Five Ways to Avoid Another Budget Hostage Crisis

APRIL 13, 2016  | by BOB DICK

The state budget impasse may be over, but Pennsylvanians are still reeling from Gov. Wolf’s budget vetoes.

The Times-Tribune reports the Women’s Resource Center of Scranton, which serves domestic violence victims, couldn't fill three open positions during the impasse and has paid thousands of dollars in interest fees on a line of credit.

School districts did not escape unscathed either. According to the Auditor General’s office, districts borrowed $1 billion and incurred $40-$50 million in interest and fees. The totals could be higher when the office issues a new report on borrowing costs later this month.

Acknowledging the needless disruptions causing headaches around the state, the governor approved some funding back in December, saying, “We're now at a point where I don't want to hold the children of Pennsylvania hostage...." But the damage was done.

Logos Academy, a private school serving primarily low-income kids in York, was forced to start a fundraiser to replace the funds they lost as a result of the governor’s indefensible delay of EITC scholarships.

Unfortunately, under current law, politicians can use non-profits and schools as leverage to advance their political agenda. This needs to end. People should not be used as political pawns.

Before 2016-17 budget negotiations heat up, lawmakers should prioritize one of the following bills to protect Pennsylvanians from the consequences of another budget stalemate:

  1. HB 1410 – Provides appropriations based on the amounts authorized in the previous year’s budget.
  2. HB 232 – Amends Pennsylvania’s Constitution to provide appropriations based on the amounts authorized in the prior year’s budget.
  3. SB 807 – Authorizes funding for education on the payment schedule agreed to in the prior year. (A Senate committee passed SB807 on a bipartisan basis yesterday.)
  4. SB 326 – Amends Pennsylvania’s Constitution to require the state to maintain 80 percent of General Fund appropriations if a budget is not signed by the June 30 deadline.
  5. SB 1129 – Provides a monthly appropriation to the human services and education departments. Travel would be restricted while this law is in effect, and a moratorium placed on per diems and expense reimbursements.

In addition to protecting Pennsylvanians, these “default budget” options would prevent any governor from creating and using a budget crisis to ignore the Pennsylvania Constitution and state law.

When the Department of Corrections ran out of money to operate state prisons, Gov. Wolf requested spending above what was appropriated. Likewise, the administration distributed large amounts of education funding to a handful of struggling urban districts in direct violation of the law.

Governing on a whim is irresponsible, and if left unchecked, could set a precedent for future governors who believe the law is an inconvenience to be ignored rather than instructions to be followed.

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Wolf's Cockamamie Concoction


Matt Brouillette pointed out in his latest commentary that Gov. Wolf  is taking a "lone-wolf" approach to governing. The latest example is his unilateral action to distribute school funding according to his own whims.

As James Paul noted, Wolf created his own scheme for doling out school funds, ignoring the bipartisan basic education funding commission's recommendations from December.

To stop Wolf from acting alone, the legislature included language in its latest budget that prohibits the distribution of new funds until a new funding formula is adopted.

That budget—which Gov. Wolf let become law without his signature—says the increase in funding “may not be expended until enabling legislation to distribute funding for payment of basic education funding for the 2015-2016 fiscal year is enacted.”

Wolf is completely ignoring the law, and the legislature, to do his own thing.

Sen. Jake Corman put it best, in talking to Capitolwire (paywall):

"The General Appropriations bill was very clear that he could not drive out the new money without a formula, and he vetoed that formula," Corman said. "For him to come up with some cockamamie concoction that the money he blue-lined in December was the old money and he kept the new money - that doesn't stand on the face of it."

Wolf's “cockamamie concoction” rewards just a handful of school districts. Four districts—Philadelphia, Pittsburgh, Chester-Upland, and Wilkinsburg—get 50 percent of the new funding. 

A whopping 428 school districts—or 85 percent of all school districts—get less funding under Wolf’s concoction than under the bipartisan funding formula. 

This formula looks at students to offer a "weighted student funding" model, rather than letting politics and past enrollment dictate current funding decisions. 

For the full impact of Wolf's education funding concoction, check out our sortable, searchable database comparing school districts' funding increases under Wolf's plan and under the bipartisan funding formula. 

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Transparency Bill Awaits Governor’s Signature

APRIL 6, 2016  | by JOHN BOUDER

Last month, Gov. Tom Wolf unveiled his “Government that Works” plan to reform contracting practices and increase transparency in government. Now, the state Legislature has given Wolf a chance to back up his rhetoric with action.

Today, the Senate passed Senate Bill 644, which would empower the Independent Fiscal Office to put a price tag on government union contracts before their ratification. The bill now awaits the governor’s signature.

“We congratulate SB 644 sponsor Sen. Mike Folmer for championing this vital transparency reform,” commented Matthew Brouillette, president and CEO of the Commonwealth Foundation. “Governor Wolf now has the opportunity to walk the walk on government transparency and accountability reforms.”

Wolf is negotiating contracts worth a combined $3.6 billion with 18 government unions, several of which donated millions of dollars to his election campaign. These contracts cover salary and benefits for state workers as well as special union privileges like release time and automatic payroll deduction for campaign contributions.

“If the governor is serious about ending conflicts of interest and fostering ‘government that works,’ he’ll sign this bill and shine light on contract costs,” Brouillette said.

Last year, taxpayers learned about $23 million in additional costs in a one-year contract with AFSCME only after the contract was finalized. Since 2000, average government worker benefit costs tripled from $12,732 to nearly $39,000. Total compensation per employee reached an average of nearly $93,000 in 2014-15.

If you would like to see how your senator voted on contract transparency, you can view the roll call here.

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Wolf's False Choice

MARCH 31, 2016  | by BOB DICK

If lawmakers don’t raise taxes, Pennsylvanians should brace for drastic cuts to education and human services. This myth is promoted endlessly by the Wolf Administration to justify taking more out of the pockets of working people.

The administration offers this false choice in the context of the state’s projected budget deficit, which admittedly has credit rating agencies worried. The agencies warnings shouldn't be ignored, but they also shouldn't serve as cover for increasing Pennsylvanians’ already high tax burden.

As Majority Leader Jake Corman pointed out last week, there are two ways to close a budget deficit: raise revenue or cut spending. The latter is preferable and possible without dramatically reducing funding for education and human services.

That’s not to say reforming the education and welfare systems is unnecessary. We need to rescue students from violent and failing schools. We need to fix a system that traps people in a cycle of poverty. However, these are not the only areas where reforms can help improve lives and save taxpayers' money. 

Other areas ripe for reform include economic development or corporate welfare programs. CF has called for eliminating the almost $700 million in corporate welfare found in the operating budget. If a recent Independent Fiscal Office (IFO) report is any indication, the full cost of special subsidies is probably much higher.

The IFO's report on corporate welfare, or what they call economic development incentives, identified a number of programs not included in our corporate welfare tally. Here are just a few:

  • Infrastructure Technology Assistance Program (Cost: $1,750,000) – Provides grants to Lehigh University to help the state and companies increase operating efficiency.
  • Alternative Fuels Funding (Cost: $9,231,000) – Awards grants to cover the costs of installing, upgrading, retrofitting, or purchasing alternative fuel equipment, facilities or vehicles.
  • Life Sciences Greenhouses (Cost: $3,000,000) – Funds biotech and medical device startups and helps connect them with investors and experts.

Should taxpayers continue to fund these programs when the state’s facing serious fiscal challenges? The governor believes so. And he is willing to break a major campaign promise to not only sustain corporate welfare spending but increase it.

If Gov. Wolf's policies prevail, Pennsylvania will continue to face a structural deficit and Pennsylvania's long history of sub par economic growth will be the norm.

Fortunately, the future isn't set in stone. We can change course and embrace an idea proven to raise the standard of living for billions of people. But it takes an act of will. Do we have it? 

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Rhetoric vs. Reality

MARCH 25, 2016  | by BOB DICK

Pennsylvania’s nine-month budget saga has concluded, but not everyone is pleased with the ending. The Philadelphia Inquirer published a caustic editorial criticizing state lawmakers for failing to surrender to the governor’s unreasonable budget demands.  

Rather than providing clarity, the partisan editorial adds to the mountain of misinformation casting a shadow over the budget debate. For example, the editorial board writes,

Gov. Wolf has succumbed to Republican obstruction and agreed to a plan that keeps the state in the fast lane toward fiscal instability and educational decline.

Far from being obstructionists, Republicans advanced numerous balanced budgets, liquor privatization, and pension reform. The governor is the one clinging to the status quo. His insistence on higher taxes and spending will chase more people out of the state, leaving fewer taxpayers to cover the growing costs of government. Does this sound like fiscal stability?

But tax increases are necessary, some say, to stave off educational decline. The truth is more complicated. No correlation exists between higher education spending and educational outcomes. Lack of funding is not the problem. Misplaced control is the problem. Pennsylvania’s educational system will improve when parents, not government officials, are in control of education.

The editorial continues:

Of the many disappointments of this budget, the greatest is its failure to address the state's structural deficit, the stark difference between the state's spending and receipts. This deepening hole, expected to approach $2 billion next year, is sapping the state's ability to function.

Leaving aside the hyperbolic ending, the board’s preferred plan does not eliminate the deficit despite including a $2.3 billion tax increase over two years. Furthermore, if the state is facing a deficit, adding billions in new spending makes little sense. Why add new bills if the state cannot pay its old ones?

In keeping with its partisan tone, the board writes,

That seems to be of no concern to the legislature's least reasonable Republicans, who can return to a never-ending campaign trail to gleefully proclaim that this budget raises no taxes. But the problem is that it does raise taxes. Local property taxes throughout the state are bound to rise because the state is failing to properly fund schools, leaving districts to make up the difference. 

Leading readers to believe lawmakers have no alternatives to tax hikes is disingenous. Reforms like voter referendums, school choice, and mandate relief can ensure education funding, which is at record levels, is spent more efficiently.

Finally, the board attempts to paint the governor as a reasonable negotiator who can’t get anywhere with obstinate Republicans:

This budget doesn't address the looming pension crisis or reform the state's absurd grip on wine and spirits sales, supposed Republican priorities that, despite belated and begrudging concessions by the Democratic governor, remain as untouched as Wolf's agenda.

These “concessions” were token at best. Republican legislators preferred a pension plan that moved all new public employees into a 401k plan. The governor said no. On liquor, they requested complete privatization of the system. The governor said no.

After having their top two priorities rejected, the legislature still increased spending by more than $880 million, with $230 million added for educationthe governor's top priority. Republican lawmakers passed these increases even though many preferred reductions in government spending.

Nevertheless, the 2015-16 budget impasse is history. Focus will now turn to the 2016-17 budget and lawmakers will have another opportunity to redesign government so that working people aren't harmed by the consquences of overspending. 

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Audio: State Worker Costs & EPA Mandates Burden Pennsylvanians


State employee compensation costs have soared to nearly $93,000 per worker per year, with health care and pensions the largest contributors.

Meanwhile, costly EPA mandates on carbon and mercury emissions will cause strife for Pennsylvania's coal industry. Other mandates could cost farmers millions.

Nathan Benefield recently joined George Toth on WNPV's Regarding Your Money to discuss how the rising costs of state workers and EPA mandates will burden Pennsylvanians.

Click here or listen below to the interview:

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The Final Piece of Budget Business in Limbo

MARCH 24, 2016  | by JAMES PAUL

After nine months of gridlock, Gov. Tom Wolf finally surrendered his 2015 quest for higher taxes on families and small businesses. On Monday morning, Pennsylvania will enjoy a completed state budget. Finally.

But the governor isn't putting down his veto pen.

Lost in yesterday’s headlines was Wolf's promise to veto the fiscal code, HB 1327, which provides instructions for spending state funds. In January, CF identified dozens of earmarks tucked away in the fiscal code, but the legislation was, on balance, a winner for jobs and students alike.

Lawmakers used the fiscal code to implement a fair education funding formula, protect private school scholarships, and authorize reimbursement for school construction costs. The fiscal code also pushed back against President Obama's energy tax on coal and expansive regulations on natural gas.

Chris Comisac at Capitolwire (paywall) explains Wolf's opposition:

The Fiscal Code bill also contained a new funding formula that would have been used to drive out the $150 million in added basic education funding and a $2.5 billion school construction borrowing plan. That borrowing plan would have delivered construction reimbursements, through the state’s PlanCon program, to school districts throughout the state that have been on a waiting list to receive that money.

Wolf spokesman Jeff Sheridan said the PlanCon borrowing also prompted Wolf’s veto, with Sheridan describing the plan being “prohibitively costly to issue due to inflated debt costs resulting from the lack of any concrete steps in the current budget to address the structural deficit.”

Sheridan’s response is strange, considering Wolf agreed to PlanCon borrowing as part of last year’s budget framework. In November, the administration was on-board with the school construction plan—and now, in March, they argue it will be “prohibitively costly.”

Setting aside the administration’s shoddy logic, districts awaiting PlanCon dollars will be on hold until a fiscal code is approved—yet another instance of Wolf refusing to release education funding.

In addition to construction costs, Wolf’s impending veto has implications for how much state funding each school district will receive. Kevin McCorry of NewsWorks has the details:

Because the fiscal code acts as a roadmap for how education money is divided, Republicans say that if Wolf follows through on that veto, he will effectively keep new spending in limbo.

"You can't spend that $150 million without a fiscal code," said Jenn Kocher, spokeswoman for Senate Republicans.

The Wolf administration disputes that, saying that it will unilaterally distribute funding "in the most appropriate manner possible."

Wolf certainly has experience unilaterally doling out education dollars—this is exactly what he did in January when he approved a partial-year state budget. At the time, Wolf thumbed his nose at a fair funding formula, instead funneling money disproportionately to school districts in Philadelphia, Chester-Upland, and Wilkinsburg.

This is precisely why a fiscal code is crucial—it restrains the governor from political gamesmanship and ensures fairness for all students in the commonwealth.


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Victory Over Wolf Tax Hikes


Pennsylvania's 267 day budget impasse has finally come to an end...with a taxpayer victory!

HB 1801 will become law without Tom Wolf's signature. The governor refuses to sign the budget, but he won't veto it, either. So HB 1801 will take effect on Monday morning.

The $30 billion budget contains NO tax increases and spends an additional $200 million on education.

For nine months, lawmakers withstood immense pressure to raise taxes. Take a minute to thank your lawmaker for standing firm and recognizing there is no appetite for broad-based tax increases on Pennsylvanians.

CF President and CEO Matt Brouillette cheered:

Today is a victory for taxpayers who will be spared crushing tax hikes, for students and teachers who will get the funding they’ve been pleading for, and for all Pennsylvanians, who now have a budget that spends responsibly.

Attention now turns to Wolf's 2016-17 budget proposal, which calls for the largest spending increase in 25 years.

Follow the steps below to send a quick email to let lawmakers know that you appreciate the men and women at the Capitol that have stood strong for taxpayers this year.


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Improving Health Care Access While Cutting Costs

MARCH 23, 2016  | by JAMES PAUL

Health Care

Is it possible to improve health care access while also cutting a costs? Yes—according to a recent study by Edward Timmons of the Mercatus Center.

Writing in U.S. News and World Report, Timmons explains that expanding the scope of practice for physician assistants and nurse practitioners can significantly reduce health costs and Medicaid expenditures:

Utilizing Medicaid claims data, I find evidence that an expanded scope of practice is indeed associated with lower health care costs. More specifically, the cost of outpatient claims per Medicaid beneficiary is about 11 percent lower in states where physician assistants are permitted to prescribe drugs.

Occupational licenses, which vary from state to state, define the scope of practice—or services a health care worker can provide to patients. Because Medicaid reimbursement rates are lower for physician assistants and nurse practitioners, expanding their scope of practice results in significant cost savings for state government.

In Pennsylvania, physician assistants are permitted to prescribe controlled substances, but nurse practitioners are required to prescribe under the direct supervision of a physician. Timmons suggests that services exclusively left to doctors are not worth the costs:

While it makes sense that only a brain surgeon should perform brain surgery, some of these laws appear to exist predominantly for medical doctors to preserve their market share. Although there are a number of factors contributing to rising health care costs, turf wars between competing health care providers are certainly not improving the situation.

Importantly, the study finds that expanding scope of practice will not reduce health quality. 

Lorraine Bock, president of the Pennsylvania Coalition of Nurse Practitioners, describes how patients are the ones who suffer from the status-quo:

A few years ago, a nurse practitioner from Venango County drafted a letter to her patients. “I am sorry this is happening,” she wrote. “I have enjoyed your friendship and trust. We have become friends over the years and I will treasure these times forever.”

After 10 years, she had to break the news that her rural Oil City practice was closing its doors. Not because she wasn’t seeing enough patients. To the contrary, her willingness to waive co-pays for low-income patients meant that her waiting room was seldom empty. The problem was a state law that prohibited her from serving her patients after her partner, a physician, withdrew from the business without warning. For many of her patients that meant a two-hour round trip to the second-nearest provider.

House Bill 765 and Senate Bill 717, currently pending in the state Capitol, would allow Pennsylvania to join nearly two dozen states which permit nurse practitioners to practice with autonomy. Not only will these bills increase access to care, they will result in significant savings to the state budget—truly a win-win for health care consumers and taxpayers.

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6 Reasons Obamacare is a Failure


Lower costs? Improved access? Six years later, the Affordable Care Act still falls painfully short of these noble goals. Years after most of the ACA's "goodies" have been implemented, public opinion is still against the law. A recent Rasmussen poll found 54% of likely voters view the law unfavorably compared to 43% with a favorable opinion.

Here are six reasons Pennsylvanians won’t be blowing kazoos for this anniversary.

  1. Higher Costs – Raise your hand if you're paying more—lots more—for insurance. You aren't imagining it: Pennsylvania insurers asked for approval to hike premiums up to 58 percent for 2015 exchange plans. One-third of insurers were granted double-digit rate increases. In southeast Pennsylvania alone, more than 171,000 adults had trouble finding an affordable exchange plan. For Pennsylvanians who can afford insurance, average deductibles for gold, silver, and bronze plans rose by $254, or 17 percent, for 2016.
  2. Fewer Choices – In 2013, 14 carriers offered individual health plans to Pennsylvanians on the Obamacare exchange. Today, that number is just seven. Most counties have four or fewer providers.
  3. Lower Reimbursements = Lower Quality – After announcing $500 million in losses in 2015, Highmark cut provider reimbursement rates. Philadelphia will soon lose an ambulance provider serving major area health systems thanks to unsustainably low Medicaid reimbursements. This means less individual patient attention and/or reduced access to care.
  4. About Those Tax Credits – For the second consecutive year, most tax filers who received Obamacare credits received too much and now owe the government hundreds of dollars. The average bill? Almost $580 per person for 2015.
  5. More Expensive ER Visits – Despite promises of less emergency room use, ER visits are up: 47 percent of ER physicians noted a slight increase, while 28 percent reported significant increases.
  6. Your Health or Your Job – As everyone now knows, if you like your plan, that doesn't mean you can keep it. Seth Maurer, a 29-year-old landscaper, lost his plan when Obamacare deemed it substandard. In Adams County, 63-year-old George Krichten, cut his work hours to avoid massive premiums. And business owners Jeffrey and Holly Wilbur ended group insurance for their employees after the costs became unaffordable. These aren't random examples—my own colleagues have written about losing their coverage and seeing their parents and friends lose coverage.

Today's health insurance system limits choices and hides prices. Costs will go down when patients are free to choose what's covered by their insurance and compare prices for medical services. Six years is more than enough time to prove fixing American health care requires less, not more, government.

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