Audio: Gov. Wolf's Vetoes Keep the Status Quo Alive

JULY 8, 2015  | by JONATHAN REGINELLA

Gov. Wolf promised to be a governor who would eliminate Pennsylvania’s destructive status quo. So how did he respond when state legislators put a budget without tax increases, a bill to privatize the liquor business and a bill to give more funding to schools on his desk?

Gov. Wolf promptly scribbled his veto pen across all of them, ensuring the status quo lives on.

Matt Brouillette spoke with WPHT’s Rich Zeoli about Gov. Wolf’s decision to veto all of these bills.

He explains Gov. Wolf executed his veto power to “take care” of public sector unions (his biggest campaign contributors) while ignoring the concerns of average Pennsylvanians.

Matt clarifies why Gov. Wolf’s own budget plan got zero votes in the House, saying it “presented spending and tax increases that exceed the other 49 states combined”. Gov. Wolf needs to lose the “my way or the highway” attitude and start chipping away at the status quo rather than allowing it to continue.

Click here or listen below to hear more.

Rich Zeoli appears on WPHT weekdays from 3 pm – 6 pm.

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Fixated on Tax Increases

JULY 8, 2015  | by BOB DICK

At the end of last month, Gov. Wolf vetoed the Republicans’ budget, criticizing it for failing to meet his lofty goals of closing the structural deficit, increasing education funding through higher energy taxes, and providing property tax relief to homeowners. Those goals come with hefty price, primarily more taxes for Pennsylvanians at all income levels.

Here’s why: If we concede (we shouldn’t) the severance tax won’t hurt people in low and middle income households, it still won’t raise enough revenue to pay for the governor’s education proposals, let alone his plan to reduce property taxes or close the deficit. To raise enough revenue for all three priorities, he needs broad-based tax increases, which Republicans have ruled out.

Amazingly, after the governor's budget proposal was defeated in the House by a vote of 0-193, he remains steadfast in his commitment to raising taxes, according to his spokesman Jeff Sheridan:

Right now, there has not been any better ideas presented to us than increasing the personal income tax, increasing the sales tax, while providing the property tax relief that was not included in their budget

The governor has drawn a line in the sand: Either tax low and middle income families or Pennsylvania continues to operate without a budget. His position is puzzling considering he campaigned on protecting low and middle income people from tax hikes.

Not only is Gov. Wolf breaking one of his core campaign promises, but his position won’t fix what he sees as some of the state’s biggest problems:

The structural deficit: His own budget plan—and the gigantic tax increase accompanying it—won’t eliminate the structural deficit. According to the Wolf Administration’s own calculations, by 2016-2017, the state would face a $318 million deficit under his plan.

Severance tax/education funding: The governor wants to impose a severance tax on the natural gas industry. He’s too late. Pennsylvania already has a severance tax, but it’s described as an impact fee. And according to the Independent Fiscal Office, it’s the equivalent of an effective 4.7 percent tax rate on production. The revenue raised from the tax rate is just one of the many taxes the natural gas industry pays.

Yet the governor continues push for an even higher severance tax to "restore education funding cuts of the last four years." There are two problems with this narrative. One, education spending is at its highest level ever. Two, there is no link between higher levels of education spending and academic achievement.

Property tax relief: Providing property tax relief through tax shifting treats the symptom instead of the disease. Property taxes are on the rise because education spending is ballooning. If the state shifts the tax burden, but doesn’t control education spending, taxpayers will continue to take a hit, just in a different pocket.

Gov. Wolf can break the budget impasse and provide Pennsylvanians the “fresh start” he promised during the campaign, but he’ll need to abandon his fixation on the stale policies of the past.


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The Illustrated Pennsylvania State Budget

JULY 8, 2015  | by NATHAN BENEFIELD

There's a lot of misinformation being thrown around about the Pennsylvania state budget and education spending. While folk are entitled to their own opinions, they aren't entitled to their own facts.

The charts below illustrate some of the key trends and data points in Gov. Wolf's proposed budget and in state education spending.

Scroll down to advance the slideshow.


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Transparency 10 Years after the Pay Raise

JULY 7, 2015  | by JAMES PAUL, ELIZABETH STELLE

Today marks the 10th anniversary of the midnight pay raise. Although it was ultimately repealed, the pay raise was a dark hour in Pennsylvania political history. Over the past decade, though, state government has steadily moved toward increased openness, transparency, and accountability.

Here are a few reforms lawmakers have enacted to shed more light on state government:

  • Open records law and creation of the Office of Open Records
  • PennWatch, a searchable database of state expenditures
  • Lobbying disclosure law
  • Independent Fiscal Office (IFO), which releases independent revenue projections and selected analysis of legislative proposals
  • Legislative rules preventing middle of the night votes
  • Posting of roll call votes and fiscal notes online

Thanks to these measures, the public is better informed. Take Gov. Tom Wolf's budget proposal, for instance. Gov. Wolf may claim that his budget provides "property tax relief," but the IFO estimates it would amount to a $4.5 billion tax hike on Pennsylvanians in EVERY income level. That's just one example of how enhanced transparency helps taxpayers uncover the truth.

In that same spirit, the latest legislative push for transparency would shine light on negotiations for state worker contracts. Currently, taxpayers are kept in the dark about a process that adds millions of dollars each year to the cost of government.

Transparency alone will not return Pennsylvania to prosperity, but it serves as a powerful tool combating half-truths that are used to justify greater burdens on Pennsylvania families.


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Ink Running Dry on Wolf’s Veto Pen

JULY 6, 2015  | by JAMES PAUL

Gov. Tom Wolf’s veto pen may be running out of ink. 

In the span of one week, Pennsylvania’s “different kind of governor” vetoed a no-tax-hike budgetliquor privatization, the school code and the fiscal code. He is currently debating whether or not to veto pension reform, as well. But that’s not an exhaustive list.

By vetoing the budget bill, Gov. Wolf turned down a $100 million increase for Basic Education, a $20 million increase for Special Education, a $30 million increase for early education, and $50 million more for higher education. He even vetoed the implementation of a new, bipartisan school funding formula—particularly curious since the formula, which would distribute funds based on student need, has been universally applauded.

At every turn, Gov. Wolf has embraced and perpetuated the myth that Pennsylvania schools are underfunded and suffering from a phony “billion dollar cut.” The administration conveniently ignores the fact that Pennsylvania spending per student ranks 10th in the country, and total school spending is at an all-time high. Seemingly nothing can deter Gov. Wolf on his quest to raise taxes—in the form of income, sales, and severance taxes—on families and small businesses.

Rather than seek common ground or areas of compromise, the governor insists on a budget—his own—that was voted down 0-193.

Thankfully for working families who would be burdened by Wolf’s tax increase, even 4 billion vetoes cannot enact $4 billion in new taxes.


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Gov. Wolf Does Understand Economics

JULY 6, 2015  | by NATHAN BENEFIELD

Last Thursday, Gov. Tom Wolf vetoed legislation passed by the general assembly that would allow private retailers to sell wine and liquor. As my colleague Bob pointed out, his reasons don’t hold up to scrutiny.

Others have noted the inconsistencies and lack of rational thought in Gov. Wolf's veto message. Jacob Sullum, writing for Reason, points out

The prediction of higher prices is not only inconsistent with basic economic principles and the experiences of the three dozen or so states that already have private liquor sales. It is also inconsistent with another major argument used by opponents of privatization, who say abolishing the state monopoly will lead to more drinking and more alcohol abuse.

The Pittsburgh Post-Gazette editorial board contrasts Wolf’s claim with the experience in neighboring states, where most Pennsylvanians actually shop for lower prices and better selection

But in written remarks Thursday, the governor claimed the bill made "bad business sense," saying it would mean "selling an asset and risking higher prices and less selection for consumers." Apparently, he's never had the far-better experience of buying a bottle of wine to go with dinner ingredients or the vast selection of adult beverages that is available across the state’s borders in New York, Ohio, West Virginia, New Jersey and Maryland.

Jonathan Adler, writing on the Volokh Conspiracy blog of the Washington Post, makes a mockery of Wolf’s veto message.

Pennsylvania Governor Tom Wolf vetoed the legislation, claiming allowing private wine and liquor sales would lead to "higher prices and less selection" for consumers. No, really. That was the explanation.

Adler, with his title, suggests Wolf doesn’t understand economics, or at least has other reasons.

To be clear, Gov. Wolf absolutely understands economics, and knows that a market-based system will result in lower prices and greater selection.

And Gov. Wolf certainly understands that "modernization" proposals, which literally call for government increasing the price of wine and liquor, will result in higher prices.

No, Gov. Wolf is simply parroting the rhetoric of government union leaders who gave $3.4 million to his campaign and now are demanding political return.

Of course, Gov. Wolf can't say in a veto message that he's beholden to union leadership and trying to raise money for a new PAC, so he pretends he doesn't understand economics and has never bought alcohol in another state.


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Poor Excuses Used to Prolong PLCB's Power

JULY 6, 2015  | by BOB DICK

Gov. Wolf missed an opportunity to be a different kind of governor. He was positioned to finally end the corrupt and inefficient state-controlled liquor system. He opted for the status quo instead.

In a press release explaining his veto of liquor privatization, the governor parrots talking points used by the United Food and Commerical Workers (UFCW)—the state store employees union—to explain why the government needs to sell wine and spirits. Needless to say, the excuses fail the red-face test.

Let’s take them one by one:

This legislation falls short of a responsible means to reform our state liquor system and to maximize revenues to benefit our citizen[sic]...

The primary function of the Pennsylvania Liquor Control Board (PLCB) should not be to wring dollars from consumers. But, for the sake of argument, let’s say it should. The privatization plan put forth by Republicans raises $220 million annually. In contrast, the governor’s own “modernization” plan raises $185 million. If maximizing revenue is the goal, the Republican plan wins.

It makes bad business sense for the Commonwealth and consumers to sell off an asset, especially before maximizing its value.

The PLCB isn’t an asset. In fact, the agency’s net income is scheduled to decline due to operating costs. It’s a liability. And it has consistently failed taxpayers and entrepreneurs. And if the governor is truly concerned about "bad business sense" then perhaps he should study the PLCB's recent history, lest we forget TableLeaf wine, the failed kiosks, the Wine Shrine...

During consideration of this legislation, it became abundantly clear that this plan would result in higher prices for consumers.

The governor has a point. Increasing revenue by $220 million annually through licenses, permits and renewal fees will lead to higher prices. But the governor’s alternative, liquor modernization, gives the PLCB the power to mark up the prices of its products. In other words, you pay more under his favored plan too.

In the most recent case of another state that pursued the outright privatization of liquor sales, consumers saw higher prices and less selection.

Although he doesn’t state it explicitly, it appears Gov. Wolf is referring to liquor privatization in Washington. But privatization isn't to blame for the price increases. The real culprit is the state’s liquor taxes, which are the highest in the nation. As for the claim about selection, the number of WA liquor stores increased by 327 percent. It defies logic to suggest a large increase in stores led to a decline in selection. 

Enough excuses. Free the booze.


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Growing Bipartisan Support for Municipal Pension Reform

JULY 2, 2015  | by NATHAN BENEFIELD

Public Pension Reform

On Tuesday, a task force spearheaded by Auditor General Eugene DePasquale released its recommendation for municipal pension reform. The report recommends, among other things, more transparency and accountability in municipal pensions and taking pensions out of the collective bargaining process.

This report is the latest in a string of bipartisan efforts to tackle the municipal pension problem.

Last week, the Senate Finance Committee advanced SB 755, legislation that would indeed take pensions out of collective bargaining and put all new public safety employees into a defined contribution plan.

SB 755 has the support of the Commonwealth Foundation along with the Coalition for Sustainable Communities—a coalition of local officials and business leaders. But for the first time, the legislation received Democratic legislative support. Sen. Art Haywood, from Montgomery County and a former township commissioner,  joined with Republicans to advance the bill.

Other Democratic Senators also indicated they might be open to supporting the final legislation.

The panel's ranking Democrat, Sen. John Blake, D-22, Archbald, voted against the bill as did other caucus members with one exception. But Mr. Blake said he’s keeping the option of eventually supporting the bill open, depending on what a pending report from Gov. Tom Wolf’s task force on municipal pensions recommends.

Mr. Blake said he’s concerned that switching to a defined-contribution plan could ultimately lead to more pension debt. He noted that Carbondale Mayor Justin Taylor supports the bill.

Sen. John Yudichak, D-14, Plymouth Twp., said he plans to keep an open mind about municipal pension changes if the bill reaches the Senate floor. He said pension changes are one reason why Nanticoke is ready to leave Act 47 distressed municipality status.

Of course, municipal pension reform has been a top priority for Democratic mayors from across the commonwealth for some time. As the Pittsburgh Post-Gazette reports:

[Pittsburgh] Mayor Bill Peduto has pushed hard this year for overhauling municipal pensions, joining nine other Democratic mayors in chastising Democratic legislators for what they called a failure to act, and has met with the governor and legislators on the issue.

"His message has been that pension reform is the number one priority for this city and every other one in the state," said Tim McNulty, Mr. Peduto’s spokesman.

Mr. Peduto and other proponents have said looming election cycles and the heavy political influence of public safety unions may make future efforts to overhaul the system difficult.

"It's going to be a hard reach to do state pension reform this year and municipal pension reform next year," said Lancaster Mayor J. Richard Gray.

While budget discussions continue under the Capitol dome, addressing municipal pensions is no less urgent. And given the bipartisan support behind this effort, the time is ripe.


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Pivotal Pension Reform Passes to Wolf

JULY 1, 2015  | by ELIZABETH STELLE

Yesterday, the General Assembly passed landmark legislation to free homeowners from skyrocketing property taxes, make school budgets go further, and protect public employees from politics.

SB 1 bill reforms the pension system by placing new state employees and school teachers in a defined-contribution retirement plan, similar to a 401(k). The bill passed the House of Representatives 106 to 89 and the Senate concurred with a 29 to 20 vote.

Please take a minute to thank your lawmakers for working to get politics out of pensions.

For years, public servants' retirement benefits have been at the mercy of political whims, with past legislatures making empty promises. Pension underfunding, along with market downswings, have left taxpayers with a $53 billion pension liability and skyrocketing local property taxes (an extra $600 per homeowner since 2008-09).

SB 1 not only stops the bleeding, but also benefits public employees by giving them stability, portability, and protection from political manipulation through a defined-contribution plan. The bill also provides employees with a cash-balance plan, adjusts the calculation of lump sum withdrawals to make them revenue neutral, and reduces "pension spiking" practices. SB 1 also puts lawmakers in the same defined-contribution plan as new employees, once they are re-elected.

The bill would save about $11 billion over the long-term.

Meanwhile, Governor Wolf continues to insist we do not have a pension crisis. A veto would be a huge blow to the commonwealth, paving the way for future credit downgrades, education cuts, and tax hikes.


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One Signature Will End PA's Prohibition

JULY 1, 2015  | by BOB DICK

The Pennsylvania legislature made history yesterday. For the first time since the creation of the state-controlled liquor system in 1933, both houses of the General Assembly voted to remove government from the business of selling wine and spirits.

The Senate voted 27-22 in favor of privatization while the House voted 113-82 to remove government from the booze business.

The privatization plan, HB 466, would gradually phase out the state stores and lease wholesale responsibilities to the private sector for a period of 10 years. After the 10 years is up, the state would completely divest itself of the wholesale system.

The bill gives beer distributors the exclusive right to purchase a permit to sell wine and spirits for six months. After six months, any remaining permits will be auctioned off to interested buyers. Establishments with a "R" license (taverns, restaurants, hotels, grocery stores) will also be allowed to purchase a permit to sell wine and liquor. The entire plan is expected to net the state $220 million annually, mainly through the sale of permits, licenses, and renewal fees.

While the bill is far from perfect, it takes a big—historic—step toward ending the PLCB's stranglehold on one of the last vestiges of Prohibition in the country. Now, the only person standing in the way is Gov. Wolf. Let's hope he sides with the majority of voters over special interests.

Join us in thanking the legislators that voted for this bill. To see if your lawmaker was one of them, click the vote counts above and take a minute to send them a note of thanks.


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