015-16

5,764,652

5,735,243

29,408

2016-17

5,815,360

5,777,047

38,313

2017-18

5,866,631

5,829,821

36,810

2018-19

5,918,471

5,882,391

36,080

2019-20

5,970,885

5,935,404

35,481 

Private Sector Employment 

Without Wolf Taxes

With Wolf Taxes

Jobs Not Created

2015-16

5,063,968

5,024,759

39,209

2016-17

5,116,985

5,076,586

40,399

2017-18

5,170,557

5,132,299

38,258

2018-19

5,224,691

5,186,636

38,055

2019-20

5,279,391

5,241,433

37,957

This analysis comes on the heels of an IFO study showing every income group would pay more under Wolf's tax plan. 

You can view the full results of our analysis, including an FAQ of how the STAMP program works here.

posted by NATHAN BENEFIELD | 08:16 AM | Comments

The Next 1,360 Days

APRIL 30, 2015

Governor Wolf marked his 100th day in office by providing a list of accomplishments. In reality, the memo is more of a status update since many of his initiatives, including the natural gas tax and his budget proposal, are a long way from passage.

But the real question is not what the governor accomplished in an arbitrary 100 days, but what he can do over the next 1,360 days to improve the lives of Pennsylvanians. Here’s a few suggestions based on the governor’s goals for Pennsylvania:

Protect taxpayers to foster "jobs that pay."
Elected officials should pass the Taxpayer Protection Act (TPA) to protect the middle-class from reckless spending and tax increases. The TPA limits future government spending to inflation plus population growth. Reining in government spending is critical to creating an economic climate that attracts jobs—and working Pennsylvanians deserve a government that lives within its means.

Put students first to build "schools that teach."
Our education system is broken. From the commonwealth’s senseless funding formula, to wasteful mandates like prevailing wage, to the need for more school choice, there are many ways for the governor to create an education system that truly serves students. Gov. Wolf should work with the legislature to create a funding formula where dollars follow the students, repeal prevailing wage and remove obstacles to greater school choice, such as creating alternative authorizers for charter schools.

Enhance transparency and accountability to create a "government that works."
The lack of transparency in Harrisburg and special privileges enjoyed by select groups have created a system ripe for corruption and abuse. In his next 1,360 days, Governor Wolf has an opportunity to continue promoting transparency by opening the closed-door union contract negotiation process and ending the government unions’ unique privilege of using taxpayer resources for partisan politics.

These reforms are by no means exhaustive, but they would move our state in a pro-growth direction after years of profligate spending, which have failed to revive our historically weak economy. After decades of focusing on finding more revenue for state coffers, it’s time to restrain excessive government and transform Pennsylvania into a state of opportunity again

posted by ELIZABETH STELLE | 11:30 AM | Comments

Economic Freedom Trumps Identity Politics

APRIL 29, 2015

Imagine a little girl and her young mother sitting on a porch on 19th Street in Harrisburg. The child smiles happily, but the mother looks tired—she’s working second shift and raising a daughter by herself. The father has never played a role in the girl’s life, but she has loving grandparents doing their best to support and care for the child and mother.

It could be a page from the lives of thousands of working-class, ethnically-mixed families—but it happens to be from my own. I was that little Puerto Rican/Slavic American girl growing up with the odds stacked against me. That was my mother gritting her teeth and getting by so that I could have a chance to thrive.

Politicians constantly give lip service to helping families like mine, but I've found that their solutions often do more harm than good.

Given my life experience, it surprises me when people promote government intervention to address issues like income mobility, job growth, and public education. Throwing taxpayers’ hard-earned money at these problems will not make them go away. Taxing and spending is not a recipe for creating jobs or helping middle-class—or working class—families.

When I worked through college and subsisted on a diet that included way too much Ramen, a tax on textbooks would have been a substantial burden. Not to mention the impact that taxes on everything from child care to non-prescription drugs to nursing home care would have on the rest of my family.

It may not seem like a lot of money to high-income households, but in working-class and minority communities struggling to make ends meet, every cent counts.

It's time we entrusted Pennsylvanians to make their own choices with their own money.

That's why I came to work at the Commonwealth Foundation, which points out how a vibrant, free economy can enable individuals to reach their full potential regardless of color, class, or creed.

Unfortunately, some will resort to ad-hominem attacks of racism, bigotry, sexism, and classism to promote their government-based solutions. They rely on name calling because they are unable to justify policy perspectives that so clearly hurt the worst off among us.

Let's be clear, there is nothing racist or divisive about empowering people to create success on their own terms. There is no place that one can point at to claim that poverty was taxed or spent out of existence.

Struggling communities in Pennsylvania are better equipped to make spending decisions about their own personal needs than politicians. If we want a brighter future for our commonwealth, we need state government to do less so that we are free to do more in our local communities and in our own families.

posted by BRITTNEY PARKER | 03:07 PM | Comments

IFO: Everyone Pays More Under Wolf Tax Shift

APRIL 24, 2015

The Independent Fiscal Office (IFO) released a new analysis of Gov. Wolf's tax proposals yesterday. What is their most interesting conclusion? Taxpayers in every income bracket will see a net tax increase. 

The table below breaks down the incidence of tax changes by 2018-19, the first full fiscal year in which all of Wolf's proposals would be in effect.

Tax Incidence for Pennsylvania Residents, FY 2018-19 
Net tax increase by household income under Wolf proposed budget, in millions
  Under $25,000 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$250,000 More than $250,000
Tobacco $126 $149 $93 $80 $78 $26
Sales and Use $367 $616 $606 $512 $1,283 $721
Personal Income $29 $270 $303 $268 $713 $658
Property -$274 -$472 -$438 -$352 -$680 -$284
Philadelphia Relief -$58 -$77 -$61 -$48 -$100 -$64
Renter Rebate -$202 -$185 -$8 $0 $0 $0
Corporate Net Income -$25 -$45 -$41 -$35 -$87 -$75
Bank Shares $1 $2 $2 $2 $4 $4
Net Severance tax $44 $56 $47 $34 $60 $23
Total $8 $316 $503 $461 $1,271 $1,009
Source: Independent Fiscal Office: http://www.ifo.state.pa.us/resources/PDF/Revenue_Proposal_Analysis_April2015.pdf

The IFO offers another look at tax incidence excluding tobacco taxes—which impose a significant burden on lower-income households. If, for whatever reason, you wanted to exclude an analysis of the burden of tobacco taxes, the lowest income group (households earning less than $25,000) would see a net tax reduction, but taxpayers in every other income category would still see a net tax increase.

That is, middle class families will pay more, even after Wolf's promised property tax reductions.

This finding shouldn't be surprising. As we noted, using Gov. Wolf's own revenue projections, only 30 cents of every dollar collected in new state taxes during the first two years of the plan go to property tax relief. Even if we ignore the tax implications of the governor's first budget, in which families will pay higher state taxes before seeing any property tax reduction, Wolf's tax shift proposal raises twice as much revenue in new state taxes than it provides in school tax relief.

It should also be noted that Wolf's tax shift provides an arbitrary system of doling out money to school districts. The amount of money your family could get in property tax relief depends—with quite dramatic differences—on where you live.

The IFO analysis delves specifically into the unique case for Philadelphia. Under Wolf's plan, Philadelphia, unlike any other school district, would see a reduction in its local cigarette tax, sales tax and wage tax along with property tax reductions. 

Gov. Wolf has been trying to sell his budget by making a remarkable claim: Everyone will receive these great benefits, but only the wealthy will have to pay for them. The IFO analysis demonstrates otherwise. Not only will the wealthy pay, but low-income and middle class families alike will be hit hard under the governor's plan.

posted by NATHAN BENEFIELD | 08:32 AM | Comments

Taxpayer Protection Act Advances in the Senate

APRIL 21, 2015

In the face of Governor Wolf’s proposed $4.5 billion tax increase, a group of Senate lawmakers are offering an alternate vision for Pennsylvania—one of limited government and economic prosperity.

Today, the Senate Finance Committee passed two versions of Taxpayer Protection Act legislation. Senate Bill 70, an amendment to the state Constitution sponsored by Sen. Camera Bartolotta, and Senate Bill 7, sponsored by Sen. Mike Folmer, are now eligible for a vote by the entire chamber. These bills protect middle-class Pennsylvanians from reckless spending and tax increases.

The Taxpayer Protection Act achieves four goals:

  • Limits the future growth of government spending to inflation plus population growth
  • Requires state government to prioritize future spending
  • Establishes a Rainy Day Fund to help balance the budget during economic recessions
  • Provides tax relief for working families

On several occasions, Gov. Wolf has urged his fellow citizens to, “please come with your own ideas. It’s not good enough to just say no and continue with the same old, same old.” The Taxpayer Protection Act would set the state on a new course.

Working Pennsylvanians deserve a government that lives within its means. They deserve to keep the fruits of their labor.

Read more about the Taxpayer Protection Act.

posted by JAMES PAUL | 04:15 PM | Comments

Pennsylvania's Economy Ranks a Dismal 39th

APRIL 10, 2015

Is placing 39 out of 50 in any competition acceptable? Most people would say no, which is why a new index published by the American Legislative Exchange Council (ALEC) is so unsettling.

Released on an annual basis, the Rich States, Poor States index ranks states based on their economic performance and economic outlook. In the first category, Pennsylvania performed poorly, ranking 39th. Future economic performance doesn’t look promising either. The authors of the index place Pennsylvania in the bottom ten at 41.

The rankings are based on fifteen different variables that include tax rates, debt service as a share of tax revenue, labor regulations, and tax or expenditure limits. Pennsylvania ranks poorly in nearly all of these areas year after year. As Jana Benscoter of Watchdog points out, Pennsylvania’s economic outlook ranking has never been higher than 33rd.

This isn’t surprising given the dramatic growth of government spending and taxation since 1970 and Pennsylvania’s inhospitable regulatory environment, both of which are roadblocks to job creation and prosperity.

But Pennsylvania doesn't have to continue down this path. If the commonwealth lowers the tax burden on businesses and families, restrains spending growth, and fixes its regulatory climate, we can shed these low rankings and grow an economy that works for everyone.

We're at a watershed moment, with a choice between the largest tax hike in Pennsylvania's history or reducing government spending to leave more in the pockets of Pennsylvanians. It's a choice between prosperity or economic stagnation.

posted by BOB DICK | 02:43 PM | Comments

Could Schools Be Harmed by a Severance Tax?

APRIL 2, 2015

As odd as it might sound, some rural schools could actually be harmed by Gov. Wolf’s efforts to increase education funding by imposing a severance tax on natural gas.

At least one school superintendent sees Wolf's Education Reinvestment Act as more of a threat than a help.

Dr. Kenneth Cuomo, superintendent of the Elk Lake School District in Susquehanna County, says, “The concern is that the tax could be passed on to landowners in the form of post-production fees that are assessed against royalties paid by gas companies”

To address such fears, Wolf’s legislation does include a prohibition on directly passing on the tax to landowners or leaseholders. But Bill desRosiers, a spokesman for Cabot Oil & Gas, notes the prohibition would be contrary to the practices of other states. In the end, simple economics indicates companies will find other ways of passing along the cost of the severance tax.

According to Dr. Cuomo, that's bad news for Elk Lake, because royalties the district receives from three wells—nearly $2 million thus far—could decrease:

That’s revenue for the district and losing it would require us to increase taxes to keep our buildings afloat.

Most of the people who make these proposals don’t live north of Interstate 80 (where much of the state’s gas is produced) and don’t understand their impact.

Apart from skimming royalties from landowners and the school district, the severance tax proposal would diminish the ability of companies to support schools in other ways—such as $50,000 worth of pipe Cabot Oil & Gas contributed to the Susquehanna County Career and Technology Center.

“The pipe was enough to supply our welding program for three years,” reports Dr. Alice Davis, administrative director of the center, which serves up to 500 pupils from seven school districts, along with 200-300 adult students. “Without that contribution, our taxpayers would have had to pay for the pipe.”

Schools being harmed by a natural gas tax is just one of the many unintended consequences of the governor’s education proposals. His approach takes more from the pockets of Pennsylvanians without addressing reforms that can impact the classroom performance far more than money ever could.

Spending more wisely, not just spending more, is the real solution.

posted by GORDON TOMB | 00:55 PM | Comments

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