Last week, Governor Wolf disclosed that he has been diagnosed with prostate cancer – Governor Wolf reported that his cancer was detected in the early stages and that he would be under-going treatments – although Governor Wolf and I do not agree on many issues – I want to take this opportunity to wish Governor Wolf a full and speedy recovery.
Yesterday (Feb. 29) the Pennsylvania Senate Appropriations Committee held budget hearings for the Department of Corrections, Department of Transportation (PennDOT) and the Department of Labor & Industry.
The first hearing held was for the Department of Corrections. For the 2016-17 budget year the Department is looking for a $200 million increase in funding.
Within the $200 million request are $73 million that will be used for pension obligations.
Most troubling is to learn that overtime at Corrections facilities is out of control.
A review of last year’s over time records reveal that:
7 Employees made more than $100,000 in overtime
130 employees made more than $50,000 in overtime
Nearly 1,000 employees made more than $25,000 in overtime
More than 3,700 employees made more than $10,000 in overtime.
The total of all of the categories listed above is $69.2 million for overtime. Factor in benefits of dollar to dollar of actual pay and the total cost of the overtime is almost $140 million.
Consider the request in funding of $200 million — $73 million for Pensions and $140 million for overtime with benefits equals $213 million.
It is important to note that personnel earning large amounts of money working overtime fully understand that by driving their full annual earnings as high as possible will result in a greater payout for their pension when they retire. Annual pension payouts are based on a percentage of earnings at the time that the person retires.
The overtime cost is particularly troublesome because the Department of Corrections has increased it’s staffing by more than 400 positions over the last year.
During the hearing we challenged the Secretary of Corrections by asking what can be done to control the Correction Department’s spending on overtime.
The Department continues to hire more staff and overtime costs continue to skyrocket.
It is important to point out that inmate population has decreased over the last four years. Total employees within the Department of Corrections as of the 2014-15 year was at 17,259. Of the total number at least 14,000 employees are unionized. It is my opinion is that the Department of Corrections has become so large that it has become unmanageable and must be reined in quickly.
The second hearing was for the Department of Transportation (PennDOT).
A major finding reveals that the Pennsylvania State Police receive funding through Gasoline and Diesel Fuel taxes collected by PennDOT.
If you recall in November of 2013 the legislature increased the gasoline and diesel taxes to fund more road and bridge construction projects.
History reveals that in 2001 a change was made to fund the State Police out of fuel taxes. A cap was to be put in place. It never was. In the 2001-02 year funding to the State Police from fuel taxes was $351.8 million. For the 2016-17 year it is projected to be $813.9 million.
The funding the State Police will receive from Penn-DOT in 2016-17 over the 2015-16 year is a 7.2-percent increase.
Using the current funding scenario where Pennsylvania motor fuel taxes fund the State Police – 11.7 cents on every gallon of motor vehicle fuel goes toward State Police funding.
Another large challenge Pennsylvania faces is that cars and trucks continue to get greater fuel efficiency – meaning more miles per gallon as the EPA mandates that car and truck manufacturers increase fuel efficiency.
As electric cars and vehicles powered by natural gas become more popular — they do not pay fuel taxes – there will be less tax revenue to fix roads and bridges.
In addition, as our population continues to age, people in their 70’s and up are driving less. Many millennials that grew up in Pennsylvania that live in large cities are choosing not to own a ca. Many people are also using Uber instead of owning car. This again also means less motor fuel taxes generated.
It is important to point out that Pennsylvania has one of the lowest passenger vehicle registration fees in the nation. I continue to be very aware of the thousands of trucks that enter Pennsylvania every day from Maryland on I-83, travel to I-81 and other routes through Pennsylvania without purchasing diesel fuel in our state because fuel taxes in surrounding states are anywhere from 20 to 30 cents less.
A large over the road truck can hold up to 200 gallons or more of diesel fuel – if they re-fuel in MD or NY the savings in fuel taxes over PA could be $40 to $60 per re-fuel.
The Pennsylvania State Police serve a critical function and it is important that we find a way to fund them without using liquid fuel taxes.
Fuel taxes were increased to rebuild Pennsylvania’s roads and bridges – the budgeted amount of over $800 million should be going to road and bridge construction, not funding the State Police.
Pennsylvania has the highest fuel taxes in the nation – click here for a chart of nationwide gasoline taxes.
The last hearing was for the Department of Labor and Industry (L&I).
The number of employees with L&I as of 2014-15 was 5,902 – the Department is looking for an increase from the General Fund of 8.2 percent.
The Department of Labor & Industry is also a critical department of the Commonwealth of Pennsylvania and it provides critical functions such as elevator inspections, fuel tank inspections, and provides workers compensation insurance through the SWITF Fund (State Workers Insurance Trust Fund).
As I sat through all of the budget hearings last week and so far this week my brain remains focused on this:
It was reported last week during the hearing for the Treasury Department that the rate of inflation as reported by the Philadelphia and Pittsburgh CPI indexes was a negative number (0.02 percent for the 2015 year – so if inflation is negative and revenue coming into the state is growing at approximately 3 percent per year (mainly through Personal Income Taxes and state Sales Tax) and each agency in Pennsylvania is looking for funding increases greater than 3 percent additional money over and above 3 percent must come from somewhere. Governor Wolf has a solution for the somewhere answer – increase taxes on Pennsylvanians.
It is very clear that state employee benefit costs coupled with the current pension crisis are now approaching one dollar for every dollar of pay — if this trend was taking place in the private sector business world it would mean CODE RED to do something — Pennsylvania is about to get buried in the dust.
I have a solution. We must get Pennsylvania State Government spending under control and go on a diet. It will require many tough decisions and will require making changes and getting away from the status quo.
Governor Wolf. it is time to act. Every day we delay the pain will increase for Pennsylvanians.
Raising taxes is not the answer. Taking action on spending is the answer.
Sen. Wagner represents the 28th District in the Pennsylvania Senate.