Gift Ban Introduced In Pa House

Gift Ban Introduced In Pa House

By Leo Knepper

In late 2014 and early 2015, five current and former members of the General Assembly were charged with bribery and other charges related to their acceptance of cash “gifts” from a lobbyist. The House and Senate changed their chambers’ rules to prohibit the acceptance of cash gifts from lobbyists, but the law hasn’t changed. One of the reasons the law wasn’t changed was because banning only cash gifts could raise questions for lawmakers about the kinds of gifts they can still accept.

What kinds of gifts can they accept? Virtually anything as long as they follow the disclosure rules. Lawmakers are required to disclose gifts of more than $250 per year from any source and transportation, lodging, and hospitality worth more than $650. Over the years, those gifts have included everything from Super Bowl tickets to Turkish rugs. As long as they follow the rules, pretty much anything is fair game.

That might finally be changing. On Nov. 18, the House State Government Committee advanced House Bill 1945. Per the co-sponsorship memo:

“The legislation will prohibit public officers, public employees and candidates for public office from accepting a gift of cash in any amount. The same individuals will be prohibited from accepting any gift that has either a fair market value or an aggregate actual cost of more than $50 from any one person in a calendar year. In addition, public officers, public employees and candidates for public office will be prohibited from accepting hospitality, transportation or lodging that has either a fair market value of an aggregate actual cost of more than $500 from any one person in a calendar year…Gifts and hospitality, transportation and lodging received that attain these thresholds will be reported on the individuals’ Statement of Financial Interests along with the circumstances surrounding the receipt of the same.”

At CAP, we generally aren’t a fan of banning things or unnecessary regulations. However, given the sheer number of public officials from Pennsylvania who end up in prison, we think that enacting these changes makes a lot of sense. There is room for improvement in HB 1945, but it is undoubtedly a step in the right direction. 

We will be keeping our eye on the legislation and will keep you informed about its progress.

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

Gift Ban Introduced In Pa House
Gift Ban Introduced In Pa House

Tom Mehaffie Is Best Republican Dems Have In Harrisburg

Tom Mehaffie Is Best Republican Dems Have In Harrisburg

By Leo Knepper

Nothing frustrates voters more than being told one thing when a candidate is running for office and then getting something else entirely after they take office. A fantastic example of duplicity is on display in Representative Tom Mehaffie (R-106) Here is the lead statement from his campaign website:

Tom Mehaffie is the endorsed Republican candidate running for Pennsylvania State House of Representatives in the 106th District. Tom is running to fight against the massive tax hikes being advocated by the current administration, implement reforms to make government more effective and efficient and to work to ensure we have the best schools possible to educate our young people.

Here is his actual record:

Rep. Tom Mehaffie

In 2017, Mehaffie voted against tapping the “shadow budget” and protecting taxpayers. He also sided with the Democrats when he voted against paycheck protection legislation. The paycheck protection legislation would have prevented government unions from using taxpayer resources to collect political contributions directly from workers’ paychecks. 

In this legislative session, Mehaffie has sponsored a litany of terrible legislation. He is the prime sponsor of pro-union “card check” legislation, which would eliminate the secret ballot and give union organizers the personal information of employees. He is the prime sponsor of the failed nuclear power bailout that would have cost Pennsylvanians an extra $500 million per year in higher electric bills. 

Rep.Mehaffie has also sponsored legislation to advance Governor Wolf’s priorities. His sponsorships include an increase in the minimum wage for teachers, and Governor Wolf’s proposal to impose additional taxes on the natural gas industry to fund “infrastructure” projects. Mehaffie is also the prime sponsor of a bill that would give unelected bureaucrats at the Fish and Boat Commission the ability to set fees. 

In 2019, he also voted against a package of legislation that would have streamlined and improved the Commonwealth’s regulatory environment, and make Pennsylvania more economically vibrant. One of the bills in this package, HB 1055, would have required, among other things, the repeal of two old regulations for every new one instituted, similar to a wildly successful policy established by President Trump and the federal level.

We could extend this list for several more paragraphs, but you probably get the gist at this point. Actions speak louder than words. Rep. Mehaffie’s actions do not match up with the pro-taxpayer rhetoric he offers. His voting record and list of sponsored legislation are nearly indistinguishable from your garden variety Big Government liberal.

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

Tom Mehaffie Is Best Republican Dems Have In Harrisburg

Wolf Labor Contracts Cost Taxpayers Over $1 Billion

Wolf Labor Contracts Cost Taxpayers Over $1 Billion

By Leo Knepper

Governor Tom Wolf negotiated a sweetheart deal with the four largest state labor unions. That is to say, it is good for them but expensive for taxpayers.

Over the next four years, taxpayers will be shelling out an additional $1.1 billion to some of the largest donors to Governor Wolf’s re-election campaign. These same unions donated millions to get Wolf re-elected, and that raises the question: Who was looking out for taxpayers at the negotiating table?

The answer is clearly no one, and that is one of the reasons that historical figures like Franklin D. Roosevelt opposed government unions. FDR stated, “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.” Keeping in mind that the government unions negotiating for more tax dollars are also some of the largest spenders on political campaigns, it is no wonder why government at every level is in financial shambles.

The new contracts are the most recent example of a broken system, and it is something that goes beyond any one governor or even any one political partyPennsylvania’s financial mismanagement is bipartisan:

Governor Ridge gave government employees a 25 percent increase to their pensions, and members of the legislature, at the time, received a 50 percent bump.

Governor Rendell sold the public on a transportation plan that is bankrupting the Turnpike.

And, Governor Corbett gave Pennsylvania the highest gas taxes in the county.

Pennsylvania doesn’t have a Republican or Democrat problem. Politicians from both parties have been driving the Commonwealth toward a cliff. One party’s policies will just get us there faster.

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

Wolf Labor Contracts Cost Taxpayers Over $1 Billion
Wolf Labor Contracts Cost Taxpayers Over $1 Billion

Most Diverse Economy Is Pennsylvania’s

Most Diverse Economy Is Pennsylvania’s

By Leo Knepper

Bloomberg’s latest release, the Economic Diversity Index, found that Pennsylvania has the most diverse economy in the country. We even edged out Texas. Economic diversity is essential, because it allows the Commonwealth to avoid the worst impacts of economic downturns. It’s like the adage of not having our eggs all in one basket. Our geographic proximity to a large swath of the US population, abundant natural resources, and world-class, high-tech research should be the perfect mix for a booming economy. But, it is not what is happening. Although our growth rate is higher than many of our neighbors, we continue to be held back.

Why?

The problem can be traced to two primary sources (which as loyal readers you can probably guess): a high corporate tax rate, and over-regulation. Pennsylvania’s corporate tax rate is 9.99 percent. The second-highest in the nation. Our elected officials are quick to point out that due to various corporate welfare programs, and “economic incentives,” most businesses do not pay that rate. While technically accurate, when we look at the last fifty years, we need only ask ourselves if the legislature’s preferred approach of picking winners and loser has paid off? Judging by the shortage of newly formed businesses, and the relative loss of population, the answer is clearly NO.

The second and more pernicious source of drag on our economy is the Commonwealth’s regulatory environment. Businesses face a literal mountain of regulations. In 2017, James Broughel painted a stark picture in testimony to the Pennsylvania House Committee on State Government:

“As of earlier this year, Pennsylvania has 153,661 regulatory restrictions in its administrative code. Some of these restrictions are vital for protecting the health and safety of citizens, but others just make the code unnecessarily complicated. There are 208 restrictions governing the design and use of ladders in the state, and there are 190 restrictions setting standards for consumer packages and containers. Surely some of these restrictions are not necessary for safeguarding public health, safety, or the environment.” (Emphasis added)

The scope, and occasionally contradictory nature, of Pennsylvania’s regulations, means that small and medium-sized businesses are forced to divert their attention from the actual “business.” They spend considerable time and money focused on complying with regulations; not making money and growing. Larger businesses are by no means exempt from the regulatory burden, but their size allows them to delegate the task of compliance to dedicated staff. There is no doubt that the money larger businesses spend on compliance could be better spent, but the impact is relatively higher for smaller firms.

The practical impact of overregulation cannot be overstated. Referring back to Mr. Broughel’s testimony:

“If Pennsylvania’s economy were to grow at 4 percent per year, it would take just 18 years for its real GDP to double. This means that if a child were born in Pennsylvania today and the state grew at 4 percent per year, that child would enter college in an economy twice the size of the economy in which he or she was born. By contrast, growing at 1 percent per year takes 70 years to double real GDP, just 9 years shy of the life expectancy at birth of someone born in the year 2014. Since the year 2000, Pennsylvania real GDP growth has averaged just 1.5 percent per year.” (Emphasis added)

Cutting the corporate tax rate and the overall regulatory burden would unleash Pennsylvania’s economy. It is, unfortunately, the road less traveled in part because politicians don’t have the same opportunity to get their picture taken with a giant cardboard check.

There are currently twelve pieces of legislation waiting for action that have been assigned to the Senate Committee on Intergovernmental Operations. Four of those bills have already passed the House. The Senate has an opportunity to make long-term changes in how the Commonwealth approaches regulation.

Please take a moment to contact your Senator. Ask them to take action that will encourage growth and could help make Pennsylvania the economic success story of the 21st century.

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

Most Diverse Economy Is Pennsylvania’s
Most Diverse Economy Is Pennsylvania's

Pennsylvania Incumbent Protection Plan

Pennsylvania Incumbent Protection Plan

By Leo Knepper

A recent report from LancasterOnline outlines the cost of one component of the “Incumbent Protection Program” operated by the General Assembly:

“Welcome to the state Capitol, where elected officials and their staffs operate a massive, sophisticated and partisan media machine that costs taxpayers nearly $10 million a year at a time when the number of journalists serving as watchdogs on government is shrinking…In a building home to one of the largest, most expensive legislatures in the country, there are at least three of these television studios built to produce state-run, news-like programs for state lawmakers.” (Emphasis added)

That’s right, $10 million per year to operate three television studios and an impressive public relations (PR) operation. Each of the four caucuses operates their own private, tax-payer funded, PR firms. These slick PR operations produce everything from news-letters to tele-town halls to professionally made videos of lawmakers touring businesses in their districts.

Lawmakers would argue that all of these expenses help them to connect to their constituents. One has to wonder how many of these “essential” communication attempts would be made if lawmakers were term-limited. Or, if they weren’t trying to hold onto an $85,000 per year salary and a golden parachute.

The PR expenses are only one component of a system that the General Assembly has built up over time to protect themselves from the electoral competition. This year, the legislature has a budget of over $350 million. They abuse this system to build their own name ID and ensure they enter every electoral cycle with an advantage that is costly to overcome. Communicating with constituents is one thing, but most of these expenses don’t even pass the laugh test as being necessary to accomplish that goal.

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

Pennsylvania Incumbent Protection Plan
Pennsylvania Incumbent Protection Plan

HB 1410 Weakens Budget Oversight

HB 1410 Weakens Budget Oversight

By Leo Knepper

Please, take a moment to contact your Representative and Senator. Ask them to oppose HB 1410.

Pennsylvania’s annual budget process is ripe with problems. Members of the General Assembly are typically given a day to review hundreds of pages of proposed spending, and accounting gimmicks hide the size of spending increases. One of the tricks used to disguise spending is the use of “special funds.” Special Funds frequently become part of the shadow budget with minimal accountability over the spending. One bill gaining traction is the House would add to the problem. HB1410 purports to address a vacated military base that has polluted the water system for the surrounding area.

HB 1410 establishes a Keystone Opportunity Zone around the “qualified former Military Installation.” It allows the municipality to establish a “qualified authority” to fund military installation remediation. The legislation provides a formula to collect a percentage of taxes (CNI, Sales & Use, Personal Income Tax, Realty Transfer Tax, & Local Taxes,) to fund the authority.

HB 1410 directs the State Treasurer to create a new Special Fund known as the Military Installation Remediation Fund to collect monies. Note that the Commonwealth has 36 environment-related special funds. Specifically, Pennsylvania has a safe drinking water special fund, an industrial sites cleanup fund, and a hazardous sites cleanup fund. Any or all of those funds could be utilized for a remediation project such as this if authorizing legislation was passed to allow qualified former military installation projects to be eligible for the monies in these various special funds.

Finally, HB 1410 directing the State Treasurer to establish restricted accounts within the special fund for each qualified former military installation. The funding can be used for funding transportation infrastructure, economic development costs, payment of debt service for construction, infrastructure, site preparation, etc. In other words, it can become a slush fund for pet projects. Raising additional concerns is the provision that allows the State Representative and Senator in that municipality, or an adjacent one, to serve as a board member of the established authority.  The Representative who introduced the legislation, Todd Stephens, just so happens to meet the qualifications to sit on the board.

HB 1410 addresses a problem with questionable methods, and grants the board, and potentially select members of the General Assembly, overly broad discretion in what projects to fund. It runs the risk of becoming one more shadow budget item.

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

HB 1410 Weakens Budget Oversight Please, take action on HB 1410.

HB 1410 Weakens Budget Oversight

Wolf Condemns Children To Failed Schools

Wolf Condemns Children To Failed Schools

By Leo Knepper

In 2018, over 50,000 students were denied education scholarships through the EITC (Education Improvement Tax Credit) and OSTC (Opportunity Scholarship Tax Credit) due to a lack of funds thanks to statutory limits. There is currently a waiting list of eligible businesses willing to provide $80 million to the programs in exchange for the tax credits offered. Who could possibly think that standing in the way of expanding educational opportunities is a good idea? The answer is, sadly, Governor Tom Wolf.

Wolf Condemns Children To Failed Schools
Does he really hate children that much? Yes, yes he does.

Almost immediately after passage, Governor Wolf announced his intention to veto HB 800. The legislation would have increased the EITC and OSTC limits by a combined $100 million. The bill would have also expanded scholarship eligibility to include more middle-class families. Despite his lofty rhetoric that a zip code shouldn’t determine the quality of a student’s education, his veto guaranteed that children will be trapped in failing schools. Pennsylvania currently spends more than $16,000 per student, on average, per year. Despite that amount being well over the national average, too many schools fail to provide the education that students deserve.
 
The EITC and OSTC provide assistance to families who live in school districts that underperform and allow students an opportunity to reach their full potential. Our friends at the Commonwealth Foundation estimated that the increased tax credits and eligibility requirements in HB 800 would have benefited 90,000 students over the next five years.
 
Expanding educational opportunities and empowering parents should be a bipartisan issue, but it isn’t. Thanks to the opposition from teachers’ unions and their allies in the Governor’s Mansion and General Assembly, Pennsylvania’s students pay the price.

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

Wolf Condemns Children To Failed Schools

Budget Season Bad Ideas

Budget Season Bad Ideas

By Leo Knepper

It’s June in Harrisburg, and that means that the Capitol is teeming with lobbyists trying to convince lawmakers to spend someone else’s money on their client’s causes. Sometimes that takes the form of subsidies like the nuclear power bailout, or the $250 million Race Horse Development Fund. However, bad ideas are not limited to spending tax dollars. One popular, and harmful policy, that continues to pop-up while lawmakers look for horses to trade is an increase in the minimum wage.

A recent article from the Associated Press notes that Republicans in the General Assembly have until now rebuffed efforts to increase the minimum wage. According to the article, there is now some movement among Republicans in the Senate to raise the minimum wage:

“In that chamber, Labor and Industry Committee Chairwoman Camera Bartolotta, R-Washington, is preparing legislation to boost the minimum wage by a ‘cost-of-living increase,’ which she said would protect business owners from crushing new costs.

“She declined to give details.

“Senate Majority Policy Committee Chairman David Argall, R-Schuylkill, said he also supports some sort of minimum-wage increase and that Senate Republicans have discussed the idea of tying an increase to policies to get more people into the workforce and off public assistance programs.”

Lawmakers who advocate increasing the minimum wage are no doubt well-intentioned, but there are always unconsidered, or unintended consequences to their interference in the labor market. One item that is rarely discussed in debates on minimum wage is the simple fact that government-mandated wages, by their nature, interfere with an individual’s freedom of contract. Freedom of contract is a person’s right to bargain and create an agreement without interference. When the government sets a minimum wage, that freedom is diminished.

A second problem with increasing the minimum wage is more practical; it harms the people that the policy change purports to help. The Independent Fiscal Office estimated that raising the minimum wage to $12.00/hour would destroy 33,000 jobs in Pennsylvania. Their report may underestimate the impact substantially. Ontario, Canada increased their minimum wage by 20 percent from 2017 to 2018, and there was a nearly immediate elimination of over 59,000 part-time jobs. Most of the wage proposals being floated would surpass Ontario’s wage increase on a percentage basis.

The real minimum wage is zero. When politicians forget that and try to set wages, they may feel good about themselves, but workers pay the price in lost jobs and decreased hours.

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

Budget Season Bad Ideas
Budget Season Bad Ideas


Alternative Power And Nuclear Plants

Alternative Power And Nuclear Plants

By Leo Knepper

In 2017 the nuclear power industry began lobbying Pennsylvania lawmakers to institute a bailout scheme. Due to federal regulations and an abundant supply of natural gas, the electricity produced by nuclear power plants costs more than electricity generated by other sources. Lobbyists for the nuclear power industry found little appetite in the General Assembly for the kinds of bailouts enacted by other states. The nuclear power industry has been undeterred and is now attempting to convince lawmakers to support a stealth bailout of the industry via Pennsylvania’s Alternative Energy Portfolio Standards (AEPS).

You may not have ever heard of the AEPS, but you are paying for it every month in your electric bill. Simply put, AEPS requires an electric company to purchase a certain percentage of their electricity from solar, wind, and other “alternative energy” sources regardless of cost. Because it costs more to generate electricity from alternative energy sources, consumers pay more for their power than they would under free-market conditions.

Being included in the AEPS list has certainly given alternative energy sources an unfair advantage over traditional energy sources. The best thing for consumers would be to eliminate the AEPS list. However, the nuclear power industry has decided that they want in on the game. They and their allies argue that being included on the AEPS shouldn’t be called a bailout; they have a point, but it is something far worse.

With a bailout, taxpayers would know up front just how much we will be responsible for adding to the nuclear industry’s bottom line. By lobbying for inclusion in the AEPS, the financial commitment from consumers is open-ended and undefined. According to the Commonwealth Foundation, the cost to Pennsylvania for the current AEPS regime is estimated to be a $700 million increase in energy costs and the loss of 11,400 jobs by 2025.

Members of the General Assembly should be appalled by the suggestion to expand the AEPS. If they wanted to help the nuclear power industry compete, they should take the government’s finger off the scale entirely and eliminate the preferential treatment given to some producers over others. Let the free-market work; not only would this help the nuclear power industry, but it would also reduce the costs for consumers.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.
Alternative Power And Nuclear Plants
Alternative Power And Nuclear Plants

Pennsylvania Ranks Low For Business

Pennsylvania Ranks Low For Business

By Leo Knepper

Pennsylvania Ranks Low For Business

Every year tax dollars are used to bribe businesses to come to or stay in Pennsylvania. The General Assembly, the Governor, and local governments may call it “economic development” but it’s another version of engaging in central planning for economic growth. Based on lackluster job growth, and an ever-dwindling population you would think that our elected officials would have learned their lesson after fifty years of failure; they haven’t.

For evidence of their failure, look no further than the Commonwealth’s rank in terms of overall business tax climate. According to the Tax Foundation’s latest analysis, Pennsylvania ranks thirty-fourth out of the fifty states for business taxes. An article from Watchdog.org gives a good breakdown of the methodology used in the comparison:

“The analysis examined more than 100 variables involving the states’ primary methods of taxation: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes. Many of the top-rated states lack one of those five major taxes, but a few apply all the taxes with low rates and broad bases.

“Pennsylvania ranked No. 43 for its corporate tax; No. 18 for its individual income tax; No. 21 for its sales tax; No. 34 for its property tax; and No. 46 for its unemployment insurance tax.”

Our poor tax climate, an overly-burdensome regulatory environment, and a reputation as a place ripe for lawsuit abuse all combine to put Pennsylvania at the bottom of the list as far as a place to start a new business. If the legislature were really interested in fostering economic growth in the Commonwealth, lawmakers would make a concerted effort to move Pennsylvania into the top ten states to do business.

For evidence of their failure, look no further than the Commonwealth’s rank in terms of overall business tax climate. According to the Tax Foundation’s latest analysis, Pennsylvania ranks thirty-fourth out of the fifty states for business taxes. An article from Watchdog.org gives a good breakdown of the methodology used in the comparison:

“The analysis examined more than 100 variables involving the states’ primary methods of taxation: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes. Many of the top-rated states lack one of those five major taxes, but a few apply all the taxes with low rates and broad bases.

“Pennsylvania ranked No. 43 for its corporate tax; No. 18 for its individual income tax; No. 21 for its sales tax; No. 34 for its property tax; and No. 46 for its unemployment insurance tax.”

Our poor tax climate, an overly-burdensome regulatory environment, and a reputation as a place ripe for lawsuit abuse all combine to put Pennsylvania at the bottom of the list as far as a place to start a new business. If the legislature were really interested in fostering economic growth in the Commonwealth, lawmakers would make a concerted effort to move Pennsylvania into the top ten states to do business.

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

 

Pennsylvania Ranks Low For Business