Friday, April 29, 2011

Gov. Corbett's greatest hits: a retrospective of the guv's first 100 days

Looking back it is hard to believe that Gov. Corbett has been in office a scant hundred days, when those hundred days have been so memorable.

On this occasion here's a review of some of the governor's most infamous acts.

After his swearing in on Jan. 18 and his campaign promise to introduce his reform package on Day 1, many expected it on -- Jan. 19. However Gov. Corbett introduced his first major initiative a week late and in the least transparent way possible: via press release and pre-recorded video.

His staff brushed off criticism claiming people misunderstood his campaign promise -- after all "Day 1" is confusing. His staff also said "He's [the guv] going to make announcements when he thinks something is important..." clearly reform didn't rank high on his agenda. A 2nd indicator of the importance of reform: appointing his campaign manager's dad to a $196K per/year job.

After Corbett's decision to introduce his 1st major initiative via video, it wasn't a surprise when a month or so later he started barring the public, Capitol staff and lobbyists from his press conferences.

In February the administration's priorities were made even clearer. First with the elimination of the affordable health insurance program, adultBasic, for nearly 42,000 working adults; and then the corporate giveaway, bonus depreciation, to the tune of $200 million for big corporations (see The governor can’t find money for adultBasic, but he found over $200 million for big business).

Finally March rolled around -- time for the big "No tax" budget address.

In his roughly 8 page speech, Corbett managed to propose cutting basic education by $1 billion (see All education cuts are not created equal ), reducing the state's appropriation to state colleges by 50% (see Corbett should treat higher education the same way he treats other industries), and named his devoted campaign contributor-turned-DCED secretary C. Alan Walker as the final voice in all permitting issues affecting potential job growth (see Corbett appoints a Supreme Decider). Notably absent in those 8 pages...transportation. PA's nearly 6000 structurally deficient bridges weren't on Corbett's budgetary radar screen.

Four months of planning for this?

In the weeks following the infamous budget address, which was generally ill-received, the governor made a few missteps, or actually miss-statements. He's continuously shown admiration for the Lone Star State, but has failed to familiarize himself with its basic policies -- like its severance tax, combined reporting and property tax (see If you wannabe like Texas, you gotta (en)act like Taxes and Oops he did it again... )

Despite his staunch opposition to a severance tax (he doesn't care what 70% of Pennsylvanians think, he made a No Tax pledge), the governor did promise a group of municipal officials that he'd keep our water clean. The same day as his promise, his DEP chief said the natural gas industry could continue to send their polluted wastewater for an additional 30 days to our state's treatment facilities, although they're not equipped to treat the water, which eventually flows to our streams and rivers.

Oh, and then Chesapeake Energy's well exploded in Bradford County, releasing tens of thousands of gallons of polluted water across the landscape (see Heckuva a week for Marcellus Shale reporters). But Gov. Corbett did create the Marcellus Shale Commission to explore the industry in PA... but stacked with it industry execs, who accumulated over 500 violations last year.

Now the governor waits. His commissions meet, his GOP brethren debate legislation, and the governor crosses his fingers that his budget will get enacted in his next 100 days.

Tuesday, April 26, 2011

Oops he did it again...

The governor misspeaks when he pays homage to his favorite state in the union... Texas.

Gov. Corbett has made no secret of his desire to put on a cowboy hat and be more like the Lone Star State, after all one of his first actions as governor was to board a plane and party with Range Resources at this year's Super Bowl.

What the governor hasn't done is research any of Texas' policies and regulations before he speaks about them.

As earlier blog posts have enumerated, in addition to having a severance tax on natural gas drilling, a tax on mineral rights and having closed the Delaware loophole a few years ago, Texas, unbeknownst to Gov. Corbett, levies a property tax. A property tax that as Michael Woods of the Pennsylvania Budget and Policy Center pointed out last week, was worth $40 billion in 2009 according to the Texas Comptroller. It comprises nearly 50% of all tax revenue generated in the state.

The math works out to more than $2 billion generated from the property tax on natural gas assets in 2009 (assets tapped and untapped) for TX, in PA that same property garners zero income for the state. Pennsylvania does have a corporate net income tax, however 85% of oil and gas corporations that filed CNI tax returns paid nothing.

As the governor has pointed out tax policies between the states don't allow for exact apples to apples comparisons, but we do know natural gas companies pay their share of taxes in Texas (and other natural gas states). There has been no mass exodus of drillers out of Texas to go where they can frack for free, which incidentally is only in PA.

Despite the differences in policy, one conclusion can be drawn: natural gas drillers do better in the Keystone State than the Lone Star State because the Commonwealth fails to tax them.

Friday, April 22, 2011

A heckuva week for Marcellus Shale reporters

For the past few years Marcellus Shale has been a fixture in the Pennsylvania headlines: to tax or not to tax, what exactly is fracking, and are we growing jobs for Pennsylvanians or borrowing workers from other states?

This week has been an especially busy one for shale-related stories.

Gov. Corbett kicked it off Monday when he told a gathering of township supervisors in Hershey, “I will not let them [gas drillers] poison our water.” And in what had to be a Homer Simpson “D’oh” moment while Corbett’s words still lingered in the air, Tuesday a Chesapeake Energy (Oklahoma City, OK) well exploded in Bradford County, forcing evacuations and releasing  drilling fluid (the chemically-treated variety) across the terrain.

Don’t worry though, the company responsible for the spill said initial tests indicated the blowout had little impact on local waterways. It now seems however, that Chesapeake’s conclusion was premature, and they now have voluntarily suspended fracking at all their wells in PA, and DEP is awaiting test results on the local water supply.

Earlier on Tuesday, the AP reported that DEP has asked the largely out-of-state natural gas industry to stop sending its contaminated water to 15 of the Commonwealth’s treatment facilities, claiming they’re simply not equipped to treat the tainted water which eventually makes it to our rivers and streams. The state agency set a May 19 deadline for the industry to stop…in others words, we know you are poisoning our water, but go ahead and keep poisoning it for another 30 days. No report if the DEP’s request ended with “pretty please with a cherry on top.”

The DEP request  came not a moment too soon since the industry group Marcellus Shale Coalition, reported the same day that it believes wastewater from drilling is at least partially responsible for heightened levels of bromide in Pittsburgh-area rivers.

Call it unfortunate timing but even with a well blowout and admitted pollution this week, the Pennsylvania Game Commission announced on Wednesday that natural gas companies deserve more access to our valuable shale formation and opted to lease additional state lands to Marcellus Shale drillers for over $18 million which will remain in the Game Commission coffers.

The drilling industry has repeatedly demonstrated they require more oversight. We need to adopt a zero tolerance pollution policy. Maybe revenue generated from a severance tax could go toward increased monitoring, enforcement, and clean up of spills, unfortunately for current Pennsylvanians and the future of our Commonwealth, the governor took a “no tax pledge.”

Tuesday, April 19, 2011

Corbett's dysfunctional family values

Recently, many people (including the governor) have compared Pennsylvania's budget negotiations to that of a belt-tightening family sitting around the kitchen table making decisions on where to cut back.

Besides the fact that it is precisely economically challenging times like these when more families turn to Pennsylvania for a variety of assistance options -- from LIHEAP to higher education grants to unemployment compensation (and up until March, adultBasic), there are other inaccuracies with this overly-simplistic Beaver-Cleaver family comparison.

If you do choose to adopt the premise that running the Commonwealth, with its 12 ½ million people, is like that of an average family there are other flaws with the governor's comparison.

First, a family wouldn't leave a potential revenue source on the table. If your spouse came home one day and told you that they lost their job or had their hours cut back, sure you'd sympathize with them and look for ways to trim your budget, but you wouldn't just hunker down in a fit of'd encourage them to find a new job or supplement the family income with another revenue source to replace the lost income. So the "PA family" should be smart with the revenue it has, but also consider options for generating additional revenue, like a severance tax on Marcellus Shale. Especially when 70% of residents agree.

Similarly, you wouldn't allow your able-bodied 28-year old, who is still living at home for free to continue to do so without helping out with the family budget. And you certainly wouldn't give them an extra $50 a week in beer money to further deepen your revenue shortfall. But that's exactly what Gov. Corbett and the Republicans are doing.

They are refusing to close the Delaware loophole allowing corporations to make profits in Pennsylvania without paying taxes here, they are handing out bonus depreciation allowances to the tune of $200 million+ p/year to their corporate contributors, and are allowing big box retailers to keep money that customers paid in sales tax by calling it a "vendor discount."

Another thing your family wouldn't do is invest a lot of money in a product with unproven outcomes. Yet, the GOP is considering instituting a school voucher program, rather than maintaining the investment in our state's public schools, which have demonstrated measurable improvement over the past 8 years.

No doubt budgeting is tough: for a family of 4 and a state of 12 million+. Everyone supports cutting waste, fraud, and abuse...and everyone SHOULD be for a fair share solution, but when Pennsylvania's families are facing higher college tuition costs, elimination of full day kindergarten, cuts to healthcare and more, while multi-state and national corporations are being let off the hook for any tax burden and being given bonuses because "someone" took a "no tax pledge" on the campaign makes you wonder who is responsible for the dysfunction in this family?

Wednesday, April 13, 2011

Marcellus Works?

Now Republicans want taxpayers to foot the bill to drum up business for natural gas corporations?

There is an old expression that says "give somebody an inch and they'll take a mile." This expression basically sums up Pennsylvania's relationship with the Marcellus Shale industry.

Currently, the Commonwealth allows largely out-of-state natural gas producers to operate without a severance tax... like every other state in the union with natural gas levies (yep, Texas too).

Under the Marcellus Works plan, which the House GOP reintroduced last week, Republican leaders are asking Pennsylvanian taxpayers to foot the bill for the natural gas industry just a little more.

The 7-bill plan the House GOP is endorsing would incentivize the purchase of natural gas by pumping $47.5 million in tax dollars into tax credits, grants and loans for transit authorities, school districts and private businesses across the state to convert to natural gas for their vehicles.

Call me a capitalist, but shouldn't the market drive these kinds of conversions?

Some transportation administrators of smaller communities see flaws in the plan because they simply don't have the infrastructure in place to convert now. And natural gas fueled vehicles cost more than conventional ones, so fleets looking to make the switch have questions regarding how long it will take to recoup purchase costs.

The cost for compressed natural gas (CNG) used for natural gas vehicles varies widely. A rep from Chesapeake Energy Corp. (based in Oklahoma City, and the leading producer of natural gas here in Pennsylvania) said it goes for $1.39 a gallon in OK. However, others show it has been as high as $2.30 in PA.

But, I can see why Republicans are adamant about fueling the market here since an Inquirer article last week exposed that currently "drilling has outpaced the industry's ability to sell the gas." (PA's Natural Gas Rush, Philadelphia Inquirer, 4/3/2011)

Pennsylvania has already let the natural gas industry escape paying an extraction tax, costing the state about $173 million so far, and further reckless action on the part of drillers has caused toxic spills, explosions and tainted our drinking water. Now we're being asked to provide them a larger market in which to sell their product.

After some consideration, perhaps a more applicable expression for the Marcellus industry is that the House GOP is allowing them to "have their cake and eat it too."

Monday, April 11, 2011

Coming Soon to a State Near You!

What "Right to Work" really means

Earlier this year Wisconsin, normally known for its cheese and beer, was a mainstay in the national news as ground zero for its clash between labor unions and the Republican party.

The Badger State, which has a new Republican governor and a budget deficit of $3.6 billion, had a legislative standoff. Teachers and other unionized workers slept in the Capitol's hallways for weeks, and Democratic senators fled the state to delay debate on a Gov. Scott Walker's budget proposal, which includes limiting the power of public-employee unions to negotiate contracts and work rules.

The bill, which passed by using legislative high jinks, awaits a ruling by the state Supreme Court before it can be implemented.

Several other states are getting in on the action with varying success including Ohio, Iowa, New Jersey and Florida. Here in Pennsylvania, Gov. Corbett has already come out in favor of Right to Work legislation.

In anticipation of this challenge to workers rights, here is a primer on what Right to Work means.

First, Right to Work, while sounding beneficial to job seekers, does nothing to secure jobs or provide protection against undue dismissal. It allows people to gain the benefit of union negotiated arrangements without being a union member -- it essentially undermines the union.  

If you compare several quality of life indicators in states with a Right to Work (like Mississippi, Florida, and Texas) with Pennsylvania, you can see our state comes out ahead consistently on measures like wages, education and health coverage.

Wages: Based off of 2009 figures, the average annual pay for Pennsylvania's estimated 900,000+ unionized workers (private and public sector) is more than $5000 higher than the average in Right to Work states.

Education: In 2009, Pennsylvania invested more in education per student than 21 of 22 Right to Work states. PA's average: just over $12,032, Right to Work average: about $9,000. This investment pays dividends: more Pennsylvania students are proficient in both math and reading then in Right to Work states.

Health care: Pennsylvania employers are more likely to offer health insurance to their workers than Right to Work states, especially small businesses with fewer than 50 employers.
·        PA all employers: 63%; Right to Work all employers: 50.3%
·        PA small employers: 49.4%; Right to Work small employers: 34.6%

These are the factors that individuals and young families look at when considering a move to a new state. Additionally, good wages, education and health care keep the Pennsylvania economy recovery moving in the right direction.

The people who are for job growth and against higher taxes should want Pennsylvania's wages to be higher.

It would seem to me given our current state's economic concerns, now would be an adverse time to rescind workers rights and move in the direction of lower wages, less health care and less student achievement.

Friday, April 8, 2011

Things that make you go hmmm...

Pennsylvania remains the only state with a natural gas industry that doesn't levy a severance tax on drillers (you guess it even Texas does), despite recent polls indicating that 70% of Pennsylvanians support implementing such a tax on the out-of-state companies responsible most of the extraction. People have legitimate concerns over the quality of PA's drinking water, the strain on small communities' emergency responders and damage to our state's already deteriorating infrastructure.

The Commonwealth has already lost out on millions of dollars in revenue which could have helped in this year's especially tense budget debate.

As has been true for the past couple years, Marcellus Shale stories consistently pepper the news media. This week several news outlets covered Marcellus from different angles including National Public Radio. Central PA's WGAL offered a rare on-air editorial. The Philadelphia Inquirer provided a list ranking the state's 20 top drillers, which speaks volumes. I've included the top 10 from the Inquirer's list of companies and their headquarters below.

1. Chesapeake Energy Corp., Oklahoma City, OK
2. Talisman Energy Inc., Calgary, Alberta
3. Range Resources Corp., Fort Worth, TX
4. Cabot Oil & Gas Corp., Houston, TX
5. Chevron Corp./Atlas Energy Inc., San Ramon, CA
6. Royal Dutch Shell P.L.C./East Resources Inc., the Hague, the Netherlands
7. EQT Corp., Pittsburgh, PA
8. Chief Oil & Gas L.L.C., Dallas, TX
9. Consol Energy Inc., Canonsburg, PA
10. Seneca Resources Corp., Houston, TX

The natural gas is here in Pennsylvania, these largely out-of-state (and out-of-country) companies have located here to profit from our resource. These companies simply can't go somewhere else to drill for this gas, they especially can't go someplace without a severance tax, because such a place doesn't exist. If these companies could afford to fund a gubernatorial campaign and trips to the Super Bowl, they can surely pay their fair share now.

Thursday, April 7, 2011

It's worse than I thought...budget cutting, and the miseducation of the House GOP

Earlier this week, the House Majority Leader spoke to the Capitol media about his caucus' desire to restore some of the higher education funding slashed in this year's budget by Gov. Corbett.

Good, maybe that's because not only would thousands of college kids suffer, but many local economies and communities would be decimated if students disappeared and schools were shuttered. Incidentally, many of those communities are in republican districts. But his caucus also is endorsing the philosophy of robbing Peter to pay Paul by targeting DPW.

Also he wouldn't commit to reinstating any of the $1.1 billion cut from public education. His flip comments included that his caucus' top priority is to change the state basic ed formula so that its cuts hit Philadelphia and other urban school districts proportionally as hard as they do suburban and rural districts (Capitolwire, Turzai says House GOP backs Corbett on leasing, budget spending total, 4/5/11).

Those comments border on absurd.

After viewing the Leader's press conference, I'm left thinking that he doesn't understand budgeting, or really how to read a spreadsheet.

Under the Gov. Corbett's proposal the Leader's 2 school districts suffer a $163 cut (Pine-Richland SD) and a $166 cut (North Allegheny SD). The rest of the state should be so lucky as to sustain cuts like those. 

A quick look at the data available on the Democratic Appropriations website (I checked the GOP website, and no spreadsheets were available) demonstrates that the p/pupil cut in Philadelphia is about $1400, more than double the state average ($584). Even more shocking is that 4 districts actually receive LARGER p/pupil cuts than Philadelphia. But I'm pretty sure the House GOP is NOT recommending raiding the funds for Philly to help Chester Upland manage their $2600 p/pupil cut.

There are only 2 things the Legislature could do to worsen the atrocious cuts made to public education than what the governor introduced. #1 – shift funds out of the districts that need it most, and balance the budget on the backs of the working poor. And #2 – implement a school voucher program that will do little to improve educational outcomes and will cost the Commonwealth a billion dollars.

These House GOP-backed policies are shortsighted and not only fail to address the true problem, but would intensify it.

Monday, April 4, 2011's what I've been hearing

Here are some samples of what people have been telling me about school vouchers from across the Commonwealth.

According to attorneys at the ALCU of PA
Two provisions of the state constitution bar the Commonwealth from funding religious schools.

Article III, Section 15 states:

No money raised for the support of the public schools of the Commonwealth shall be appropriated to or used for the support of the sectarian.

            Article III, Section 29 states:

No appropriation should be made for charitable, educational or benevolent purposes to any person or community nor to any denomination and sectarian institution, corporation or association...

Americans for the Separation of Church and State reports

·        Despite receiving public money, private schools that participate in voucher programs are not subject to all civil rights laws that public schools are, including Title IX and the federal Individuals with Disabilities Act (IDEA).

·        Voucher payments often do not cover the entire cost of tuition or other mandatory fees for private schools.

A 2003 study concluded: "For many families, the financial burden of paying even the relatively small portion of their children's private school tuition is more than they can bear."[1] In the end, the families most likely to use a voucher are the ones who could already afford to send their kids to private schools.

·        Vouchers do not provide any "savings" to public schools. A 1999 study of Cleveland's program showed public schools from which students left for private voucher schools were spread throughout the district. The reduction in students, therefore, was negligible at individual schools. Instead, the public school district lost state funding without being able to cut overall operating costs.[2]

According to school superintendents

Under the proposed bill, education institutions can "pick and choose" which students they wish to educate. Special education students and students with "at-risk" behaviors, will likely be discriminated against because this proposed bill allows schools to "opt-out" of enrolling these students if they do not offer "appropriate programs."
     Scott V. Graham, Northern Potter School District

The choices offered to parents, at least with regard to non-public institutions, offer no way to determine whether or not their "choices" secure better results than their current schools. On this day, all of our third through eighth-grade student, and or high school juniors, are bubbling in answer sheets on the PSSA. Their scores will be thoroughly analyzed, disaggregated by a variety of demographic characteristics and publicly reported in numerous venues. We will be held accountable for their scores. Our non-public peers are not obligated by SB 1 to meet the demands of Chapter 4, nor will they be required to align their programs with the Commonwealth's even more rigorous graduation requirements with the Common Core standards and Keystone Exams are fully implemented.
     Jay Badam, School District of Erie

All testimony is available at

[1] Metcalf, Evaluation of the Cleveland Scholarship and Tutoring Program: Exploring Families' & Education Choices: Technical Report, 162 (Dec. 2003)
[2] KPMG, LLP, Cleveland Scholarship and Tutoring Program: Final Management Study (Sept. 1999)