"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
Philadelphia's teacher shortage is making headlines, and city council is demanding the district solve the problem. A classroom without a permanent teacher is certainly unfair to students, yet Philadelphia teachers are regularly pulled out of classrooms to work full time for the teachers' union.
Each year, up to 63 district employees may be plucked from Philadelphia's classroom to do full-time union work on the taxpayers dime.
These employees, known as "ghost teachers," aren't unique to Philadelphia. Across the state, dozens of teachers and other school district employees are absent from the classroom. Instead, they work full-time jobs with the local teachers’ union. These teachers stay on district payroll, receive health benefits, amass pension credits, and accrue seniority, just as if they were actually teaching
Ultimately, lawmakers should end Pennsylvania's ghost teaching problem by passing HB 2125. The bill would ban ghost teaching with two exceptions: extended leave for statewide teacher union officers and 15 days of annual release time for all other teachers. This reform would also require the unions to reimburse every cent associated with the cost of absent teachers.
Students deserve more than ghost teachers who never show up for class, and taxpayers deserve more than paying for an empty teacher’s desk.
RELATED : EDUCATION, TEACHER UNIONS, UNIONS & LABOR POLICY
The Pennsylvania Liquor Control Board (PLCB) is boasting about record sales again. But as we've pointed out in the past, that’s not much of a feat when you have a monopoly over liquor sales. And the claim is even less impressive when you realize the agency is $238 million in debt.
Like a private business, the PLCB now has to include pension liabilities on its balance sheet. These liabilities are in excess of the agency's assets, putting the PLCB (officially) in the red for the second year in a row.
Despite the agency's financial position, it's generated positive attention recently by allowing grocery stores to sell wine, but this is only a small step in the right direction. The most effective way to serve Pennsylvanians is to fully privatize the system. This is important for two reasons.
First, it eliminates any potential future bailout of the PLCB. Approximately 85% of PLCB’s revenue comes from taxes. That means the state will still collect revenue with a privatized system, but the $238 million debt will only grow as the pension liabilities rise. We should take the initiative to privatize the system before it becomes a bigger burden on taxpayers.
Second, privatization would benefit consumers. It would give consumers more choices, convenience and competitive pricing.
It’s time Pennsylvania joins the 48 other states that enjoy more efficient government and consumer convenience.
RELATED : PRIVATIZATION, LIQUOR STORE PRIVATIZATION
The school board and the local teachers union in the West Shore School District are in conflict. The two sides have been unable to agree on a contract for two and a half years, and now the negotiation process itself is in dispute.
In a nod to transparency, the school district decided to publicize its contract offer to the West Shore Education Association (WSEA). The union—upset with the move—accused the district of hijacking negotiations. The president of the WSEA claimed the district promised not to negotiate in public.
Ideally, all public-sector contract negotiations should involve the public. After all, the taxpayer is footing the bill.
Instead, the typical collective bargaining process is conducted in secret, shutting out the very people who make the process possible.
To give communities a greater voice, Senator Pat Stefano introduced SB 645—legislation that would require public employers to provide public notice of collective bargaining agreements two weeks before they’re approved. Releasing the details before final approval gives taxpayers the ability to advocate for changes to contracts they deem unacceptable.
School boards could go even further, opening up negotiations to the public and providing a summary of each contract. Of course, the district should make it clear these steps will be taken before the process begins to avoid accusations of negotiating in bad faith.
Pennsylvanians are already benefiting from transparency over state contract negotiations. Lawmakers now have an opportunity to build on their good work.
RELATED : ACCOUNTABLE GOVERNMENT, TRANSPARENCY, EDUCATION, TEACHER UNIONS
Gov. Wolf is embracing a government that works for the wealthy and well-connected. Yesterday, his administration announced its intention to commit more than $20.5 million to Aramark just to keep the corporation located in Philadelphia.
The governor’s preferential treatment of Aramark stands in stark contrast to his treatment of the state’s 300 vape shops. In short, he's putting shop owners out of business for $13 million in revenue, while handing over $20 million to a multi-billion-dollar corporation.
In each of Wolf's first two years in office, his budget included a 40 percent excise tax on the vaping industry. It failed the first year. Unfortunately, lawmakers relented and passed the tax in July as part of a larger $650 million tax increase.
The results have been disastrous. Dozens of shops—like Scottie Freeman’s— have closed their doors and many more are on the verge of closing if the tax is not repealed. Despite the devastation sweeping through the industry, Gov. Wolf hasn’t demonstrated any urgency to undo the damage he’s responsible for.
Maybe the most exasperating aspect of the tax is how much pain its causing for a relatively insignificant impact on the state’s budget picture. The tax is projected to raise about $13 million in total revenue—representing only 2 percent of the $650 million tax increase package. This figure is also $7 million less than what the state just committed to Aramark. Is there a better example of government playing favorites?
Gov. Wolf has made a conscious choice to treat some businesses and people better than others. Aramark and Amazon—they get subsidies. Vape shop owners—they get a platitude-filled press statement about their concerns. Talk about inequality.
Pennsylvania has a history of handing out corporate welfare. It’s hasn’t worked. And it creates a system people grow to resent—one where government picks winners and losers without worrying about the economic consequences. It needs to end.
If Gov. Wolf and lawmakers want to make things right, they can start by repealing the excise tax and reducing corporate welfare. This will help bridge the inevitable budget deficit, but more importantly, prevent further harm to Pennsylvanians.
RELATED : TAXES & SPENDING, PENNSYLVANIA STATE BUDGET, TAXATION
APSCUF—the union representing faculty at state-owned universities—has begun a vote to authorize a strike.
One of APSCUF's complaints with the proposed contract is higher health care expenses. In a recent email to faculty members, APSCUF touted the fact that employees would now have a deductible with their health insurance plans--$250 for singles and $500 for families. That is, their current contract offers a ZERO deductible.
In contrast, the average deductible nationwide for employer-provided coverage is more than $1,300 for single coverage and more than $2,000 for family coverage, according to the Kaiser Family Foundation.
Likewise, APSCUF is complaining about out-of-pocket limits on health care since employees currently pay $0 out-of-pocket. The proposed contract would limit out-of-pocket expenses to $1,000 for single coverage and $2,000 for family coverage.
Nationwide, 83 percent of employee-sponsored individual plans have an out of pocket maximum of more than $2,000, according to the Kaiser Family Foundation.
If students and parents wonder why tuition costs so much, they should look to faculty health care benefits that are out of whack compared to the private sector.
RELATED : HIGHER EDUCATION, PUBLIC EMPLOYEE PENSIONS AND BENEFITS, UNIONS & LABOR POLICY
Did you know Pennsylvania has more than 3,000 taxing authorities? It’s a staggering number that exceeds almost any other state in the nation. Not only does this create confusion and raise costs for job creators, it also enables politicians to manipulate the tax code to benefit special interests.
The result, as we discussed with Travis Brown of Forbes, is entrepreneurs and job-seekers take their talents to other states.
Jared says simplification and neutrality are the keys to a tax structure that promotes, rather than stymies, business investment. We talk with Jared about what Pennsylvania can learn from North Carolina, which is enjoying a boom after responsibly reforming its tax code.
What can we change? Pennsylvania’s high tax rates, coupled with carve-outs for special interests, means politicians pick winners and losers. This system is both inefficient and unfair. Jared says there’s a better alternative. “Neutral, across-the-board rate reductions is the best incentive package you could create,” he says, “And it would apply to every business, not just those favored few.”
Here’s the bottom line: Broadening our tax base and reducing rates for everyone will make us more competitive.
RELATED : JOBS & ECONOMY, TAXES & SPENDING, TAXATION
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The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.