Gov. Tom Wolf has a tax plan that would place an additional $4.7 billion burden on Pennsylvania’s citizens.
Yesterday, June 1, legislation went before the State House that would have started the process of enacting it.
It failed 193-0. Yes, not one Democrat could bring himself or herself to vote for it.
The Democrat leadership is angry. They are calling the legislation “gamesmanship.” Maybe they should ask instead that government officials like Wolf refrain from pandering and making impossible promises and seriously consider the effect of what they propose.
Of course, that would mean that a Democrat would never again get elected.
Many people are asking me whether I see Governor Wolf’s budget being passed by June 30.
I entered the Pennsylvania State Senate in April of last year, and by that time the majority of the budget process had already taken place, so this is my first real experience with the budget.
This year is also different because I serve on the Senate Appropriations Committee.
I attended 33 of 35 appropriations hearings in March and April with agencies and entities affected by the budget.
This is my prediction – unless lightning strikes the Capitol in Harrisburg I do not see the budget being passed by the June 30 deadline.
Governor Wolf’s budget asks for various tax increases totaling $4.5 billion for the next fiscal year and $4.5 billion for the following year for a two year total of $9 billion.
Governor Wolf’s budget does not address any dramatic cost saving initiatives.
The best example of “PA Government Gone Wild” would be benefit costs for public sector employees.
When I identify public sector employees, I am referring to both union and non-union public sector employees.
Benefits for public sector employees are running at a minimum of 60 percent and up to 97 percent for benefits on one dollar of payroll.
The private sector generally runs in the range of 40 percent for benefits for each dollar of payroll.
We have come to a crossroads in Harrisburg.
For at least 25 years, people have been running the State of Pennsylvania with little knowledge of how a budget is balanced in the real world – wage and benefit increases were handed out like they were candy – public sector union bosses have been demanding more wages and benefits for their members, at the expense of the taxpayers.
From my point of view, virtually every public sector employee is doing well with wages and benefits.
When Senate Bill 1 (Pension Reform) was in the process of being passed two weeks ago my Senate office received over 250 emails from teachers bashing the bill.
Trust me folks – teachers are also doing well – teacher salaries in my home school district average between $85,000 and $90,000 per year for 180 days of work –plus great benefits too.
Governor Wolf wants to dump $1 billion into the public school system but is unwilling to entertain a discussion to eliminate prevailing wage mandates on public school district projects.
By public school projects, I am referring to new building construction, building renovations, maintenance and repair projects.
The elimination of this ridiculous mandate might very well save $200 – $300 million per year for school districts throughout the state – that is 20-30% of the $1 billion Governor Wolf is proposing to put into the public school system.
What do my readers think – Am I right or wrong on prevailing wage mandate elimination for school districts?
A few weeks ago I reported in an email blast the outrageous pensions being paid to retired Penn State employees.
During an appropriations hearing almost two months ago I asked the President of Penn State for a balance sheet to be supplied to the appropriations committee so we could understand how much cash they are sitting on – as of today we have not received the information requested.
Penn State could be sitting on billions of dollars for all we know – so here is my question – if outrageous pensions are being paid – plus Penn State has one of the most valuable football franchises in the nation – Why is the State of PA going to give Penn State $400 million for this upcoming fiscal year – am I right or wrong on this question?
I have a simple suggestion – Why doesn’t the State of PA go to a zero-based budget each year?
It is time to start over and clean out 25 years of excessive costs and stop the mentality that money grows on trees and there is an endless supply.
Sen. Wagner represents the 28th District in the Pennsylvania State Senate.
State Rep. Bill Adolph (R-165), in a terrifying talk, told the Springfield Republicans, tonight, April 15, that the tax hike in the budget proposed by Gov. Tom Wolf would be the largest ever imposed on the Commonwealth of Pennsylvania.
He said the $33 billion proposed budget would increase spending by 16 percent and the ways he is proposing to fund it would add $8 billion in taxes.
Wolf wants to hike the personal income tax to 3.7 percent from 3.07 percent and raise the sales tax to 6.6 percent from 6 percent but the real devils are in the details. Adolph pointed out that Wolf is seeking to expand the sales tax to services such as day care and nursing homes. The callow cruelty of such a suggestion can only come from one who has never had to worry about such things which in Wolf’s case would be himself.
Adolph said that the property tax reform proposed by Wolf would benefit 96 of the state’s 500 school districts while burdening the rest.
He said Springfield residents can expect to spend an extra $8 million in taxes under Wolf’s plan.
Adolph noted that there are more sensible reforms regarding property taxes and he expects them to come up in May.
Adolph said another significant but ignored point concerns how Wolf wants to handle corporations. Wolf’s idea is to require combined reporting businesses headquartered in Pennsylvania. This is a method of taxation that treats a parent company and its subsidiaries as a single corporation for state tax purposes.
Adolph said he has been told bluntly by several major businesses that they will move from Pennsylvania if this happens.
State Sen. Tom McGarrigle (R-26) also addressed the group and while his talk was much shorter it contained better news. He said the senate will soon pursue pension reform in the way advocated by Sen. Pat Browne (R-16) who chairs the Appropriations Committee. Browne wants to change all state workers to 401-K type plans not just new hires. The existing defined-benefit plans are getting retired workers up to 80 percent of their salary and rising. This is unheard of in the private sector.
McGarrigle said such a change would likely be tested in courts but considering the existing pension fund deficit — it’s $50 billion — it’s in the self-interest of those with money vested in the program to go along.
County Councilwoman Colleen Morrone, who is seeking re-election, noted that the Marcus Hook refineries that were closed four years ago are now both open and that county policy played a part in saving them.
Mrs. Morrone is also CEO of Goodwill of Delaware and Delaware County, Inc.
Township GOP Chairman Mike Puppio noted that the former ConocoPhillips refinery purchased by Delta Airlines is making a profit and is being expanded.
In political matters, Puppio said that the only race being contested in his bailiwick in the May 19 primary is Springfield’s 1st Ward Commissioner race and that the endorsed candidate is incumbent Ed Kelly.
He said he expects the Democrat County Council candidates to manage to get the 250 write-in votes needed in the primary to be on the ballot in November. The Democrat slate was knocked off the ballot after failing to provide the required documents to the proper people. Puppio said if they can’t follow those details they can’t be expected to follow the details in a $500 million county budget.
Springfield Commissioner President Jeff Rudolph of the 4th Ward said the new pool at the township Country Club is beautiful and has water jets for kids, lap lanes for adults, and a diving tank. He also praised the new lights on Saxer Avenue. He noted there was no township tax increase this year.
State Sen. Scott Wagner (right) with Joe Gale who is a candidate for Montgomery County Commissioner
State Sen. Scott Wagner (R-28) compared Pennsylvania to the Titanic with disaster just ahead at tonight’s (April 6) meeting of the Delaware County Patriots.
About 100 persons attended the event which was held at the Knights of Columbus hall in Newtown Square.
“The ship is going down and we got to do something about it,” Wagner said.
He was referring to Pennsylvania’s fiscal crisis driven by out-of-control state pensions and spiraling property taxes.
He blamed the cause on corruption giving special scorn to those on his side of the aisle. Wagner, who started three successful businesses in York County that now employ 600 persons, described how GOP leaders would hit him up for money at campaign time and that he would write ever bigger checks. Yet, he noted, the simple things that should have made life easier for himself and his employees never seemed to happen.
“They weren’t taking care of you,” he says. “They were taking care of themselves.”
This inspired him to seek office and in a special election on March 18, 2014, he ran a write-in campaign to fill the remainder of the term left vacant by late State Senator Mike Waugh. It was the first time a write-in candidate won a state senate seat. Wagner got 10,595 votes (47.7 percent), while the endorsed Republican nominee received 5,920 votes and Democratic nominee got 5,704.
He won an election to a full-term in November.
Wagner notes that in the private sector pensions rarely reach 40 percent of the working pay. He said in the public sector in this state it is approaching 80 percent. He notes that average pay for a teacher in his school district is $88,000 for 180 days of work and they can look forward to getting $75,000 per year for the rest of their life upon retirement. This would be at age 60 after 30 years, or earlier after 35 years.
He said that it angers him to see soldiers coming home from overseas in wheelchairs missing limbs knowing they could look forward to $800 per month in benefits when retired teachers would be getting over $6,000.
He said if things don’t change benefits and wages would soon be dollar for dollar.
“If Pennsylvania could file for bankruptcy, I’d be the first to prepare a bill,” he said.
Wagner proposed specific solutions. He said abolishing the prevailing wage mandate that requires wages for public works projects be set by the union-dominated Department of Labor and Industry rather than the market would save school districts between $200 million and $300 million annually.
He said he will not vote for a state budget unless the state gets rid of prevailing wage.
Wagner is also pushing to turn the state pension programs into 401K defined contribution types rather than the existing defined benefit packages.
He said he is also working on ways in which force give-backs in the existing benefits package.
A related issue that he is also trying to address is the cause of the corruption that led to this crisis.
He noted that he has been targeted by Pennsylvania AFL-CIO leader Rick Bloomingdale for his push for paycheck protection for union members. He said that about $750 annually is automatically deduction from each union member’s paycheck with the members having little say for which causes the money should be used.
The state’s AFL-CIO has about 800,000 members, so that’s about $600 million that winds up supporting not-so-pro labor causes like opening borders and stopping pipelines.
Wagner pointed out that Bloomingdale’s salary is over $300,000.
Wagner mentioned that he had a recent lunch with presidential hopeful Wisconsin Gov. Scott Walker who was notably successful in stopping union corruption in his state. Wagner said the big difference between Wisconsin and Pennsylvania is that unlike in Pennsylvania, Wisconsin Republicans did not get any union money.
“Eighty percent of Republicans take money from unions,” Wagner said.
Wagner said he is far from making an endorsement but that he likes Walker
Wagner said that he is pushing for the sale of the state’s liquor stores.
“State liquor stores aren’t making the kind of money people think they are,” he said.
In a bit of irony, Wagner is now running the Senate Republican Campaign Committee which so bitterly fought him a year ago. He said that he has his eye on several Democrat seats in the western part of the state and expect to flip four or five to the GOP in 2016. The Republicans now hold a 30-20 lead in the body but Wagner notes that four or five from the Philadelphia suburbs often end up supporting the Democrats.
It was rather daring that Wagner would make his speech on his adversaries’ turf.
Wagner did have some nice things to say about Dominic Pileggi (R-9) who he was instrumental in removing as Senate Majority Leader earlier this year.
“I think he’s a brilliant guy,” he said.
He said Pileggi’s weak spot was that his training as a lawyer kept him from seeing the steps needed to save the state.
Pileggi is running for election as a Common Pleas Court judge this fall and would leave his senate seat if he should win as expected. Wagner said he expects a more conservative senator to replace Pileggi.
Wagner got some grief in the question period regarding his support for SB 76, a bill that was tabled last fall and would have replaced the property tax with either an income or sales tax to fund schools. Many members in the audience said they feared it would mean the end of local control of schools. Wagner said the bill was not perfect, is not likely to pass as is, and needs further work.
He said property tax relief is desperately needed, however, and SB 76 gets things moving.
Wagner said he does not expect a state budget to be passed until October. He said any claims that the government is going to shut down are “bullshit” a word he repeated several times. He noted that the state is still going to be collecting taxes whether the budget is passed or not.
Also at the meeting was Philadelphia Common Pleas Court Judge Paul Panepinto who was seeking support for his independent run as a state Supreme Court judge. Judge Panepinto needs 17,000 signatures by July to get on the ballot. He recently made headlines for fining lawyer Nancy Raynor $1 million for her behavior during a medical malpractice case.
Wagner gave him a ringing endorsement calling him the “real deal”.
State Rep. Russ Diamond (R-102) was the last person to testify before the State House Appropriations Committee concerning this year’s Pennsylvania budget.
“I just want to remind you as we go forward that every dollar we spend here is a dollar a hard-working Pennsylvanian first had to earn. We are talking about the dollars of truck drivers who spend maybe days, weeks away from their homes providing for their children, a single mom who works two jobs, the garbage man who risks his life and limb every day jumping up and down on the truck.”
Diamond is a truck driver in real life.
Here is his short speech. Springfield’s Bill Adolph makes a quick cameo.
Gov. Tom Wolf’s budget proposal expands the size of government and shrinks the size of your wallet.
The governor argues that his property tax relief plan would offset the brunt of these tax hikes, but this relief is delayed until 2016-17. In the meantime, the state will collect higher taxes and retain those funds.
Should Gov. Wolf’s property tax plan pass the General Assembly, there’s no guarantee school districts will stop raising property taxes. Even if local governments did manage to hold the line on property taxes, Pennsylvanians would suffer a net tax increase of $4.3 billion in the 2016-2017 budget.
These tax hikes will grease the wheels for record levels of spending. Under Gov. Wolf’s plan, true General Fund spending in 2015-16 would reach $31.6 billion (Governor Wolf moves $1.75 billion in school pension payments to a new fund, which makes the General Fund increase appear smaller). This amounts to the largest spending increase in 25 years.
Of course, the General Fund is only a portion of Pennsylvania’s total operating budget. If each of Gov. Wolf’s proposals were enacted, Pennsylvania’s total operating budget would surpass $78.6 billion—the highest spending level in the commonwealth’s history.
Unsustainable spending growth and tax increases have been the prevailing trend in Pennsylvania since the 1970s. As a result, Pennsylvania ranks near the bottom in job, income and population growth. Governor Wolf’s proposals would accelerate this trend despite evidence of its harmful consequences.
There is a better alternative.
We need to grow the economy by limiting government. This means unleashing innovators and protecting working families—not weighing them down with higher taxes.
Governor Wolf unveiled his 2015 – 2016 budget on March 3.
The governor is proposing to give the public school system an additional $1 Billion dollars in his budget.
I agree that our public school system needs to be a major focus.
Getting a good education is the foundation for success.
I am a firm believer that our public school system needs to “reinvent itself” to meet the needs to compete in a world economy and also to meet the needs of the ever- changing workforce required for manufacturing and the various skilled labor sectors.
Everyone knows that Pennsylvania has a pension crisis and it must be fixed immediately.
School teachers and administrators who will be retiring in the future are part of the pension system that has to be changed so that Pennsylvanians are not continuing to throw money at a problem that will continue to be a problem and will require more money in the future.
Governor Wolf is in the process of throwing money at the education problem.
Money will not solve the problem – the problem needs to be fixed first.
In the business world, this concept is called throwing money down a black hole with no results.
There are also plenty of solutions on the spending side that should be implemented which would free up money to actually impact our children’s education.
In addition to pension reform, eliminating prevailing wage mandates on all school district capital and maintenance projects, updating the funding formula would all alleviate some of the financial burden our school districts face.
Pennsylvania collected $2.7 billion in its General Fund during December, says state Rep. Jim Cox (R-129). This is roughly $162 million more than expected. Across the board, revenue collections were above estimates, including corporation taxes, sales taxes and Personal Income Tax collections.
Six months into the fiscal year, the General Fund stands at $13.3 billion, $271 million above estimate.
State Senator Scott Wagner (R-28) has issued a statement concerning Pennsylvania’s financial situation in response to the mid-year budget briefing by Budget Secretary Charles Zogby given Dec. 3.
The important points are that the state has $30 billion annual revenue, a $5 billion, 60-day line of credit and a $2 billion is not unrealistic for this time of year.
Here is the statement albeit with some editing.
I’ve been sitting back listening to my colleagues on the other side of the aisle, and unfortunately it is apparent that none of them understand how the finances of a business operate,.
The Commonwealth is identical to an operating business where there is revenue and there are expenses. As an owner and operator of multiple businesses, I fully understand that my business enterprises would not be able to operate without an operating line of credit from a bank. The Commonwealth has revenue of approximately $30 billion per year. Any experienced business operator or chief financial officer would agree that the Commonwealth of Pennsylvania should have an operating line of credit equivalent to 60 days of average revenue, which would be an operating line of credit of approximately $5 billion.
As a private sector business owner, I know how to manage a budget and what factors will impact the budget. The Democrats are trying to spin the budget issue to scare the public into thinking the only solution is more tax increases, when in reality, revenue comes in at different times throughout the year. The $2 billion deficit is not unrealistic at this time of year. A large portion of the revenue that comes into the Commonwealth is received between Jan. 1and April 15 through payments for PA State Income Tax.
Many Democrats are using the budget discussion as an opportunity to grand-stand politically and criticize Governor Corbett for the equivalent of borrowing against a line of credit to cover revenues that are slower at the end of the year. Any private sector business operator needs to understand cash flow into and out of their business. Businesses routinely operate with lines of credit. This is what businesses do – and if some of the critics would have ever signed the front of a paycheck rather than the back, they might possibly have a better understanding of cash flow, borrowing money and cycles throughout the year that affect cash flow.
Also, last winter was the worst winter that many businesses have seen in 30 years, and this impacted revenues to the Commonwealth.
At one of my companies, we spent approximately $50,000 on snow removal, which is more than double of any year that the company spent over the last 15 years. I would be curious to know how much additional expense the Commonwealth spent on snow removal at Commonwealth owned or leased facilities throughout the state.
Just consider this, if car dealers in all 67 counties throughout Pennsylvania sold 500 less vehicles per county on an average, that would equal 33,500 less vehicles sold. Factoring transaction value of $25,000 per vehicle times 33,500 vehicles would result in lost revenue of $837,500,000 to the car dealers. Sales tax of 6 percent lost to the Commonwealth on revenue of $837,500,000 would equal $50,250,000.
Many people who had planned on purchasing a new vehicle during the winter may have had to cancel their vehicle purchase to replace a roof, spouting, or a new furnace because of the severe winter we just experienced.
The bottom line is this: many of my colleagues on the other side of the aisle just don’t understand the complexities to operate a business and this unfortunately means that they struggle to understand economics. We face a deficit next year because costs continue to climb for pensions, human services, corrections, and debt.”
For the last four years, Democrats could have worked with Governor Corbett to solve these daunting issues and instead chose to do what they’re doing now – distorting the facts and complaining without offering solutions. Governor Wolf, yesterday, to his credit, chose to delay actions and wait until he gets to spend some time reviewing the budget in depth before offering any commentary.
I continue to stand by my statement that Pennsylvania does not have a revenue problem, it has a spending and expense problem.
For the benefit of all of Pennsylvania, the Democrats need to step up to the table and begin working on actually fixing problems rather than just criticizing and grand-standing politically.
The claim recently made that Southeast Pennsylvania’s GOP backed Corbett’s pension revamp rings hollow. What the GOP fears is that Corbett is likely to be replaced by Tom Wolfe in the next election and some of them will go down with Corbett.
Frankly, it will serve them right. If the GOP had truly supported revising the pension system for the teachers union and state employees they could have done it. But instead they frittered away the days with no solution in sight and none on the horizon.
I think this indicates that these unions hold the GOP by the short hairs just as surely as they hold the Democrats. The victim from the legislators recalcitrance is of course the public and most notably senior citizens living on fixed incomes.
To illustrate, Rose Tree Media school district in 2007 contributed $2.5 million to the teachers’ pension fund; this year 2014, the district is contributing $9.6 million, or an increase of $8.2 million – all taken from the pockets of already strapped taxpayers. In 2024 the contribution increases to $11.5 million. Please note that the amounts will be greater than these numbers because of the automatic increases in annual wages that teachers will receive over this time that increase the base on which the contributions are calculated.
The typical pension paid to RTM’s retiring teachers approaches $100,000 a year. Many have pensions that far exceed that amount. The school district’s administrators receive even more with the average exceeding $150,000 a year and the superintendent is already scheduled to get $180,000 per year.
Nobody in the private sector receives anything close to what the teachers’ union members get and yet the rest of us are forced to subsidize this scheme out of meager salaries and paltry retirement savings.
Frankly, I think there is no hope Pennsylvania will ever resolve this problem simply because the legislators in Harrisburg are feasting on the same system. They can’t handle change.
