Pennsylvania Budget Logic Baffling

Pennsylvania Budget Logic Baffling

By Scott Wagner

Coming from the private sector where we actually get things done every day, I continue to be baffled as I watch Harrisburg chase its tail over how to pay for the 2017-2018 budget.

Last week the Treasurer told us the state is going to have to borrow more money or Harrisburg will shut down. But is that necessary?

I sat down and did the math, and here is how we should be looking to solve our budget problems:

You would have to be living under a rock to not know that we have a pension crisis in Pennsylvania. On May 25th, the Auditor General completed an audit of the Public School Employees Retirement System (PSERS) pension fund for the 2016 year, and it isn’t pretty. It isn’t pretty at all.

In 2016 the PSERS pension fund saw an astonishingly low return of 1.29% on $49.2 billion in assets. In dollars, the return was $634.6 million — which may look like a lot on paper, until you factor in that PSERS paid $416 million to money managers. It looks like a lot of money until you recognize that in 2016 most 401k retirement programs saw more than an 8% return. It was an exceptional year for everyone except Pennsylvania taxpayers

An 8% return would have yielded an additional $3.3 billion — which is more than enough to solve our budget problems.

PSERS could have put their money in a bank CD and received a better return (1.45%) — but who in the world would do that — and who would pay $416 million to money managers who would yield such a shameful return on investment?

I’ll tell you who would do that. A governor who’s asleep at the wheel, inept, or just doesn’t care.

Tom Wolf’s mismanagement is the biggest sham against honest, hardworking people that there ever was.

Why is Pennsylvania state government so bad at managing its employees’ money? If I were the Governor of Pennsylvania I would demand the answer to that question – but only after I fired the money managers at PSERS.

Where is our Governor? When he was running for election back in 2014, Tom Wolf presented himself as a “brilliant businessman,” and yet here we are paying $416 million for a return that we could have walked into a local bank and gotten ourselves.

PS: It is no secret that the PSEA (Pennsylvania State Education Association) fiercely hates me and has instructed their teacher members to hate me also. Isn’t it ironic that I am criticizing the PSERS pension fund performance demanding better returns so that all of the Pennsylvania teachers get their pensions paid?

Sen. Wagner represents the 28th District in the Pennsylvania Senate and is seeking the Republican nomination for governor in 2018.

Pennsylvania Budget Logic Baffling

 

Pennsylvania Republicans Twist Thumbscrews On Taxpayers

Pennsylvania Republicans Twist Thumbscrews On Taxpayers — The Republican-controlled Pennsylvania State Senate voted today to pass a tax increase that will see heating, air conditioning and use of communications become more expensive.

The vote was 26-24. Fourteen of the 34 Republicans in the 50 member body voted yes. The guilty ones were:

Sen. Pat Browne
Sen. Jake Corman
Sen. John Gordner
Sen. Tom Killion
Sen. Tom McGarrigle
Sen. Chuck McIlhinney
Sen. Bob Mensch
Sen. John Rafferty
Sen. Joe Scarnati
Sen. Mario Scavello
Sen. Tommy Tomlinson
Sen. Randy Vulakovich
Sen. Don White
Sen. Gene Yaw

What good are these people? What does party Chairman Val DiGirogio say?

Hey did you see where Pennsylvan taxpayers are on the hook for a $477,591 public pension?

Hat tip Leo. Knepper.

Pennsylvania Republicans Twist Thumbscrews On Taxpayers

 

Pennsylvania Republicans Twist Thumbscrews On Taxpayers

Budget Approaches Fail Taxpayer

Budget Approaches Fail Taxpayer

By Leo Knepper

On Monday, (July 10) Gov. Wolf allowed the state budget to become law without his signature despite the fact that the budget didn’t balance. The budget passed by the House and Senate spends more than the Treasury is likely to collect. The House and Senate shouldn’t have passed the budget without a clear plan to fund the expenditures. The Governor should have either vetoed or line-item vetoed the budget. As it stands, credit rating agencies may downgrade the Commonwealth again. A downgrade won’t solve our problems, and the two “solutions” under consideration won’t be good for taxpayers.

On one side: a Democrat governor who wants to raise taxes and leave a legacy of suffocating costs. On the other side: a Republican House and Senate looking to borrow their way out of trouble and leave a legacy of crushing debt. The solution nobody in Harrisburg wants to discuss? Spending reduction, which would leave a legacy of budget corrections that would eventually pay off for taxpayers.

There are ways that the General Assembly could cut costs. First, they could dissolve the Race Horse Development Fund. The Fund subsidizes “purses” for horse racing. In 2015, some of that money went to a billionaire from the United Arab Emirates.  Considering Pennsylvania’s financial needs, this doesn’t sound like the best use of resources. A second option, would be to reform the welfare code to add work requirements. In 2014, Maine added a work requirement for able-bodied childless adults. In two years the number of able-bodied childless adults receiving food stamps dropped by over 90 percent. This change not only saved taxpayers money, but it also added people to the tax rolls.

There are a number of other ways that the General Assembly could put taxpayers first. It’s up to “leadership” in the General Assembly to step up to plate to make that happen. And, based on their track record that doesn’t seem likely.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

Budget Approaches Fail Taxpayer

Budget Approaches Fail Taxpayer  By Leo Knepper  On Monday, Governor Wolf allowed the state budget to become law without his signature despite the fact

Pennsylvania Budget 2017 Explained

Pennsylvania Budget 2017 Explained

By Nathan Benefield

If Gov. Wolf is looking to leave a legacy of unusual—and unconstitutional—budget happenings, he remains on track.

Here’s a quick run-down of what’s going on with the state budget:

As you know, last Friday the House and Senate sent the governor a $32 billion budget (a spending increase of $500 million) with no plan to pay for it.

Gov. Wolf had 10 days to sign, veto, or line-item veto the budget. The state constitution requires a balanced budget and the state Administrative Code mandates that the governor line-item veto any spending above existing revenue. The deadline was Monday. Gov. Wolf took no action and the budget became law. Gov. Wolf has yet to sign a Pennsylvania budget in his tenure.

Now, the focus remains on a revenue package. GOP leaders have expressed frustration with Gov. Wolf’s rejection of their revenue plans that included borrowing and no tax hikes. According to reports, Gov. Wolf wants more tax hikes.

Multiple tax hikes have been rumored:

  • A drink tax on bar and restaurant patrons
  • A new tax on families’ cable TV bill
  • A new tax on homeowners’ gas heating bill
  • An additional tax on energy jobs

Additionally, borrowing gimmicks continue to be discussed as a way to bridge the budget gap.

It’s important to continue to reach out to your lawmakers so they know that Pennsylvanians cannot afford more tax hikes.

But here’s good news: Lawmakers are also discussing substantive changes in government to balance the budget without higher taxes—including letting grocery stores and other private retailers sell liquor and reducing government subsidies for horse race prizes. And yesterday, the House passed meaningful welfare reforms that will help improve our state’s safety net.

Click here to send a message to your lawmakers now.

You can get the latest on the state budget from the CF team on our PolicyBlog, Facebook, and Twitter.

Mr. Benefield is vice president and chief operating officer of Commonwealth Foundation.

Pennsylvania Budget 2017 Explained

Pennsylvania Budget 2017 Explained

 

Spending Cuts Missing In Pa. Budget

Spending Cuts Missing In Pa. Budget

By Leo Knepper

It looks like the General Assembly is in full-on “kick the can” mode on the budget. An article from the Patriot-News lays out the options the General Assembly is considering for closing the budget gap. None of them involve cutting spending.

One of the top contenders is using the tobacco settlement fund as collateral for a loan. Other options include expanded gambling and a “by the drink” tax for bars and restaurants on alcoholic drinks. Right now, the tax is somewhat hidden from patrons because it is collected at the wholesale level, i.e. per bottle paid by the establishment. The new proposal would move that to a per drink tax paid directly by the consumer. From the budget crafters perspective, they’re missing out on revenue because the price paid for a bottle of alcohol is much less than the price the establishment collects by selling by the glass, etc.

Another item under consideration would be to add a financial transaction tax on electricity transmissions. From the Patriot-News article:

“Senate Republicans are also vetting a new financial transactions tax that would be centered solely on the obscure business of buying and selling space on energy transmission lines.

“Pennsylvania plays host to this roughly $2.5 billion-plus market by virtue of our role as host to the business end of PJM energy grid. Some have drawn a parallel here to the state taxes collected by New York on Wall Street transactions.

“Those familiar with the issue say a 5 percent tax on this relatively small slice of PJM’s activities could net the state about $125 million per year, with minimal impact on the industry.”

Remember when Governor Corbett and the members of the General Assembly assured us that the tax they were raising on gasoline wouldn’t be passed onto consumers? That fallacious argument is rearing its head again on this tax. If this goes through, don’t be surprised to see your energy bill go up to recoup the cost.

Please, take a moment to contact the General Assembly. Tell them to get serious about cutting spending and stop the tax and spend shell game.

PS: CAP is trying to raise $5000 in the month of June. If you value our work, please make an investment in our organization today.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

Spending Cuts Missing In Pa. Budget

Spending Cuts Missing In Pa. Budget

Magic Wolf Claims Spending Cut With Higher Budget

Magic Wolf Claims Spending Cut With Higher Budget

By Leo Knepper

Magic Wolf Claims Spending Cut With Higher Budget By Leo Knepper
Magic man says he’s cutting while adding.

On Feb. 7, Gov. Wolf gave his latest budget address. Since he has his eye on re-election, this was the Governor’s most realistic budget to date. There are still a lot of problems with what he’s asking for, but it’s much less terrible that what he has wanted in the past.

 

For starters, Wolf acknowledges that there is room to cut spending and this is a step in the right direction. The problem arises when we look “under the hood, ” and then the cuts disappear. The state budget is made up of several different parts: the general fund, special funds, federal funds, and other funds. These various parts all add up to give us the total operating budget. The current year’s total operating budget is $80.1 billion. In his budget address, Gov. Wolf notes that there will be a $3 billion deficit next year. He purportedly solves the problem with $2 billion in spending cuts and “savings initiatives” and increases taxes by $1 billion to make up the difference.

Let’s direct our attention to Gov. Wolf’s spending “cuts.” If the current budget is $80.1 billion and the Governor’s proposed budget cuts $2 billion in spending, the proposed budget should be $78.1 billion. Here is where the magical math comes into play. Instead of being $78.1 billion, the Governor’s proposed budget is $81 billion, an increase in spending of nearly $900 million. How does a $2 billion cut turn into a $900 million spending increase?

The purported spending cuts turn into a spending increase due to “baseline budgeting.” In baseline budgeting, the previous year’s budget is the starting point and the next budget increases from that point by a certain percentage. In other words, politicians like Gov. Wolf can claim they are cutting spending, but in reality, they are only increasing it by a smaller percentage than they wanted. It’s the equivalent of Orwellian newspeak. Gov. Wolf and others rely on the ignorance of taxpayers to get away with it.

If the Commonwealth spent $2 billion less next year than they are this year, then there wouldn’t be any need to discuss tax increases. Please, contact Gov. Wolf and the General Assembly immediately. Tell them that cutting spending means cutting spending and not making it grow more slowly.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

Magic Wolf Claims Spending Cut With Higher Budget

Wolf Wants $1 Billion In New Taxes Says CF

Wolf Wants $1 Billion In New Taxes Says CF
$1 Billion’s not much if it’s not my money.

Wolf Wants $1 Billion In New Taxes Says CF — Nathan Benefield of Commonwealth Foundation notes that the budget Gov. Tom Wolf unveiled yesterday, Feb. 7, would raise living expenses by $315 for a family of four.

This is because that Wolf wants to expand the sales tax to several business services and add a 6.5 percent natural gas severance tax, which is an extremely foolish idea.

The bottom line is that Wolf wants a billion dollars more in taxes.

There is no need for this. Pennsylvania’s expenses are bloated and can be easily cut. While Wolf gives lip service to doing so, he rejects simple yet effective solutions such as public pension reform, or the repeal of the prevailing wage law that adds 20 percent to the cost of almost all public projects.

Or once again forbidding teacher strikes that cause the cost of school taxes to rise far above the rate of inflation.

There is not even consideration for small but real money-saving things such as ending the mandate to pay old media for carrying public notices which is something that can be cheaply handled by all government bodies via the web, and be far more useful to citizens than the existing standard.

Pennsylvania voters have to make it a point to reject leaders whose loyalty lies with the special interests and governing class, and not them.

Wolf Wants $1 Billion In New Taxes Says CF