Big Win for Transparency

MARCH 22, 2016  | by ELIZABETH STELLE

One year ago, Governor Tom Wolf began negotiating contracts worth billions of dollars with state employee unions. Despite his rhetoric about improving government transparency, these negotiations took place behind closed doors. To make matters worse, six of these government unions contributed more than $2.6 million to Wolf’s campaign.

Thankfully, yesterday's passage of SB 644 is a huge step toward revealing the price of these contracts before taxpayers are asked to foot the bill.

SB 644 garnered wide support in the House with a 108-83 vote and returns to the Senate, where it passed last summer by a wide margin. The bill provides taxpayers with an IFO (Independent Fiscal Office) estimate of the costs associated with each collective bargaining proposal before a ratification vote.

Why is this legislation so critical? Case in point: Last April, a contract was negotiated that added $23 million to the state budgetand taxpayers only discovered this news weeks after it was a ratified

Unfortunately, rapid increases in state employee costs are nothing new. Since 2000, average government worker benefit costs tripled with total compensation per employee reaching an average of nearly $93,000 in 2014-15.

Two more contract transparency reforms are also under consideration. SB 645, which requires collective bargaining proposals be posted online before a ratification vote, and SB 643, which opens collective bargaining negotiations to the public.

CF President and CEO Matt Brouillette noted the similarity between SB 644 and the governor's recent calls for transparency,

Last week, Gov. Wolf called for expanded government transparency, claiming, ‘special interests still wield too much power and influence in Harrisburg’. Now, Wolf has a chance to put his money where his mouth is.

Just last year, Wolf's spokesman explained that the governor is,"keeping an open mind on the bills and would review them on the merits if they reach his desk.” Wolf should back up his rhetoric on transparency by supporting this legislation. 


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Support for Wolf's Hostage-Taking Is Breaking

MARCH 22, 2016  | by NATHAN BENEFIELD

Last week, Gov. Wolf indicated he plans to fully veto yet another budget. He said if schools face a “short term shutdown,” that could be “a good thing.” 

Now, he’s realizing he's alone on that island.

Yesterday, Wolf said he will take a little more time “to further review the spending plan to make sure ‘it is as out of balance as I’ve been saying it is.’” That is, Gov. Wolf is not sure his rhetoric and internet memes are actually true. (For more on how this budget balances, check out my interview with Fox 43.)

More importantly, he’s getting a lot of pressure from House and Senate Democrats to back off and sign all or most of the budget (using a line item veto) to keep schools open. Likewise, school officials from across the state are calling on Wolf to end this gamesmanship.

If he insists on a veto, there may even be enough legislative support to override it, said Washington County Democrat Rep. Pete Daley.

It’s time to move this thing forward … I’m almost positive that if he vetoes it, we have enough Democrats to override his veto.

On the Senate side, Senator John Yudichak, a Luzerne County Democrat who voted against the budget last week, told the Times-Leader if Wolf vetoes the bill, he will vote to override.

As I pointed out last week, Wolf has little to gain with a budget veto, and support for his radical agenda is cracking.

It’s time for Wolf to stop holding students hostage to his demand for higher taxes.


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PA Faces Another Costly EPA Mandate

MARCH 21, 2016  | by ELIZABETH STELLE

President Obama’s energy tax—also known as the Clean Power Plan—is just one of many EPA mandates stifling Pennsylvania’s economy.  One mandate in particular imposes enormous costs on Pennsylvania farmers and taxpayers.

Chesapeake Bay Mandates place caps on nitrogen, phosphorus and sediment that can flow from rivers to the Chesapeake Bay. Historically, one of the largest sources of nitrogen and phosphorus run-off is livestock farms.

Last month, Department of Environmental Protection (DEP) Secretary John Quigley estimated it would cost Pennsylvanians $3.6 billion up-front, or $378.3 million annually to meet EPA’s mandated reductions. But compliance needn’t come at such a painful price tag.

The burdensome costs to farmers and taxpayers stems from the DEP’s reliance on what they call Best Management Practices (BMPs). These “best practices” have failed to meet the standard their name implies—the commonwealth is far behind EPA mandated targets at a cost of nearly $4 billion thus far.

In contrast, compliance costs can be dramatically reduced by using competitive bidding for verified nitrogen reduction credits. A 2013 Legislative and Budget Finance Committee study estimates a competitive bidding process could cost 80 to 85 percent less than modeled BMPs.

In addition to lower costs, a competitive bidding process also reduces taxpayer risk. The commonwealth would only pay for nutrient credits after they have been produced and then verified by the DEP. No special grants, tax credits or penalties on farmers would be necessary.  Senate Bill 724 sets up the competitive bidding process.

Absent repeal of these stringent regulations by Congress, state lawmakers and DEP should consider more affordable alternatives to comply with these mandates. 


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What Is Wolf's Plan?

MARCH 17, 2016  | by NATHAN BENEFIELD

In his 2015 budget address, Gov. Wolf stated, “But if you don’t agree with my ideas, here is my request: please come with your own ideas. It’s not good enough to say no and continue with the same old same old.”  

Unfortunately, Wolf has become the expert at ‘just saying no’.

Yesterday, he threatened to veto the balanced, no-tax increase budget passed by the legislature (with bipartisan support in the both the House and Senate).

This would mark Wolf’s 10th veto. If he vetoes the Fiscal Code and bills funding Penn State, Temple, Pitt, Lincoln, and University of Pennsylvania, as he has threatened, the count rises to 16.

But while Wolf is busy saying no, he doesn’t offer viable solutions.

  • Wolf complains of a structural deficit, but spending $800 million more won’t fix it.
  • His 2016-17 budget included a retroactive income tax hike of 11 percent so he could spend more this year. Every person would pay back taxes on income earned since January 1. This is simply never going to happen.
  • It is already March 17—more than 70 percent of the fiscal year is over. There is no way to raise and collect enough taxes by June 30 to pay for Wolf’s spending wish list. To quote Wolf: “The math just doesn’t work.”

What does Wolf hope to achieve by vetoing yet another budget?

We aren’t alone in questioning Wolf’s strategy of holding schoolchildren hostage to maintain pressure for more funding. School officials are also speaking out:

Even some Democratic legislators are questioning Wolf’s game plan. From Capitolwire (paywall):

“I was dissatisfied with the results of the meeting on Monday for a multitude of reasons,” said Rep. Gerald Mullery, D-Luzerne. “The main reason I was dissatisfied with the meeting was I had hoped going in we would come out with a clear plan for the path forward, and in my opinion – speaking solely for myself – we didn’t have that, and that was truly discouraging to me.”

With a 10th veto looming, we agree with Wolf on one thing: It’s not good enough to just say no.


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Gov. Wolf Can Lead by Example on Transparency

MARCH 17, 2016  | by BOB DICK

Today Gov. Wolf unveiled a series of reforms aimed at increasing transparency and improving how government works.

The plan includes limits on campaign contributions and a governmentwide gift ban. However, the governor's attempt to change the culture in Harrisburg does not include transparency for collective bargaining contracts.

Right now, the Wolf Administration is secretly negotiating contracts worth a combined $3.6 billion with more than 15 different unions—a handful of which donated to the governor’s 2014 campaign. Talk about a conflict of interest.

This arrangement should raise a red flag and command the attention of every policymaker concerned about ethics and transparent government.

Yet, instead of focusing on secret negotiations contributing to a rapid rise in state employee costs, the governor is calling for restrictions on political speech.

Campaign finance reforms, like contribution caps, only serve as limits on free speech and fail to address the primary problem: too much power in government. The money chases the power. For reformers looking to get money out of politics, they must get the politics out of money.

Rather than weakening the free speech rights of donors, the governor should focus on making contract negotiations with his donors public. Or, at the very least, he could publicize contract agreements and their costs before ratification. SB 644 and SB 645, which are positioned for passage in the House, would pave the way for both of these reforms.  

Refusing to reform a process that completely shuts out the public—while touting the importance of transparency—demonstrates a lack of sincerity and respect for taxpayers.


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Wolf's Bad Budget Bluffs

MARCH 16, 2016  | by ELIZABETH STELLE

The Senate just passed and the House will soon vote on another no-tax-hike, balanced budget for fiscal year 2015-16. Gov. Wolf has already promised to veto it.

Remarkably, the governor continues to insist lawmakers need to raise state taxes to avoid a local tax hike:

Either way you get a tax increase, their [the legislature's] plan does have a tax increase. We cannot afford another property tax hike at the local level and the only way you can keep from doing that is a modest increase in taxes at the state level.

Of course, Wolf’s “modest” increase for the upcoming fiscal year is an astounding $2.7 billion tax hike. In nominal dollars, this would be the biggest in state history, and it includes an 11 percent retroactive personal income tax increase on working families and small businesses.

Beyond this, Wolf’s claim is false for several reasons:

First, two ways exist to close a budget deficit: increase revenue or reduce spending. The governor refuses to accept the latter, even as we've identified a long list of recommended savings.

Second, Wolf’s insistence that local property taxes will rise without state tax hikes is misleading at best. If he is truly concerned with property taxes, he should act to reduce exemptions for school property tax referendums.

Furthermore, the Wolf administration acknowledges tax hikes alone will not fix the structural deficit. During budget hearings, Budget Secretary Randy Albright admitted that if all Wolf’s proposals were adopted, the projected structural deficit would return in 2017-18.

This didn’t stop the governor from claiming yesterday:

We are looking at a train wreck in 2016-17, a huge deficit, if we don't do something about this.

Note to Governor Wolf: You can't close a structural deficit by spending even more. Wolf wants at least $500 million more in spending this year (even though it is already two-thirds complete). This is a sure way to widen, not close, any deficit.

The governor’s lip service to compromise notwithstanding, his partisan rhetoric and nine vetoes have blocked a final budget for months. Even more telling, he hasn't even convened a budget negotiation meeting since December.

Despite desperate warnings about bond downgrades, rising property taxes, and counties left to fund human services, this administration has failed to take action toward a final budget deal.


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Taxpayers on the Hook for Wolf's Spending Binge

MARCH 15, 2016  | by NATHAN BENEFIELD

Despite the lack of a completed state budget, and no support for his unpopular tax hike proposals, Gov. Wolf continues to rack up additional costs for taxpayers

Wolf's executive order would increase payroll and benefit expenses by $1.5 million in fiscal year 2016-17 for the 450 employees affected, according to estimates provided in Wolf administration fiscal note. The majority of those employees are seasonal workers like tax season clerk and temporary clerical pool workers.

It would also apply to contractors under new contracts with the state beginning in July which the fiscal note estimates would cost about $2.6 million annually.

It's the latter provision that concerns some observers, including state Rep. Seth Grove, R-Dover Township. He said what is actually written into the order does not match the narrow focus that Wolf spoke about in his news conference. As written, he said, it could apply to any contractor working directly with the state.

"It shows the governor or anyone who drafts this stuff is not on the same page," he said. "Their political talking points don't match up with the reality."

That's $4.1 million in added costs to taxpayers—more, if Republicans are correct about Wolf's poorly worded executive order—with the stroke of the pen.

Ironically, while Wolf recognizes the additional cost of state worker wage increases—paid for with higher taxes—he refuses to admit the additional costs created for private businesses by a minimum wage mandate. Such costs include higher prices, fewer business owners, reduced job hours and layoffs. The Independent Fiscal Offices estimates 31,000 jobs would be lost with a statewide minimum wage increase. 

This executive order is not the only way Wolf is driving up taxpayer costs. His administration recently spent $250,000 to come up with a new state slogan and will spend another $500,000 to promote that slogan. Somehow, this is supposed to attract tourists to come visit Pennsylvania.

Government shouldn't be in the business of marketing to tourists—and it doesn't even do a good job with the millions spent every year in that effort. That money, along with the nearly $700 million in corporate welfare subsidies, should be redirected to priorities in the state budget—or left in the hands of taxpayers.

Yet, instead of scrubbing the budget of corporate welfare, Gov. Wolf continues to demand higher taxes on working families, and promises cuts to education and human services if he doesn't get his demands.

Maybe he should stop throwing around millions in taxpayer dollars to score political points.


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Gov. Wolf's Self-Created Constitutional Conflict

MARCH 14, 2016  | by ELIZABETH STELLE

Rep. Bill Adolph accused the Wolf administration of creating a budget crisis during Thursday's final House Appropriations Committee budget hearing. In an op-ed published Friday, Representatives Greiner and Grove argued the governor's actions created a constitutional crisis.

Whatever the claims, it's clear the budget impasse will have implications far beyond the 2016-17 fiscal year budget.

The state treasurer recently approved Governor Wolf’s request to release funds for corrections above what has been appropriated. This action flies in the face of constitutional powers and circumvents the legislative process.

Article III, Section 24 of the Pennsylvania Constitution prohibits spending without statutory authority.

No money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers; but cash refunds of taxes, licenses, fees and other charges paid or collected, but not legally due, may be paid, as provided by law, without appropriation from the fund into which they were paid on warrant of the proper officer.

On the other hand, courts have ruled that federal and constitutional law require the commonwealth to continue paying for services related to the health and safety of residents.

This constitutional conflict exists solely because Governor Wolf line-item vetoed $944 million of corrections funding in the December budget—the very funding he's now asking the treasurer to pay anyway.

Several state lawmakers put forth legislation to avoid future constitutional conflicts during a budget impasse. Many of the proposals include a "default budget."

  • Sen. Lisa Baker’s SB 326 and SB 327 creates a default budget equal to 80 percent of the prior year’s funding.
  • Sen. Stefano’s SB 1129 provides a monthly appropriation to schools and human services providers and limit per-diems, travel, social media and other discretionary spending until a budget is passed.
  • Rep. Truitt’s HB 1410 defaults to the previous year’s budget and automatically reduces certain line items in the event of a budget shortfall.
  • Rep. Truitt also sponsored House Bill 232, a constitutional amendment to provide a default budget and reduce expenditures to meet lower-than-anticipated revenues.

A default appropriation process is important, but so is transparency. During the budget impasse, there has been confusion over how much money was spent without a budget, and why that spending was authorized. In approving the additional corrections funding, the treasurer set guidelines as to what must be funded and what cannot be—but provided no oversight for lawmakers or taxpayers to ensure the law is being followed.

One solution is to improve Pennwatch, the "state checkbook." The online database could provide greater value if the administration published payment data promptly, provided more details on where the funds were going, as well as how they were approved.

Moreover, Pennwatch data cannot be downloaded, which makes it difficult to analyze trends. Such improvements should be easy to implement and would improve transparency and accountability in state spending.


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Wolf’s "Plague" on Public Education

MARCH 11, 2016  | by JAMES PAUL

Schools across Pennsylvania are feeling the squeeze from Gov. Tom Wolf’s $3 billion education funding cut. In Red Lion, Carbondale, Plum, and Erie—to name just a few—districts are struggling to remain open.

The governor claims he’s fighting to restore funding lawmakers “cut” and blames the legislature for supposedly underfunding education.

But last week, the administration’s education secretary, Pedro Rivera, dropped two bombshells that undercut the governor’s rhetoric.

First, Rivera confirmed Pennsylvania’s public schools are among the highest funded in the nation:

Second, Rivera conceded that the legislature has never voted to cut education spending:

Why, then, does Gov. Wolf continue withholding funds from cash-strapped schools? Wolf’s Budget Secretary Randy Albright admitted the real reason on Thursday. PennLive reports:

Wolf's $6.9 billion in December line-item vetoes—including more than $3 billion earmarked for schools—to close a budget hole estimated at $500 million to $600 million was ultimately about leverage.

Actually, we already knew that.

But rarely is it stated as openly or directly as this:

The vetoes were "to make the clear statement that it (the overall amount of funding earmarked for state aid to public schools in the GOP-crafted budget) is not enough," Albright said under questioning about the governor's strategy.

Apparently, funding Secretary Rivera says is among the highest in the nation is “not enough” for the governor. So, Wolf's strategy is to punish schools.

Not surprisingly, this approach has become increasingly unpopular.

From a recent editorial in The Intelligencer, emphasis added:

Locally, some districts — among them Central Bucks and Hatboro-Horsham — have so far been able to weather the storm. But Mark Miller, president-elect of the PSBA, says it’s only a matter of time before the stalemate in Harrisburg consumes every district. “No school district is immune,” Miller said. “This is a plague that the governor has released on public education, and it’s not necessary. We’re all going to catch the disease."

These are harsh words from an organization typically friendly to Wolf’s high-tax agenda. But Miller is right—Pennsylvania’s funding crisis is not an accident. It is an intentional element of the governor’s political strategy.

Each passing day without $3 billion in education funding is another day public schools are manipulated as leverage for higher taxes. Fortunately, Rep. James Santora introduced legislation (HB 1821) to appropriate the funding that Wolf has blocked. It is time to release those funds and cure the schools from Wolf’s plague on public education.


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Breaking Promises to Fund Broken Programs

MARCH 11, 2016  | by BOB DICK

During his gubernatorial campaign, Tom Wolf promised to reduce taxes on working people. As a matter of fact, his campaign attacked Gov. Corbett for raising taxes. An October 2014 campaign blog post claimed, “Unlike Governor Corbett, Tom Wolf will fight to reduce taxes on working, middle-class families.”

Now, Gov. Wolf is pursuing the same policies his campaign denounced fewer than two years ago. Since taking office, the governor has proposed raising taxes on low- and middle-income people six times. His latest proposal includes a tax hike of about $850 per family of four.

Gov. Wolf claims tax increases are necessary to fix Pennsylvania’s $2 billion budget deficit. This is false for two reasons. First, Secretary of Revenue Randy Albright admitted the tax hikes will not erase the deficit. Second, reasonable alternatives exist to fix the fiscal follies of the past few decades. We don’t need to balance the state’s budget on the backs of taxpayers.

Beyond higher taxes, the governor wants to increase spending by 10 percent—the largest one-year growth in 25 years. This includes more than $742 million in corporate welfare—a $58 million increase above current spending levels.

Table 1. Corporate Welfare Programs in Operating Budget (in thousands) 

2015-16 Budget (projected)

2016-17 Budget (projected)

Spending Programs

Agricultural Excellence

$1,100

$0

Agricultural Research

$1,587

$0

Agricultural Promotion, Education and Exports

$250

$0

Ben Franklin Tech Development Authority Transfer

$14,500

$14,500

Commonwealth Financing Authority Transfer

$88,812

$95,614

Council on the Arts

$892

$903

Food Marketing Research

$494

$494

Grants to the Arts

$9,590

$10,590

Hardwoods Research and Promotion

$350

$0

Industry Partnerships

$1,813

$11,613

Infrastructure and Facilities Improvement Grants

$19,000

$30,000

Keystone Communities

$6,350

$15,000

Livestock Show

$177

$0

Marketing to Attract Business

$2,005

$3,014

Marketing to Attract Tourists

$7,014

$4,291

Municipalities Financial Recovery Revolving Fund Transfer

$3,000

$4,000

New Choices/New Options

$500

$0

Open Dairy Show

$177

$0

Partnerships for Regional Economic Performance

$11,880

$9,880

Pennsylvania First

$20,000

$45,000

Pennsylvania Race Horse Development Fund

$253,471

$250,073

Tourism-Accredited Zoos

$550

$0

Transfer to the Nutrient Management Fund

$2,714

$2,714

Office of International Business Development (World Trade PA)

$5,829

$6,942

Youth Shows

$140

$140

Total

$452,195

$504,768

Tax Credits

Film Tax Credit

$60,000

$60,000

Job Creation Tax Credit

$10,100

$10,100

Research and Development Tax Credit

$55,000

$55,000

Keystone Opportunity Zone

$70,300

$78,000

Keystone Innovation Zone

$25,000

$25,000

Resource Enhancement and Protection Tax Credit

$10,000

$10,000

Alternative Energy Production Tax Credit

$2,000

$0

Total

$232,400

$238,100

Total

$684,595  

$742,868

Campaign promises aside, apparently Gov. Wolf believes taxing low- and middle-income earners to fund corporate welfare will improve the state's economy. Yet, concentrating more economic power in the hands of Harrisburg has produced disappointing results.

The alternative—removing government barriers to growth—has a record of creating and sustaining economies that produce better job growth and higher wages for working people.

Ultimately, we will solve our economic challenges not by giving more power to Harrisburg politicians but by freeing entrepreneurs to serve the needs of Pennsylvania's communities. 


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