Does Corbett's elimination of HEMAP funding make "cents"?

There is little debate that the foreclosure crisis and the subsequent collapse of the US housing market were among the most devastating negative consequences of the national economic downturn. An article this week on MSNBC.com predicted that even with a recovering economy the number of foreclosures will continue to worsen and experts cite it as the second-biggest drag on the economy after fluctuating oil prices.

Pennsylvania has been ahead of the curve in responding to home foreclosures. Since 1984 the PA Homeowners Emergency Mortgage Assistance Program has helped keep 44,000 families in their homes by providing bridge loans to people who had lost their jobs. As a result Pennsylvania has had a considerably smaller number of foreclosures in comparison to its unemployment rate. For instance, with a record number of applications in fiscal year 2010, PA had the 26^th highest unemployment rate but was 37^th in foreclosures.

HEMAP has been praised as far more effective and economical than the federal Home Affordable Modification Program. For a hypothetical mortgage of $210,000, HEMAP costs the Commonwealth an estimated $1,620; HAMP comes with a cost of about $13,600 for the feds.

Further evidence of HEMAPs success: 80% of loan recipients have retained ownership of their homes. And HEMAP loans do not accrue interest until the borrower has found employment.

So the question remains why when the housing market is just beginning to recover and the threat of foreclosure still looms, and when Pennsylvania has a successful, affordable and enviable program, would the governor's budget plan eliminate its funding?

Chef Corbett's chopping block -- targeting programs that brew billions of bucks

Tom Corbett's record-setting and reckless cuts to education have received national attention since they were introduced in March. Programs like pre-k and full day kindergarten and staff like librarians are being scrapped across the state as districts struggle to reduce costs.

Beyond education however there are dozens of other proven, revenue-generating programs where funding is being cut or eliminated -- programs where underfunding could have a negative impact on the economic recovery of our Commonwealth.

Is Corbett's half-baked plan to underfund tourism a recipe to spoil a leading PA industry?

It is no surprise that tourism is Pennsylvania's second largest industry: from our celebrated historical heritage to our treasured tradition of hunting; from our spirited urban centers to our restful rural farmsteads.

In fact Pennsylvania welcomes 175 million visitors every year, generating $3.4 billion in travel and tourism-related state and local taxes alone. The industry employees more than 400,000 residents and yields a total economic impact $33 billion.

The question is if the tourism industry can produce these economic benefits after suffering a 70% cut. While Corbett goes out of his way to cook up a gourmet business climate for the out- of-state natural gas drillers, who by the way contributed a paltry $218 million last year according to the governor's own specially commissioned Dept of Revenue study, he leaves the homegrown Pennsylvania tourism industry with table scraps.

Poorly-funded tourism leaves Pennsylvania less competitive with other states like Virginia and Michigan which are boosting their investment to spur more visitors. It seems the governor is only interested in attracting transients from Oklahoma, Texas, and Arkansas to exploit our natural gas, pay taxes elsewhere and depart when their job is done.

Here is the first in a series of posts exposing the pennywise pound foolish cuts being embraced by PA's GOP leaders.

Gimmicks and WAMs: the Top 5 problems with Governor Corporate's $1.9 billion fund for friends

5.      $220 million would be transferred from the state Tobacco Settlement monies in order to fund a portion of the Liberty Loan Fund. Up until March 1^st adultBasic was partially funded by the Tobacco Settlement Fund, which under law is earmarked to go to health-related programs. AdultBasic could have been extended until July for $56 million.

4.      During his budget testimony, campaign contributor and PA polluter-turned DCED Secretary C. Alan Walker and his staff hinted as to an additional $110 million to be transferred from the Tobacco Settlement Fund which the governor failed to mention in his budget address. This brings the total to $330 million in health-related dollars being diverted.

3.      The governor wields the majority of control in appointing members under the initial plans for the Liberty Loan Fund board, which could limit bipartisan representation on the current Commonwealth Financing Authority.

2.      The terms of each loan may be done through the regulatory process and not the legislative process, thereby eluding legislative oversight.

1.      The Liberty Loan Fund amounts to a budgetary gimmick to create a WAM account for the governor to use to dole out money to his big business friends.

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 2^nd 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 1^st 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.

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.

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.”

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 depression...you'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 trail...it makes you wonder who is responsible for the dysfunction in this family?