Unions Pouring Big Money in Pennsylvania Elections

FEBRUARY 27, 2014  | by NATHAN BENEFIELD

As we've pointed out in the past, unions—often using campaign contributions collected at taxpayer expense—dominate political spending and electioneering.

Well, the first campaign finance reports for the 2014 gubernatorial election have been released, and sure enough, unions (along with millionaires self-financing their own campaigns) are pouring money in. As Media Trackers PA reports, union PACs have given more than $500,000 directly to candidates already, not counting the millions unions spend from dues supporting or opposing candidates with independent ads.

Media Trackers’ review of campaign finance documents filed with the PA Department of State reveals that, to date, labor unions have collectively made contributions totaling more than $550,000 to State Treasurer Rob McCord and Montgomery County Congresswoman Allyson Schwartz.

We've noted before the unfortunate irony that State Treasurer Rob McCord signs the checks that fund government union PACs before those union PACs contribute to his (or his opponents') campaign.

Another former state treasurer has also weighed in on the issue of taxpayer collection of union political money. Bob Casey, now U.S. Senator, also signed checks from the state treasury over to government union PACs, while his campaigns were funded by those same union PACs. According to FollowtheMoney.org, Casey's top eight "noteworthy contributors" as a candidate for state offices were all Union PACS, five of which use taxpayer resources to help collect their political money.

Not surprising, Casey supports this political power cycle.

TABLE 2: Noteworthy Contributors to CASEY JR, BOB

Noteworthy Contributor

Years

Records

↓Total↓

SERVICE EMPLOYEES INTERNATIONAL UNION
Public Sector Unions
2002-2004 9 $840,000
UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION
General Trade Unions
2000-2002 8 $170,500
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS
General Trade Unions
2002-2004 5 $105,900
INTERNATIONAL BROTHERHOOD OF TEAMSTERS
Transportation Unions
2002 2 $100,000
ELECTRICAL WORKERS LOCAL 98
General Trade Unions
2004 6 $49,500
PENNSYLVANIA AFL-CIO
General Trade Unions
2000-2004 23 $31,600
AFSCME COUNCIL 13
Public Sector Unions
2004 4 $20,000
ASSOCIATION OF PENNSYLVANIA STATE COLLEGE & UNIVERSITY FACULTIES
Public Sector Unions
2004 2 $20,000

Taxpayer resources should never be used for politics. Click here to tell your lawmakers to end this practice and its corrupting influence.


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End Special Subsidies to Lower Taxes for All

FEBRUARY 26, 2014  | by ELIZABETH STELLE

Sony Site

Taxpayers have spent millions on four different occasions to subsidize the infamous "Sony site" in Westmoreland County. In the 1970’s Volkswagen got $70 million in state aid under Gov. Milton Shapp. Under Gov. Bob Casey, Sony moved in with $40 million in taxpayer cash, and secured another $1 million under Gov. Rendell before moving out just two years later in 2007. Finally, in 2011 taxpayers gave $10 million to rehabilitate the site.

The Sony saga is hardly an anomaly. We've identified $706 million in "economic development" grant and tax credit programs from the 2013-14. This total doesn't include independent agencies like the Commonwealth Financing Authority or borrowing for Redevelopment Assistance Capital Spending.

Corporate Welfare Grant & Loan Programs 2013-14 Budget (Thousands)
General and Special Funds
Agricultural Research $787
Agricultural Promotion, Education and Exports $196
Ben Franklin Tech Development Authority Transfer $14,500
Commonwealth Financing Authority Transfer $78,019
Council on the Arts $886
Discovered in PA Developed in PA $9,900
Food and Marketing Research $494
Grants to the Arts $8,179
Hardwoods Research and Promotion $350
Industry Partnerships $1,813
Infrastructure and Facilities Improvement Grants $19,409
Keystone Communities $11,300
Keystone Works $1,000
Livestock Show $177
Marketing to Attract Business $3,442
Marketing to Attract Tourists $7,435
Municipalitites Financial Recovery Revolving Fund Transfer $7,096
New Choices/New Options $500
Open Dairy Show $177
Partnerships for Regional Economic Performance $11,880
Pennsylvania First $37,800
Pennsylvania Race Horse Development Fund $301,225
Tourism-Accredited Zoos $550
World Trade PA $7,296
Youth Shows $140
Total General and Special Funds $524,551
Targeted Tax Credits
Film Tax Credit $60,000
Job Creation Tax Credit $10,100
Research and Development Tax Credit $55,000
Keystone Opportunity Zone $21,800
Keystone Innovation Zone $25,000
Alternative Energy Production Tax Credit $10,000
Total Targeted Tax Credits $181,900
Total Amount $706,451

By eliminating these targeted incentives and instead creating tax relief for all businesses, Pennsylvania could lower the corporate tax rate by 2.91 percent, dropping the tax rate from 9.99 to 7.08 percent. That's assuming a purely static model, not factoring in new businesses attracted with the lower rate. 

Instead of having the second-highest corporate tax rate in the nation (and the highest flat rate), Pennsylvania would land in the middle of the pack with the 22nd highest ranking. That is, we would bypass 20 states that currently have lower corporate income taxes. 

Other states are catching on to the failure of targeted tax incentives. According to the Tax Foundation, New Mexico recently passed a business tax rate reduction and reduced the number of special interest tax credits, with a Democratic legislature. Indiana is keeping corporate tax reductions on track and North Carolina cut their corporate tax, and repealed some selective credits.

As other states continue to reduce the barriers for business, Pennsylvania will become even more uncompetitive despite the billions spent to woo businesses each year.

For more on the failure of Pennsylvania’s corporate welfare spending see our Blueprint for a Prosperous Pennsylvania.


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Myth: PA Spends Less on Education

FEBRUARY 25, 2014  | by NATHAN BENEFIELD

There are many myths circulating about how much Pennsylvania spends on public education. One such myth is that the state government used to provide 50 percent of all revenue for public schools, equaling the local share. State records indicate otherwise. 

The state's share of education funding has never been as high as 50 percent. Records from the Pennsylvania Department of Education show that the state's percentage of education revenue reached an all-time high of 45 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 frame.

Pennsylvania Education Revenue by Source

Moreover, claims about the percentage of education revenue coming from the state is often used to advocate for more state spending.

However, according to NCES data, Pennsylvania’s state aid per student is about the national average, and we rank middle-of-the-pack in state revenue per student. The "state share" is lower because Pennsylvania’s local education revenue is nearly $3,000 per student more than the national average, ranking Pennsylvania 7th in the nation.

Indeed, Pennsylvania taxpayers spend significantly more per student—about $3,000 above the U.S. average—and more than most other states.

Per Pupil Revenue Total Federal State Local
United States  $12,217 $1,527 $5,394 $5,296
Pennsylvania  $15,153 $1,851 $5,230 $8,073
 
PA Rank 10 11 27 7
Source: National Center for Education Statistics, Digest of Education Statistics, Table 235.20. Revenues for public elementary and secondary schools, by source of funds and state or jurisdiction: 2010-11, http://nces.ed.gov/programs/digest/d13/tables/dt13_235.20.asp 

Here are some more facts about Pennsylvania education spending.


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A Look at Job Growth in Pennsylvania

FEBRUARY 25, 2014  | by BOB DICK

Pennsylvania Economy

Pennsylvania’s economy is beginning to recover from the 2007 recession, according to the latest numbers from the Bureau of Labor Statistics.

Since 2010, Pennsylvania has added 86,400 jobs, ranking 21st among states. In contrast, Pennsylvania added just 41,300 jobs from 2002-2010.  This lack of job growth can be attributed to a variety of things including national trends; Pennsylvania's tax burden, which is the 10th highest in the nation; and the state's regulatory environment and growth in government spending—issues which lawmakers need to tackle.

Pennsyvlania Job Growth by Governor

While Pennsylvania employment has not returned to its prerecession peak, the state is slowly making progress. Claims of Pennsylvania ranking near the bottom in job creation during the past few years are widespread but misleading. In fact, the state has ranked poorly in job growth for decades.

Policymakers in Harrisburg should consider reforms to encourage job growth. Here are just a few recommendations from our new report, Blueprint for a Prosperous Pennsylvania:

End Corporate Welfare and Lower the Tax Burden: Pennsylvania will spend approximately $1.6 billion on corporate welfare this fiscal year. Instead of handing out loans, tax credits, and special favors to privileged companies, policymakers should end these programs and use the savings to cut Pennsylvania’s corporate tax rate, which is the second highest in the world.

Enact Welfare Reform: Pennsylvania's welfare budget continues to grow at an unsustainable rate. To prevent burdening Pennsylvanians with even higher taxes, policymakers should crackdown on the fraud and waste inherent in welfare programs, and demand flexibility from the federal government to restructure the welfare system’s incentives, which only hurt those trying to escape poverty.

Enact Spending Limits: In order to put Pennsylvania on a sustainable path, lawmakers should adopt fiscal restraints, such as spending limits for core functions of government.  The limits would control the growth of government spending by tying increases to inflation and population growth.  Had state spending limits been enacted in 2000, taxpayers could have seen savings of $4,000 per family of four. 


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Gov. Rendell Left Pennsylvania a Big Deficit, and it's Still Here

FEBRUARY 24, 2014  | by NATHAN BENEFIELD

Recent headlines have former Gov. Ed Rendell challenging Gov. Tom Corbett on the issue of the deficit he left the current administration. Gov. Corbett has campaign ads stating he closed a $4.2 billion budget deficit. Gov. Rendell recently claimed he left Corbett a $1 billion surplus.

Gov. Rendell’s claim is the easier to address—he is simply using the word "surplus" incorrectly. When he says "$1 billion surplus," he means there was a fund balance just over $1 billion in June 2011—effectively, there was money remaining in the state's bank accounts. But spending exceeded General Fund revenue in each of Gov. Rendell's last 3 budgets.

Make no mistake, by any accounting standards, or just the dictionary, this is considered a "deficit." No business or household could claim to be running a surplus simply because they had some money in their checking account at a certain point in time.

The question is exactly how large the deficit was when Gov. Corbett took office. The "$4.2 billion deficit" comes from Gov. Corbett’s first budget proposal. It is based on the fact that the 2010-11 budget included $2.65 billion in federal stimulus funding, $750 million in one-time revenue, and $665 million in one-time revenue reductions (see page 4 of the slide presentation).

This overstates the amount of cuts Gov. Corbett had to make to balance the budget. As noted above, the state wasn't spending every last dime in 2010-11 (though some lawmakers wanted to), giving some leeway. Revenue also increased in 2011-12, and both Gov. Rendell and Gov. Corbett made some freezes to 2010-11 spending.

By the end of fiscal year 2010-11, the state had spent about $1.8 billion more than it collected in revenue.

Perhaps the most important thing taxpayers should know is that the state has been spending more than it collects in revenue for six straight years. Gov. Corbett's proposed budget would make that a seventh year.

This deficit spending was made possible through temporary federal stimulus funds, one-time transfers from other funds (like the Rainy Day Fund and the MCare Fund), and spending down the remaining fund balance.

Gov. Corbett has done well to balance the budget, given the deficit left to him, without raising the income or sales tax. But we aren’t out of the hole yet, as the state continues to deal with a structural deficit.

PA Budget Deficit or Surplus

Moreover, this problem will only get worse. The commonwealth continues to pay less than it needs to for pension costs, given the artificial caps set by Act 120 of 2010 (indeed, Gov. Corbett’s proposed budget includes lowering these caps further).

Because of rising pension payments, along with welfare spending that continues to grow faster than our economy, the Independent Fiscal Office projects the deficit to grow to $2.1 billion by 2018-19. Years of overspending have created a structural deficit in Pennsylvania, and it's still here.


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Tableleaf is Dead, Booze Bureaucracy Remains

FEBRUARY 24, 2014  | by BOB DICK

In a long overdue move, the PLCB is discontinuing its in-house wine, Tableleaf. As a refresher, Tableleaf is the PLCB's own government-branded wine, which it introduced in 2011. Tableleaf is made in California and directly competes with Pennsylvania's own burgeoning wine industry—and was backed by up to $10 million of taxpayer money in branding and marketing muscle. 

The introduction of Tableleaf was an obvious bureaucratic overreach and squeezed out Pennsylvania entrepreneurs. Ending production of government wine brands is a win for taxpayers, consumers, and Pennsylvania wineries.

But that bad decision is only a symptom of a larger problem: The PLCB has sole authority over determining what wine and spirits are bought and sold in Pennsylvania.

The PLCB’s booze bureaucracy forces entrepreneurs to jump through a variety of hoops just to propose selling a wine or spirits product in Pennsylvania.  It's a byzantine system, and here's how it works:

  1. In order to submit what the PLCB calls a "product proposal," you must first obtain a license from the Alcohol and Tobacco Tax and Trade Bureau (TTB), a federal government agency.
  2. Once you’ve obtained a license from the TTB, you must then apply for a Pennsylvania Vendor’s Permit, which costs $265, in addition to a filing fee that will run you about $700.  According to the PLCB’s website, payment of these fees does not guarantee your product will appear on state store shelves.
  3. Now that you have both the federal license and the vendor’s permit, you can send a “listing proposal” (only twice a year) to the PLCB that must contain the following:
    • A non-refundable listing proposal fee of $150 per item
    • Two presentation packets that must include: 
      • Completed New Item Request Form
      • Completed Standard Quotation and Specification Form
      • Two copies of the front and back label of the product.

The packets and check must then be mailed to the “Office of Product Selection” in Harrisburg.

Congratulations!  You have successfully completed the PLCB’s proposal process, that is, unless you’re required to make a presentation.  If that’s the case, you must present your product to the product manager responsible for your product's category.  Be sure to bring samples of your brand of wine or spirits.

Once the proposal process is completed, a decision follows. The PLCB's "Procedures and Policies for Vendors" states:

The Category Managers will make their recommendation to accept or reject an item based on several key factors, including price segment growth, category growth, projected annual profit per store, and marketing support being provided by the vendor/supplier.

The Director of Product Selection will submit recommendations to the Board for official decision.

Did you catch that? Even after completing the proposal process, the PLCB can still reject your product.  And because the PLCB is a statewide monopoly, you do not have the option of pitching your product to another store.  The PLCB has the final say. 

Creating a successful business is difficult; state government should not make the process even more difficult by creating a bureaucratic maze for entrepreneurs to navigate just to sell their product.

The solution to this bureaucratic nightmare is full privatization.  Entrepreneurs should not have their fate determined by a board in Harrisburg.  Instead, they should be free to negotiate with private wholesale and retail owners on the market.  That's true liquor liberty.


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Media Attention for Paycheck Protection

FEBRUARY 21, 2014  | by BOB DICK

Our new paycheck protection survey released this week has Pennsylvania talking. Why? The results show union members overwhelmingly agree that taxpayer resources shouldn’t be used for their unions' politics. 

The survey found 80 percent of union households do not believe taxpayer resources should be used to collect campaign contributions. 67 percent of union households believe taxpayer resources should not be used to collect union dues, and 58 percent favor paycheck protection legislation to end government unions’ unfair political privilege. These results has received coverage from a number of media outlets:

Our survey has also received attention from elected officials like Senator Eichelberger who wrote, "The results may seem startling to many, but to those of us who deal with unions regularly, it’s no surprise that the rank and file have the opposite position of the highly-paid union bosses you see quoted in the media."

Senator Eichelberger is exactly right. While union bosses oppose paycheck protection, the average union member supports ending the practice of using taxpayer resources to collect unions' political money. This disconnect should not come as a surprise given that members rarely hear from their state and national union officials.


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Big Labor's Billions Targeting PA

FEBRUARY 20, 2014  | by NATHAN BENEFIELD

Unions are spending millions on politics, and drumming up issues like a minimum wage increase, solely to win some elections, the New York Times reports today. Union leaders are specifically trying to defeat Republican governors and legislators in a few states, including Pennsylvania:

A.F.L.-C.I.O. leaders said they would focus this fall on four industrial battlegrounds — Michigan, Ohio, Pennsylvania and Wisconsin, traditional union strongholds — and Florida. Their hope is to not only oust the Republican governors of those states, but also to flip several of the legislative chambers. In all five states the Republicans control both houses.

Ironically, union leaders claim they are trying to catch up with big corporations after the Citizens United ruling—yet it was unions who benefit from the Citizens United ruling and the subsequent rise of "SuperPACs." As Eric Boehm of Watchdog.org reports:

An analysis by the Sunlight Foundation, a nonprofit that tracks political spending, of groups and individuals who wrote checks of more than $10,000 to super PACs and other political committees found big labor outspent big business by a margin of more than 2-to-1 during 2013.

Of course, unions dominated political spending long before that. Ten of the top 14 "heavy hitters" in national politics are unions, according to Open Secrets. Moreover, 18 unions spent more on politics than the Koch brothers, the supposed puppet-masters of the "vast right wing conspiracy."

But direct spending on federal elections is only the tip of the iceberg in terms of union political spending. In addition, unions spend heavily in state and local races, and far more in political activity and lobbying from union dues. Nationally, unions spent $1.7 billion on politics in 2011 and 2012.

 

Unions are able to dominate political spending because, unlike every other political organization, taxpayers support their spending binge. State and local governments, including school districts, collect union dues (that can be use for politics) and even their campaign contributions using public resources and send a check right to union leaders.

This unique privilege creates an unfair political advantage that hurts taxpayers, workers, and even union members.


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Plagiarism: Union Style

FEBRUARY 19, 2014  | by MATTHEW BROUILLETTE

Several letters to the editor opposing paycheck protection—ostensibly written by different teachers—have appeared in newspapers around the state. Their suspicious similarity provides a valuable lesson in a practice typically frowned on in the classroom: plagiarism.

The Pennsylvania Department of Education has an anti-plagiarism brochure aimed at what they call the "cut and paste generation." Under the heading "Student's Checklist for ePlagiarism Prevention" PDE notes, "Plagiarism in any form is dishonest. You dishonor yourself as well as the author and may jeopardize your reputation."

Perhaps the PDE should add the below examples to the brochure.

The real story (Williamsport Sun Gazette, February 9, 2014)

by Deb Kuhar, Unityville Teacher, East Lycoming School District

Instead of focusing on how to improve conditions for middle-class families, the governor and his supporters in the General Assembly are now pushing bills that would prohibit me from making voluntary payroll deductions, and eliminate my right to choose which organizations I support.

Legislation like this is being promoted all over the country by a network of out-of-state billionaires and corporate special interests.

They use right-wing front groups like the Commonwealth Foundation and the American Legislative Exchange Council, who refuse to identify their wealthy backers. These are the same shadowy groups who backed efforts to privatize Social Security and Medicare, and opposed increases in the minimum wage.

Focusing on the wrong priorities (Intelligencer Journal / Lancaster New Era, February 11, 2014)

by Jason Molloy, Hamilton Elementary School Teacher, School District of Lancaster

Instead of focusing on how to improve conditions for middle-class families, the governor and his supporters in the General Assembly are now pushing bills that would prohibit me from making voluntary payroll deductions, called “paycheck protection,” and would eliminate my right to choose which organizations I support.

Legislation like this is being promoted all over the country by a network of out-of-state billionaires and corporate special interests.

They use right-wing front groups like the Commonwealth Foundation and the American Legislative Exchange Council, who refuse to identify their wealthy backers. These are the same shadow groups that backed efforts to privatize Social Security and Medicare, and opposed increases in the minimum wage.

Public needs to know the truth (The (Lockhaven) Express, February 6, 2014)

by Mark Condo, Central Mountain High School Teacher, Keystone Central School District

These far right special interest organizations don't reveal their funders. These are the same shadowy groups who backed efforts to privatize Social Security and Medicare, and opposed increases in the minimum wage.

Instead of focusing on how to improve conditions for middle-class families, the governor and his supporters in the General Assembly are now pushing bills that would prohibit me from making voluntary payroll deductions, and eliminate my right to choose which organizations I support.

Corbett attacking middle class families (Observer-Reporter, February 8, 2014)

By Gordon Lowry, Trinity Middle School Teacher, Trinity Area School District

Instead of focusing on how to improve conditions for middle class families, Gov. Tom Corbett and his supporters in the Legislature are now pushing bills that would prohibit me from making voluntary payroll deductions and eliminate which organizations I support.

Thanks for the lesson, PSEA!

When Pennsylvania union members are allowed to speak for themselves, though, we found they overwhelmingly support paycheck protection legislation.


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Union Spokesmen Still Lying About Paycheck Protection

FEBRUARY 19, 2014  | by NATHAN BENEFIELD

Yesterday, I pointed out that union leaders would use every bogeyman and slogan in their playbook rather than explain why taxpayers should collect their political money.

As if on cue, Steve Herzenberg of the union-funded Keystone Research Center—in response to our poll showing the vast majority of union members support paycheck protection—ignored the issue entirely. Instead, he relayed his usual catchphrases about "right to work for less," even though HB 1507 and SB 1034 don't touch on the issue of Right to Work, and repeated some jibber-jabber about the "top 1 percent."

As a refresher, the Keystone Research Center's board is dominated by union leaders, and they receive large checks from government unions. According to the most recent reports from the Department of Labor, they received more than $120,000 from government union dues.

Government Union Funding to Keystone Research Center, 2012-13
Union Amount How they Reported It
UFCW 1776 $5,369 Representational Activities
SEIU Leadership Council $11,500 General Overhead
PSEA $33,025 Contributions, gifts and grants
AFSCME Council 13 $50,000 Political Activities
AFSCME Council 13 $6,500 Contributions, gifts and grants
American Federation of Teachers $15,000 Representational Activities
Total $121,394
Source: http://www.dol.gov/olms/regs/compliance/rrlo/lmrda.htm

Only AFSCME counted this funding as political activities. In other words, the $5 million from union dues Pennsylvania government unions reported spending on political activities and lobbying last year significantly understates how much money they spend on politics.

Amazingly, UFCW and the American Federation of Teachers had the gall to classify their support as "Representational Activities" (which is supposed to include only union costs for negotiating a contract and similar services), while SEIU called it "General Overhead"—as though funding a separate advocacy organization should be counted as a union's operating cost.

Significantly, these categories are included in "fair share fees" that non-union members can be forced to pay. That is to say, liquor store clerks, public school teachers, and social workers are forced to support the political agenda of the Keystone Research Center.

"Do you think government employees and taxpayers should be forced to support Keystone Research Center?" might even poll better than the 80 percent of union members who believe public resources shouldn't be used to collect campaign contributions. No wonder Herzenberg keeps changing the subject.


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Who are We?

The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.