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FEBRUARY 7, 2012 | Policy Points by COMMONWEALTH FOUNDATION
Pennsylvania State Budget Background & 2012 Preview
The FY 2011-12 total operating budget of $63.4 billion, which included $27.1 billion in General Fund spending, represented the first year-to-year reduction in state spending in at least 40 years. However, as the economy continues to struggle out of a recession and with increasing costs in public welfare, corrections, pensions, and debt, the FY 2
FEBRUARY 6, 2012 | Policy Points by COMMONWEALTH FOUNDATION
Pennsylvania State Budget Toolkit
2012 Budget Resources
The FY 2011-12 total operating budget of $63.4 billion, which included $27.1 billion in General Fund spending, represented the first year-to-year reduction in state spending in at least 40 years. However, as the economy continues to struggle out of a recession and with increasing costs in public welfare, corrections, pensions, and debt, the FY 2
MAY 11, 2011 | Commentary by NATHAN BENEFIELD
A Penny Saved or a Penny Burned?
For any family, saving a few dollars for the future and paying off credit card bills would be the fiscally prudent path. Likewise, state lawmakers should resist the temptation to spend every penny they have, and consider retaining any surplus to pay off debt or put toward pensions.
Recent Blog Posts
JANUARY 11, 2012
Turnpike Commission Defends Ballooning Debt
Following our post yesterday, the Pennsylvania Turnpike Commission wanted to make sure we saw their response to Auditor General Jack Wagner's warning on their growing debt.
The Turnpike Commission wanted to ensure bondholders that, "the PTC remains committed to meeting all its financial obligations—including obligations to bondholders—by sound management of our debt load and by reinvesting in our toll-road system."
But while bondholders (and bond attorneys) may rest assured, taxpayers and drivers should not.
Act 44 may not result in a default—as a government monopoly, the Turnpike Commission can raise tolls without threat of competition, and bonds are further backed by Pennsylvania taxpayers—but that doesn't make it sound policy.
The Turnpike Commission's Annual Financial Report (see page 24) shows that the PTC lost $523 million, $1 billion and $891 million respectively each of the last three years. That should worry taxpayers and motorists.
Indeed, Moody's rating agency latest grade of Turnpike bonds gives it a "negative outlook." Why? The Turnpike Commission needs to keep raising tolls.
The negative outlook reflects the possibility that larger than currently forecasted toll rate increases will be necessary to maintain sound financial operations and targeted debt service coverage levels. The outlook also incorporates the possibility that the turnpike could be tapped to pay for more of the state's growing unfunded infrastructure needs.
Let's not forget, Act 44 was created as an alternative to leasing the Turnpike to a private investor and manager. The claim was that a private company would ... wait for it ... raise tolls!
So is the commonwealth better off having borrowed $5 billion under Act 44 compared to getting $12 billion in an up-front lease payment?
The Turnpike Commission's persistent defense of Act 44 might make one think that its Chief Operating Officer is the Senate staffer who wrote the offending legislation.
posted by NATHAN BENEFIELD | 01:38 PM | 0 comment
DECEMBER 19, 2011
Time to End Borrowing for Corporate Welfare
The Pa. House is expected to vote this week on SB 1054, legislation to authorize $1.66 billion in state borrowing for the "capital budget." The annual cost of this bill would be $115 million per year for 20 years in annual interest and principle payments. In a memo to legislative leaders urging passage, Budget Secretary Charles Zogby claims the additional debt is needed to finance projects the commonwealth is already contractually obligated to fund.
Of this borrowing, $270 million would be for Redevelopment Assistance Capital Projects (RACP). Borrowing for RACP is one of the drivers of Pennsylvania state debt—a growing problem as interest payments continue to rise, while taxpayers' debt continues to grow year after year.
RACP borrowing has been used to fund everything from corporate headquarters to sports stadiums to the Arlen Specter Library. Most recently, RACP was the source of a $3 million grant to the Second Mile, the charity founded by accused child molester Jerry Sandusky.
In response, Rep. Rosita Youngblood (D-Philadelphia) is holding a press conference tomorrow to call for reforms to the RACP program to promote greater transparency and accountability. These reforms are much-needed, but better yet would be to eliminate future RACP borrowing altogether and stop accruing debt for corporate welfare.
posted by NATHAN BENEFIELD | 05:10 PM | 0 comment
JUNE 13, 2011
Unemployment Compensation Reform on Tap
This week, the House is expected to take up SB 1030, which would change Unemployment Compensation guidelines to ensured continue benefits for about 45,000 Pennsylvanians and help bring the fund, now $3.8 billion in debt, into balance.
A few of the reforms SB 1030, as amended by the House, would address include:
- Requiring those collecting benefits to actively seek a new job. This would require taking actions like posting a resume on Careerlink, registering for employment services within 30 days, and applying for similar positions within 45 minutes of home.
- Limiting the ability to collect both unemployment benefits and severance pay. Under SB 1030, laid off workers could get $11,000 in severance pay and still collect state unemployment benefits on day one. Currently, there is no limit on collecting severance pay and unemployment compensation simultaneously.
- Increasing the earnings necessary to qualify for unemployment compensation from $50 per week to 16 hours at minimum wage ($116 per week).
- Tightening eligibility requirements for those who leave work voluntarily and extending the misconduct definition to include threatening co-workers, theft, certification expiration, or coming to work under the influence of drugs or alcohol. In the past, fuzzy definitions have allowed disruptive employees to qualify for benefits.
The amended bill now contains an estimated $140 million in savings [subscription to link]. This would be enough to balance the fund in 27 years. HB 916, Rep. Perry's bill which was defeated on the House floor on second consideration in May, contained an estimated $632 million in savings, enough to pay back the $3.8 billion the state owes to the federal government by 2018.
Pennsylvania currently has one of the highest unemployment tax rates per employee. Moreover, when the fund is insolvent, as it is now, it triggers an automatic unemployment tax increase—that is, a higher tax for each job, making it more expensive to retain workers.
The current proposal is a good start, as fundamental changes are essential if Pennsylvania's unemployment compensation fund is to remain solvent.
posted by ELIZABETH STELLE | 10:17 AM | 0 comment
