“Republicans say they will go at it alone on budget”

I would have never seen that coming…oh, wait…I did.

(http://thetimes-tribune.com/news/democrat-predicts-drawn-out-budget-battle-1.1860480) 

Governor Wolf gave his budget address on March 3. Immediately after, Republicans took to the microphones decrying the fact that the new governor was proposing to do something different than they had done in consort with former Governor Tom Corbett in the prior four years.

Pennsylvania was facing a projected $2 billion structural deficit and Republicans felt confident that the governor would be forced to renege on his campaign pledges to restore funding for basic education and start turning the ship that was heading for the abyss. Surely, the governor would have to hunker down and look for gimmicks and one-time fixes just to get by and make it through another year while he waited for the economy to turn itself around.

While the structural deficit projection for this year has dropped to about $1.5 billion, if it is addressed by gimmicks and one-time fixes again as legislative Republicans propose, we are staring at a $2 billion structural deficit again next  year. You can only transfer balances between credit cards and put off paying bills so long until the gig is up. We already know the consequences of these maneuvers…state bond rating downgrades, job losses, higher local property taxes and lower student performance.

Instead, Wolf is demanding that the legislature take action with proposed meaningful solutions to address the deficit and reinvest in education, restore former cuts to human services, provide a fair tax structure to encourage business growth and jobs, and deliver on property tax relief for homeowners. After four years of Republicans gimmicks and their current stance of perpetually neglecting the issues instead of facing them, one could speculate that they are ideologically opposed to the notion of fiscal responsibility. Proposing their own budget that ignores the fiscal crisis, points to the fact that they are more focused on philosophical wins for the fringe of their party than they are on producing a fiscally sound budget that prioritizes Pennsylvania’s citizens.

If the Republicans in the House and Senate want to debate ideology and pontificate about union busting, the perils of a living wage, the pitfalls of people actually having access to affordable healthcare, executive orders and booze in convenience stores, they have the power to call session days all summer long. But for them to refuse to deal with the fiscal issues of the state until their ideological needs are met is simply irresponsible.

It could prove to be a long summer. 

Gas industry should pay fair share in Pa.

The natural gas industry’s drilling of Pennsylvania’s Marcellus Shale provides economic benefits to the state including job opportunities and a reliable domestic energy source. That has been true in every state where the industry exists. A recent study by the American Petroleum Institute stated that the natural gas industry is responsible for $34.7 billion to the state economy and Pennsylvania’s shale gas production has increased exponentially over the past few years. Yet Pennsylvania is the only major gas producing state that does not charge a severance tax.

The industry generously profits from the Commonwealth’s natural resources. A reasonable severance tax would help address the state’s needs and invest in one of our greatest resources: Pennsylvania’s children. The opposition to a commonsense severance tax is being fed to the public directly from the industry and their paid operatives and fails to acknowledge the inherent need to fund Pennsylvania’s schools and take care of our environment.

Despite claims to the contrary, natural gas companies remain strongly profitable. In 2013 the market value of natural gas produced in the Keystone State was $11.8 billion compared to $4 billion in 2011. Drillers paid just 1.9 percent of that in impact fees. As the industry flourishes, the PA Department of Revenue reports the industry’s corporate net income taxes paid in 2013 fell below pre-Marcellus drilling levels in spite of increased production.

The industry and its special interest allies continue to perpetuate the myth that Pennsylvania’s favorable tax climate is the cause for Pennsylvania’s low natural gas prices; but the facts show otherwise. The reality is that an estimated 80 percent of the natural gas produced in PA is exported out of the state and thus any additional cost due to a severance tax would be paid mostly by non-Pennsylvanians. Furthermore, Pennsylvania’s residential prices in February 2015 were 53 cents higher than West Virginia’s and our commercial prices were 54 cents higher.

The Pennsylvania Chamber of Commerce, Commonwealth Foundation and others special interest groups claim that a severance tax would negatively impact Pennsylvania’s competitive edge to attract more gas drilling. Drillers haven’t left Alaska, Texas, North Dakota, West Virginia or any other state with gas reserves that are taxed. The total energy under the ground in Pennsylvania is estimated to exceed the energy value of Saudi Arabia. Pennsylvania has the natural resources with an estimated 1.925 billion cubic feet of recoverable gas in the Marcellus Shale and would still be offering a competitive business environment for the industry. At the same time that a small impact fee went into effect in Pennsylvania in 2012, Pennsylvania jumped from seventh to third in the rankings of natural gas producing regions. Unfortunately, the majority of that impact fee revenue stays in localities with gas wells and does not apply to areas with pipeline and compressor station disruptions.

In 2009, Chesapeake Energy said, “We gladly pay a severance tax in every state where we’re active, except in New York and Pennsylvania.” The industry needs to make a reasonable investment in the Commonwealth, the same as all hardworking Pennsylvanians do, to improve our educational system and our future. As Governor Tom Wolf has repeatedly warned, we cannot continue to do the same thing and expect a different result. The last administration’s policies had a devastating effect on the Commonwealth and we are working hard to reverse that and turn Pennsylvania back into an innovator and leader in energy as well as education. We need to work with the Governor to break the cycle of placing oil and gas interests ahead of Pennsylvania’s children and our environment.

A budget that serves the citizens of PA into the future or one that caters to the special interests of the past?

That is the central question surrounding this year’s budget proposal.

In his budget address, Governor Wolf laid out a plan to move Pennsylvania forward by investing in education and jobs to drive the state’s economy in the coming years.

Despite the partisan rhetoric in the post-budget address spin room, I hope the Republicans will accept the “fresh start” Pennsylvanians called for this past November and finally produce a budget that fixes our structural deficit instead of adopting yet another gimmicky budget to maintain the status quo.

The evidence is undeniably clear; what was done in the past four years has not worked. PA went from 7^th in job creation to 50^th; education test scores went from consistently rising to consistently falling; the state’s bond rating was downgraded multiple times; PA’s resources were exploited; and after several years of failed attempts, many PA workers simply stopped looking for a job.

All citizens of PA need to ask their legislators….

• Will you vote for property tax relief for me or will you continue to protect the bottom line of special interests?
• Will you vote for funding for schools that get results for the children in my community or will you continue to protect the special interests?
• Will you vote for quality Pre-K for kids so they are ready to start school or will you continue to protect the special interests?
• Will you vote for community colleges and job training that train workers for family-sustaining jobs or will you continue to protect the special interests?
• Will you vote for solving pension issues or will you continue to protect the special interests?
• Will you vote for increasing the minimum wage so that no one who is willing to work full time has to live in poverty or will you continue to protect the special interests?
• Will you vote for a truly balanced budget or the cost of structural deficits of the special interests?
• Will you vote for fair corporate tax rates for all businesses or special rates for some special interests?
• Will you vote for taxing Marcellus Shale like every other state with natural resources or will you continue to protect the special interests?
• Will you vote for paying appropriately for charter schools or will you continue to protect the special interests?
• Will you vote for freezing college tuition costs or will you continue to protect the special interests?
• Will you vote for expanding health care for access to all working families or will you continue to protect the special interests?

Governor Wolf’s bold budget proposal will put Pennsylvania back on the right fiscal path and benefits the citizens, not the special interests, of Pennsylvania.

 

 

 

Corbett, Republicans ignored the problem for four years

During his recent mid-year budget briefing, Corbett administration Budget Secretary Charles Zogby said the cost growth in the 2015-16 state budget, which was cited as the reason for the projected $2 billion deficit, is nothing new. Which begs the question: Why didn’t they do something to deal with it, instead of ignoring it for the past four years?

If Zogby and others knew the one-time revenue fixes used to balance the last four state budgets would not solve the state’s overall fiscal problem, that begs more questions: Did they use those tactics merely for “window-dressing” of the budget or were they simply being irresponsible with your tax dollars?

Another example of the Corbett folks simply ignoring the problem with state finances is that everyone knew Act 120 of 2010 included mandated cost increases in the out-years, yet Corbett actually proposed reducing the payments to balance the budget instead of meeting the obligations.

While Zogby might be continuing the false claim that the Corbett administration didn’t raise taxes on middle-class families, the fact is those families did get hit with higher taxes, such as property tax increases and higher gas taxes.

Meanwhile, legislative Republicans and Corbett also gave away the store to the tune of $2 billion in corporate tax breaks instead of fixing our ongoing structural budget deficit problem. Those tax breaks didn’t result in more jobs as promised, instead Pennsylvania’s job growth plummeted from 7^th to the bottom of the pack at 50^th.

Zogby went on to admit that one-time budget fixes don’t work, yet he continues to push for more one-time revenue gains like selling the liquor stores, electric competition and pension reform. Those ideas simply won’t solve Pennsylvania’s structural budget deficit.

Finally, Zogby now admits that legislative Republicans and the Corbett administration created a structural budget deficit of $2 billion, yet here are just a few of the things that incoming Speaker of the House, then House Majority Leader, Mike Turzai said about the budget during final passage on June 30^th:

“We have been nothing but responsible.”

"We have been fiscal stewards.”
“We have been about governing.”
"Let us talk about responsible governance.”
“We have been prudent, fiscally responsible, and prioritized state spending on the most vulnerable in our society.”

 “We are fiscally prudent, recognizing we have a responsibility to the taxpayers.”

 

Maybe not so much …

Bad Republican fiscal policy got us into this budget mess

After attending today’s mid-year budget briefing by Budget Secretary Charles Zogby, the multi-billion dollar budget deficit that Pennsylvania is facing is not unexpected given the past four years’ budget messes and the bad news is not likely to end.

The Independent Fiscal Office’s latest report revealed a multi-billion dollar budget deficit that was reaffirmed today by Secretary Zogby and points to a dreadful fiscal crisis for our new governor. It is certain that the extent of the gap is massive and we cannot continue with the same fiscal policies of the past four years and expect anything other than a continued deficit projection.

I see three main points concerning the budget deficit:

1.    Gov. Tom Corbett’s fiscal year 2014-15 budget was based on one-time revenue sources that the administration now admits was bad policy.

2.    The Corbett administration already borrowed to meet operational expenses and projections indicate the state will be cash flow negative from January through March 2015.

3.    The Republicans that control the House and Senate marched in lockstep with the Corbett administration on fiscal policy for the last four years. They also need to be held accountable for this failed fiscal policy and be willing to work to change it in a bipartisan manner that produces solutions.

Additionally, our state has fallen from the top 10 in job creation to last in the nation over the past four years.

This budget situation also has bad ramifications for policy proposals, such as infrastructure, jobs and equitable education funding, because most initiatives need state money to implement.

The Wolf administration offers a different fiscal policy that received a strong mandate in the recent election. This most recent forecast makes it even more obvious that we need to follow that change in policy.

I’m definitely ready for a fresh start, which begins Jan. 20.

The state checkbook is out of money!

Bad Republican budgeting maneuvers that have crippled the state’s ability to meet its obligations during the past four years have led the state to borrow money from itself.

What's that you ask? How does Pennsylvania borrow money from itself?

Well it goes something like this: the state's checkbook (the General Fund) is what Pennsylvania government uses to pay its recurring bills. This week, the General Fund ran out of money so the state Treasurer had to create a $1.5 billion line of credit out of a cash investment fund operated by the Treasurer. Of that line of credit, $700 million was immediately used. Kind of like using your credit card to pay your mortgage.

The administration has stated that this will actually save the state money, which is laughable. If this were actually true, it should be common practice every month and why hasn't Governor Corbett done this sooner? Ha!

In fact, actual loans to be used for the General Fund have only been done four times.  Even if these types of loans were common, it still begs the question as to whether they should be used for General Fund purposes at all. In this case, using them is an indication of an underlying symptom of inadequate and negligent budgeting. There are only a handful of valid reasons for using the Short Term Investment Program (STIP), but a failure of leadership is not one of them.

If the budgeting process was done correctly, with an accurate revenue forecasting methodology, and a realization that new revenue was needed instead of asking working families to pay more and school districts to make due with less, this whole line of credit would be unnecessary. The Corbett Administration claims they needed to do this to advance funding to Philadelphia schools, but these schools need this money because they were underfunded by Governor Corbett. It is like blaming someone else for your bad budgeting.

But you don't have to just take my word for it that these were terrible budget decisions.

The Independent Fiscal Office and the nation’s three major credit rating agencies have all noted that choices made in recent Pennsylvania budgets are creating a structural budget deficit that cannot be solved with the one-time fixes proposed and passed by the Corbett Administration and Republican controlled House and Senate.

It seems that Governor Corbett and his Republican friends prefer budget gimmicks that set up the next governor for a deficit from day one.

It's time for a fresh start.

"Opportunity" for education dollars, hurt by tax breaks

Crafting a state budget is all about priorities.

For four years now, Gov. Tom Corbett and his Republican colleagues leading the House and Senate have shown that giving tax breaks to some multi-national corporations, while refusing to tax others at all, is their priority and that funding public education is not.

Since he took office, Corbett has provided more than $2 billion in big-business tax cuts. Not to mention allowing multinational corporations to continue using the Delaware loophole to avoid paying taxes while, at the same time, refusing to implement a shale gas severance tax.

In an attempt to cover their tracks, Corbett and the Republicans are now trying to include funding for pensions as part of their calculations of education funding levels. But that's not flying with the parents and taxpayers in Pennsylvania who understand that funding for old pension obligations doesn't help a single student learn to read, write or solve a math equation. It never has, nor should it now be, included in the bottom line. For comparison sake, the total education spend, not including pension costs, (... because historically, no other administration has ever included pension costs when calculating levels of education funding) for 2008-09 -- the year before federal stimulus funding -- was $9.36 billion. Meanwhile, total education dollars spent in 2014-15, not including pension costs, (... because historically, no other administration has ever included pension costs when calculating education funding levels) is $9.18 billion. Clearly less funding, yet Corbett and the Republicans in an attempt to call a lame duck a swan, try to tout this as an increase.

Simply put -- Corbett and the Republican-led House and Senate have cut education funding in Pennsylvania by about $3 billion total over the past four years.

Those funding cuts at the state level have drastically impacted Pennsylvania's 500 school districts, which have been forced to lay off 20,000 employees, cut programs, increase class sizes and hike local property taxes.

But wait ... that's not enough tax breaks for corporations or enough defunding of public education for Corbett and his Republican privateers. To make matters worse, the 2014-15 state budget continues $150 million in business tax credits for the Opportunity Scholarship Tax Credit (OSTC) and the Educational Improvement Tax Credit (EITC) ... or what some like to describe as "the faux voucher program that masquerades as choice."

Some Republican echo chamber organizations continue to tout these programs as vehicles for "saving tax dollars." Their argument goes something like this ... if corporations (remember, they are people too) can pay their taxes to private schools instead of to the state so that a handful of kids can attend the private schools of their choice, the rest of the taxpayers in the state will actually save money. I know ... it makes no sense ... but that's what they are claiming.

However, providing those tax credits to businesses doesn't relieve the school district of their educational expenses or the rest of the taxpayers the burden of paying for the lost revenue.

Those scholarship recipients aren't leaving Pennsylvania classrooms in groups of 25 or 500, which would lead to one less classroom or one less school building. On the contrary, the buses still run past the child's house that opted for the taxpayer-subsidized private scholarship (and in some cases the public schools incur additional costs to transport that scholarship student separately to their new private school). Meanwhile, the same costs still accrue for the public school ... a teacher might have one less kid in their class (although they most likely have 10 more due to the Corbett education cuts), the cafeteria worker still prepares the same lunch (less one serving), the principal still oversees the same number of teachers (although probably 10 less as a result of the Corbett education cuts), the janitor still cleans the same school building, and there are still the same numbers of teacher's aides and nurses … check that, the Republicans cut reimbursement for nurses and teacher's aides so they are no longer a part of any equation anyway. But ... the same lights are still on in the same classroom, the same public school building is still heated to the same temperature by the same boiler, and the same roof still needs the same repair.

So where are all these "savings" other than lurking somewhere in the ideological minds of the faux voucher advocates.

The reality is, these business tax credits don't save any taxpayer dollars. In fact, they are an extra cost to Pennsylvania's pocketbook. The $150 million of taxes otherwise due to the state would be better spent in the public classroom for the basic education or special education line items.

But as we've already discussed, those aren't priorities for Gov. Corbett or the Republican-led General Assembly.