Wolf Expresses Half Right Ideas

Wolf Expresses Half Right Ideas

By Leo Knepper

With all of the chaos of the Iowa Caucuses, the Senate wrapping up its impeachment proceedings, and the State of the Union address, you might have missed Governor Wolf’s budget address last week. The budget address is similar to the State of the Union; it is mostly a piece of political theater.

In the speech, the Governor lays out the administration’s policy vision for the next year. Governor Wolf’s budget addresses have primarily contained the same bad ideas and half-truths every year. This year was no exception. The Governor is still insisting that the natural gas industry isn’t paying their “fair share.” It’s worth noting that the impact fee paid by the natural gas industry will likely generate close to $200 million in 2020, a decrease from 2019’s record-breaking numbers (due to lower natural gas prices). Governor Wolf also wants to reduce school choice options, increase the minimum wage, and increase public assistance in covering the cost of childcare. Ironically, raising minimum wage costs will have a ripple effect and make childcare even more expensive, and that would probably require even higher levels of public assistance.

In the midst of all of the terrible ideas, Governor Wolf did touch on two policy requests that he got at least half-right. First, Wolf suggested that Pennsylvania lower its corporate net income (CNI) tax rate. The Commonwealth has the second-highest CNI in the country, and it is often cited as a reason why businesses don’t locate or expand in Pennsylvania. He paired the tax rate reduction with some complicated changes to the tax code, called combined reporting that will make it more burdensome for businesses to file their taxes and end up increasing their tax bills in the state.

He requested the combined reporting change to make up for “lost revenue” from the lower tax rate. A better way to pay for the reduction in the tax rate is to eliminate the corporate welfare and targeted tax breaks offered by the Commonwealth to politically connected firms. This would create a level playing field and improve the overall business environment. Over time, a better climate would encourage new businesses and business expansion, and that would generate even more revenue for the treasury.

The Governor’s other good idea was tapping into the $250 million Race Horse Development Fund. The fund, replenished annually, is derived from Pennsylvania’s casinos and subsidizes the horse racing industry. One notable beneficiary was the multi-billionaire, Vice-President of the United Arab Emirates. There are quite a few other items that should have priority over subsidizing the sport of kings.

Governor Wolf is proposing to use the funds from the Race Horse Development Fund to create grants for students attending Pennsylvania’s state universities. Decreasing the cost of education is laudable, but a complete overhaul of the state’s universities would accomplish the same goal. And, while we’re at it, the universities should probably look at what percentage of the students’ tuition is going to education versus what is spent on administration and empire-building through the construction of new buildings, etc.

The House and Senate will be conducting budget hearings for the next couple of months. We will be sure to keep our readers informed of any notable developments.

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

Wolf Expresses Half Right Ideas
Wolf Expresses Half Right Ideas

Lawmaker Leaving With $120K Pension

Lawmaker Leaving With $120K Pension

By Leo Knepper

Heading into the election season, 14 Pennsylvania lawmakers, so far, have announced that they will be retiring at the end of their term in December. It is worth noting that for one of them, their annual pension payment will exceed their current salary by roughly $30,000.

Lawmaker Leaving With $120K Pension
Fat and happy politics doth make

By our calculations, Representative Thomas R. Caltagirone will be walking out the door with an annual pension payment of roughly $120,000. In addition to this golden parachute, he will also receive lifetime health insurance benefits “generously” subsidized by taxpayers. With only limited exceptions, private-sector employees are offered a defined-contribution retirement plan, such as a 401(k). On average, they can expect to retire with a nest egg that provides them with 50 to 75 percent of their final salary. 

Why do Harrisburg’s politicians remain such a costly anomaly? Because they determine their own salary and benefits. In the Pension Grab of 2001, Caltagirone voted to increase his pension by 50 percent. This pension increase, signed into law by Governor Ridge, is one of the primary reasons the Commonwealth’s pension system is in dire financial condition. (For a list of all of the lawmakers who voted for the pension hike, see this blog post on our website.)

Rep. Caltagirone is the only member of the Golden Parachute Club, i.e., lawmakers whose pensions will equal or exceed their current salary, to announce his retirement so far this year. Getting to the Golden Parachute level requires lawmakers to “serve” in the legislature for 35 years or more and be enrolled in the pre-2017 pension program.

According to our research, the other members of the Golden Parachute Club are Representatives Bob Freeman (D-Bethlehem) and Tony DeLuca (D-Pittsburgh). Senator David Argall (R-Lake Hauto) will be joining the Club in November of 2020, provided he remains in office, and there are all indications that he will be sticking around.

There is no limit to how large the legislators’ defined-benefit pension can grow, so long as they stay in office. The Golden Parachute is the most corrupting influence on members of the General Assembly. It makes them prioritize their re-election above everything else, even the well-being of their constituents and the financial health of the Commonwealth

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

Lawmaker Leaving With $120K Pension

Wolf Plot Hikes Energy Costs For Working People

Wolf Plot Hikes Energy Costs For Working People

By Leo Knepper

Back in January, we shared a Guest Post with our readers on the Transportation and Climate Initiative (TCI). The author, Lowman Henry, noted:

“[T]he Wolf Administration has entered into an agreement with nine other mostly northeastern states to cap each of the states’ carbon emissions from transportation (your car). The states have one year to come up with a plan. Such plans will most certainly include additional taxes on gasoline and diesel fuel…the money will be “redistributed” to “low carbon transportation systems” – in other words urban mass transit…Thus the lofty sounding Transportation and Climate Initiative allows Governor Wolf to advance two of his top agenda items: establish a new revenue stream to keep urban mass transit afloat and penalize users of carbon-based fuels. Keep in mind, those users include you every time you start your car or use a product that was delivered to the store by motor vehicle, which is to say everything.” (Emphasis added)

Wolf Plot Hikes Energy Costs For Working People
Rich and Indifferent

The TCI plan was released on Dec. 17, and it is everything we feared it would be. The Citizens Alliance of Pennsylvania, CAP, has joined with allies from across the Northeast and Mid-Atlantic in voicing our opposition to this plan. We noted in a joint letter:

“Legislators should not allow one citizen of a state — the governor — to impose such serious financial burdens on all other citizens. Such a decision rightfully belongs to the people’s representatives and should be reached through the legislative process, not by the decree of a single executive. “The TCI is a poorly conceived, fundamentally regressive, and economically damaging proposal.”

Pennsylvania already has one of the highest gas taxes in the country. According to TCI’s own estimates carbon emissions will decrease by 19 percent from 2022-2032. They don’t think that’s good enough. Instead, the TCI is advocating a new gas tax ranging from five to seventeen cents per gallon in order to reduce emissions by only an additional one to six percent. The mere fact that Governor Wolf would consider increasing the tax yet again is appalling. The question now is whether or not the legislature will take substantive action to reclaim its power of the purse to combat the measure.

Wolf Plot Hikes Energy Costs For Working People

Pennsylvania Legislative Salaries Hit $90,300 Not Including Benefits

Pennsylvania Legislative Salaries Hit $90,300 (and this doesn’t include benefits).

By Leo Knepper

As of Dec. 1, the base salary for Pennsylvania lawmakers will increase to $90,300 per year. This pay raise comes as the result of an annual cost-of-living-increase (COLA) they receive automatically. The higher salary will be on top of any per diems, health insurance, etc. that lawmakers are eligible to receive.  

As an aside, lawmakers pay only one percent per year of their salary for health benefits. In other words, their annual premium is roughly $900 for health insurance that is second to none. There are many taxpayers whose monthly insurance bill exceeds that amount.

The $90,300 salary is the minimum for members of the General Assembly. As noted by the Associated Press:

“Lawmakers in leadership posts will top out at $141,000 for House Speaker Mike Turzai, R-Allegheny, and Senate President Pro Tempore Joe Scarnati, R-Jefferson. The four caucus floor leaders in the House and Senate will each make almost 130,900 while the four caucus whips and the four Appropriations Committee chairs will receive $121,100.”

The salary differences between rank and file members and “leadership” are especially noteworthy. It presents another clear example of how our beloved judicial branch ignores the plain text of the Pennsylvania Constitution. According to Article II, Section 8, “The members of the General Assembly shall receive such salary and mileage for regular and special sessions as shall be fixed by law, and no other compensation whatever, whether for service upon committee or otherwise.” (Emphasis added)

Members of the General Assembly aren’t the only ones who will benefit from taxpayers’ forced generosity in the new year. When January rolls around, members of the executive branch will also see an increase in their pay. Governor Wolf’s salary will increase to over $200,000 per year. The Chief Justice of the Pennsylvania Supreme Court, Tom Saylor, will make over $220,000 per year.

Many lawmakers will, if they haven’t already, make a show of donating their salary increase to a charity. It is a standard public relations move on their part, and has become as regular as the leaves changing colors. However, despite their righteous indignation, there is never any real interest in eliminating the automatic COLA by changing the law. Finally, for any lawmakers in the defined benefit pension plan, the higher annual salary, regardless of charitable contributions, will be used to calculate their pension benefits upon retirement.

Unlike members of the General Assembly, CAP can’t force anyone to pay for projects we want to undertake. Next year is going to be incredibly busy for us. If you value what CAP does and would like to help us continue holding Harrisburg accountable, please consider making a financial contribution to our efforts.

Pennsylvania Legislative Salaries Hit $90,300 (And This Doesn’t Include Benefits)
Pennsylvania Legislative Salaries Hit $90,300 (and this doesn't include benefits).

Wolf Wants Republican Swamp Rat For Commonwealth Court Says CAP

Wolf Wants Republican Swamp Rat For Commonwealth Court Says CAP

By Leo Knepper

Due to a recent retirement, Governor Wolf has an opportunity to fill a vacancy on the Commonwealth Court, one of Pennsylvania’s two intermediate appellate courts. The Governor would have had to work hard to make a worse choice than Drew Crompton.

Crompton’s name isn’t likely one that most Pennsylvanians are familiar with, but he has worked for the Senate for over two decades. He currently serves as Chief of Staff and counsel for Pennsylvania Senate Pro-Tempore Joe Scarnati. Over the course of his career, Crompton has been on the periphery of ignoble moments in Pennsylvania’s recent history. Two stand out, and are worthy of special attention.

In 2005, Crompton authored a memo suggesting that activists exercising their First Amendment rights in advocating for the repeal of the “midnight pay raise” should have to register as lobbyists. Concerning the memo, The Pittsburgh Tribune-Review stated, “It suggests an orchestrated plan of attempted intimidation that, to this day, we believe is worthy of a Justice Department investigation.”

In 2006, Crompton took three months of “unpaid” leave from the Senate to work on Lynn Swann’s gubernatorial campaign. He then, remarkably, received a $19,647 bonus. This activity resulted in an investigation by the Attorney General’s office. Although no Senate Republicans were charged with wrongdoing, a similar scheme among House Democrats resulted in multiple arrests and convictions.

Crompton’s role in the Senate would raise serious questions about his impartiality in legal cases. How will his involvement in the drafting of legislation, public statements, and issuance of internal documents impact his ability to hear cases? How many plaintiffs or defendants will seek his recusal? How disruptive will it be for the Senate to have parties to cases file suits seeking email communications on legal matters authored by Crompton?

In the entirety of Pennsylvania, there certainly must be more qualified candidates to serve out a term on the Court.

Please, take a moment to contact your Senator and urge them to vote against Drew Crompton’s nomination for the Commonwealth Court.

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

Wolf Wants Republican Swamp Rat For Commonwealth Court Says CAP
Wolf Wants Republican Swamp Rat For Commonwealth Court Says CAP

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