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Ten Reasons Why Gov. Wolf Should Veto the Republican Budget

June 30, 2015 - 8:34pm

Gov. Wolf should veto the Republican budget because it would:

  • Bankrupt K-12 schools. Public schools would receive a miserly $8 million increase – spread over the 3,287 schools in Pennsylvania’s 500 school districts.
  • Deny hard-pressed Pennsylvania seniors, families and communities property tax relief.
  • Force state universities to hike tuition and college students to incur more debt.  The budget’s higher education funding increase is less than projected inflation; at this rate the state may never restore the real level of higher education funding before Gov. Corbett’s first cuts.
  • Maintain Pennsylvania as the only extraction state foolish enough not to enact a commonsense severance tax.   
  • Add to Pennsylvania’s debt and further lower the state’s bond rating. One-time gimmicks mean the Republican budget would come up $1 billion short this year and $3+ billion short next year, which would lead to more downgrades of Pennsylvania’s debt.
  • Fail to invest in job creation and “upskilling” of Pennsylvania workers.
  • Continue to starve county-run human services programs.
  • Only take care of Republican lawmakers’ priorities and interests – pension changes that slash retirement benefits, privatization of profitable state-run liquor stores, give $51 million more in funding to the legislature (but only $36 million for higher education) and more money for the Commonwealth Financing Authority, over which legislators have veto power – but turn a blind eye to the people’s priorities – education funding and a tax on natural gas drillers. .
  • Ignore the Governor’s detailed budget proposal on the table for four months now, and replace it with an extreme, one-sided and uncompromising plan conceived in secret and hurriedly passed without input from the Governor or the public.
  • Prolong a course that is not working by mercilessly clinging to a cuts-only, “no new taxes” approach that is stalling Pennsylvania’s economic recovery.

*(For more detail and sources, see PBPC’s detailed analysis of the Republican budget).

Backroom Republican Budget Scores ZERO on Voters’ Main Priorities

June 30, 2015 - 8:52am

In March, Gov. Wolf presented his budget to the Republicans in the General Assembly. Knowing they would present objections and alternate approaches, the governor made numerous overtures to the Republican leaders in an effort to engage them in fruitful negotiations.

At one point, Gov. Wolf offered a substantive compromise on his severance tax proposal, but Republicans refused to negotiate. "Our counterproposal was nothing," Senate President Pro Tem Joe Scarnati said. "Yeah, nothing," he repeated. That’s a big ZERO.

Instead, House and Senate Republican leaders negotiated with themselves behind closed doors in backrooms and produced a budget that involved ZERO engagement with the governor.

The budget Republicans cooked up has ZERO property tax relief and an almost ZERO increase in education funding – even though property tax relief and increased education funding are the highest priorities of the voters who sent them to Harrisburg. The budget also maintains Pennsylvania’s status as the only major gas-producing state that has a ZERO severance tax on drillers.

Gov. Wolf has said he will veto this budget that was created without his input if it ignores his stated priorities of increased education funding, property tax relief and a severance tax on drillers.

House and Senate leaders are betting that their cynical antics will be well-received by a public that will blame the governor for the budget impasse. Early indications are that their gamble is backfiring. The Philadelphia Daily News observes that it’s “tough to bargain with GOP lawmakers living in fantasyland,” and a reporter for the Pottstown Mercury muses in his blog that “this is why everybody hates Harrisburg.”

The Republicans apparently will get their wish of passing an on-time budget that raises ZERO taxes – not even on gas drillers. But they should remember the old caution, “be careful what you wish for.” After all, voters are wishing for more money for their schools, property tax relief and a tax on the gas drillers, and the Republican budget scores ZERO on all of these. 

 

55 Million Reasons (and Counting) Why PA Does Not Have a Severance Tax

June 29, 2015 - 5:44pm

Ten years after the first gas driller bored into the Marcellus Shale formation, the commonwealth remains the only major gas-producing state without a severance tax. Legislation to enact a severance tax has been introduced into the General Assembly every year since 2009. And every year, the General Assembly has failed to get a severance tax bill to the governor’s desk. The Republican budget for 2015-16 does not include a severance tax.

Polls over these years have shown that a severance tax enjoys broad, bipartisan support from voters. Bipartisan support also exists in the General Assembly, where both Republican and Democratic lawmakers have introduced versions of a severance tax.

So why hasn’t a severance tax passed? Well, there are a million reasons – no, wait, -- there are 55 million reasons why Pennsylvania continues to give the drillers a huge tax break. According to the latest Marcellus Money report, a project of Common Cause of Pennsylvania and the Conservation Voters of Pennsylvania, since 2007 gas drillers have spent $46.8 million lobbying Pennsylvania officials and $8.2 million in campaign contributions to candidates for office and PACs.

Governor Wolf made passage of a severance tax the centerpiece of his budget. The Wolf budget is structured so that revenue from a drilling tax would go to restore education funding drastically cut during the Corbett administration, fund economic development and clean energy, and hire more Department of Environmental Protection inspectors to monitor gas drilling in Pennsylvania.

In failing to include a severance tax in their budget, the Republican leadership chose oil and gas industry lobbyists and PACs over the needs of our children and communities. This budget richly deserves the veto the governor is sure to deliver.

KRC/PBPC's Insider News for Week Ending June 26, 2015

June 27, 2015 - 11:32am

Ah June, the month of blushing brides and bruising budget battles. The latest on the latter is that House and Senate Republicans announced their own $30.1 billion budget Friday. The new proposal looks like Gov. Corbett's fifth budget, a pure expression of a cut-spending, no-new-revenues approach. Gov. Wolf vowed to veto it if it remains in its current form. “Pennsylvanians want a budget that provides property tax relief, a real investment in education and a reasonable severance tax to pay for it,” he said. The Republican budget contains no property tax relief plan or severance tax and would invest a fraction of what the governor’s proposal would in education.

The House will reconvene at 11 a.m. Saturday to take up the Republican plan. The Senate is in recess until 6 p.m. Sunday. The state’s fiscal year ends on Tuesday. If the legislature passes the Republican budget, and the governor vetoes it, a protracted budget impasse could ensue, leaving the state’s bill-paying and funding capacities in a precarious position. We’ll keep you posted.

Rep. Bill Adolph (R-Delaware) & Senate Majority Leader Jake Corman (R-Centre) take
questions after Republican budget plan released on Friday  (Sam Janesch, The Morning Call)

The Final Verdict … happens to be the name of the briefing paper the Keystone Research Center released Tuesday. And it’s not a pretty verdict for the one-sided, cuts-only style of budget that, ironically, the Republicans are voting on this weekend. The paper concludes that “the failure to take a balanced approach – looking for costs savings but also new revenues – since 2011 operated as a drag on the state’s economy and makes PA’s budget choices this June more difficult.  What PA needs now is a turnaround budget that combines sound fiscal management with investments in education, job creation, and communities.”

And a SUPREMELY good week … for decisions coming out of the U.S. Supreme Court. Check out KRC Executive Director Steve Herzenberg’s blog post on the Court’s decision upholding tax subsidies under the Affordable Care Act to help low- and middle-income people buy health insurance in states with a federal health-care exchange.

Rallying for fair funding … PBPC staff and interns joined hundreds of parents, students, teachers, clergy and community leaders who rallied in the capitol Tuesday, as part of the Campaign for Fair Education Funding, to urge lawmakers to create a basic education funding system that gives all PA students access to a quality education, regardless of where they live. PA ranks as the worst state for inequality in state and local funding between poor and wealthy school districts.

Fair Education Funding Rally in the Capitol on Tuesday

Phoning in for fair funding … PBPC Outreach and Engagement Director Jeff Garis was the featured presenter for a tele-town hall Thursday hosted by the Urban League of Philadelphia. More than 1,000 people from Philadelphia and Delaware counties phoned into a discussion about the need for a state budget that increases PA’s investment in public schools and distributes funding in a fair and equitable way.

Drilling down to the facts … The Pennsylvania Budget and Policy Center came out this week with a one-page list of the Top Five Facts About Drilling and Taxes in PA. We’ve been blogging and tweeting a fact a day to counter some of the creative “information” coming out of the gas industry about what the dire consequences will be if PA becomes the last major gas-producing state to enact a severance tax.

 

 

 

The Top Five Facts About Drilling and Taxes in Pennsylvania

June 26, 2015 - 8:37pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

Below are five facts, supported by research and independent data, which tell the real story:

 1.     Fact - Oil and gas development companies often pay little to no corporate income tax in Pennsylvania due to federal energy development tax incentives.  Gas drillers pay less now in state income taxes than they did in 2008 at the beginning of the boom. And even as production soars, the drillers are paying slightly less in impact fees.

  • Range Resources, the No. 3 PA producer, says it is “currently not in a taxpaying-position for federal income taxes,” and admits “we generally do not pay significant state income taxes.” 
  • Cabot Oil and Gas, the No. 2 PA producer, reports it paid no state income taxes in 2014.
  • Chesapeake Energy, the No. 1 PA producer, paid a combined federal and state effective income tax rate of only 1.5% in 2014.
  • Combined, these three companies reported more than $4 billion in net income in 2014.

 2.     Fact – Every other major gas-producing state has a severance tax, so there would be no point to a drilling company “leaving” Pennsylvania because a severance tax is enacted here. State tax policies make little difference in the development of resources in one state over another. Montana offered tax rates of about half that of neighboring North Dakota, yet from 2009 to 2012 production doubled in North Dakota and fell in Montana by 14%. Tax policy aside, Pennsylvania’s Marcellus/Utica shale play is the largest, lowest-cost gas producing region in the country so it is very attractive to drillers.

 3.     Fact – Most of the gas produced in Pennsylvania is exported to other states so, according to the Energy Information Agency, residents of those states would pay 90 percent of a Pennsylvania severance tax. Pennsylvania consumers already pay severance taxes to other states that ship gas here. Because severance taxes levied in other states are already figured into the price of gas, any increase from a Pennsylvania tax would be very small – less than 2 percent. Natural gas prices have fallen in Pennsylvania by 28 percent since 2008.

 4.     Fact- Pennsylvania’s proposed severance tax has an effective rate that is lower than or equal to that of other major gas-producing states. When gas prices are at $2.50 per 1,000 cubic feet of natural gas (McF) or more -- and the Energy Information Agency projects gas will average $3.05 per McF in 2015 – Pennsylvania’s tax would have a lower effective rate than in Wyoming and New Mexico, and would be roughly equal to the rate in Texas. As natural gas prices rise, the effective rate would drop.

 5.     Fact – The drilling industry inflated the number of jobs it created in Pennsylvania. The state Department of Labor and Industry recently improved the method for calculating the total number of drilling jobs, revising the figure downward. L&I now puts the net new number of jobs created by shale development at 59,394 jobs, with only about 23,478 of them directly related to the industry. All together by this estimate shale drilling accounts for 1 percent of all Pennsylvania jobs.

Fifth of Top Five Facts About Drilling and Taxes in PA

June 25, 2015 - 9:07pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. We are posting a fact a day on this blog. Today, we give you:

Fact 5.  The drilling industry inflated the number of jobs it created in Pennsylvania. The state Department of Labor and Industry recently improved the method for calculating the total number of drilling jobs, revising the figure downward. L&I now puts the net new number of jobs created by shale development at 59,394 jobs, with only about 23,478 of them directly related to the industry. All together, by this estimate, shale drilling accounts for 1 percent of all Pennsylvania jobs.

 

Fourth of Top Five Facts About Drilling and Taxes in PA

June 25, 2015 - 8:58pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. We are posting a fact a day on this blog. Today, we give you:

     Fact 4. Pennsylvania’s proposed severance tax has an effective rate that is lower than or equal to that of other major gas-producing states. When gas prices are at $2.50 per 1,000 cubic feet of natural gas (McF) or more -- and the Energy Information Agency projects gas will average $3.05 per McF in 2015 – Pennsylvania’s tax would have a lower effective rate than in Wyoming and New Mexico, and would be roughly equal to the rate in Texas. As natural gas prices rise, the effective rate would drop.

Third of Top Five Facts About Drilling and Taxes in PA

June 25, 2015 - 8:55pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. We are posting a fact a day on this blog. Today, we give you:

     Fact  3. Most of the gas produced in Pennsylvania is exported to other states so, according to the Energy Information Agency, residents of those states would pay 90 percent of a Pennsylvania severance tax. Pennsylvania consumers already pay severance taxes to other states that ship gas here. Because severance taxes levied in other states are already figured into the price of gas, any increase from a Pennsylvania tax would be very small – less than 2 percent. Natural gas prices have fallen in Pennsylvania by 28 percent since 2008.

Second of Top Five Facts About Drilling and Taxes in PA

June 25, 2015 - 8:40pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. We are posting a fact a day on this blog. Today, we give you:

Fact 2.  Every other major gas-producing state has a severance tax, so there would be no point to a drilling company “leaving” Pennsylvania because a severance tax is enacted here. State tax policies make little difference in the development of resources in one state over another. Montana offered tax rates of about half that of neighboring North Dakota, yet from 2009 to 2012 production doubled in North Dakota and fell in Montana by 14%. Tax policy aside, Pennsylvania’s Marcellus/Utica shale play is the largest, lowest-cost gas producing region in the country so it is very attractive to drillers 

Commonwealth Foundation Doesn’t Understand What Pennsylvania’s Voters Do: We Need More Education Funding

June 25, 2015 - 6:12pm

While increasing public education funding rightly remains the top priority for Pennsylvanians after years of cuts, the Commonwealth Foundation conveniently confuses terms to try and slam the case for it.  Let’s untangle their post:

  • The Commonwealth Foundation states that Pennsylvania’s public education funding share is reasonable because the dollar amount of state revenue per student ranks 25th of all states nationwide.

Total state dollars alone is not “state share.”

“Share” is defined as a portion of something.  Thus, “state share” of public education funding is defined as the percentage of total revenue going to school districts that is provided by the state or


In Pennsylvania, the state share for the 2012-13 school year was 36%.[1]  Meanwhile, the national average was about 46%.  That puts Pennsylvania in the bottom five states nationally (46th).  Here is the breakdown of Pennsylvania revenue shares compared to the national average:

Figure 1: US Census Bureau

Pennsylvania can have a state revenue per student rank of 22nd among states, but if its local revenue per student rank is sixth highest in the nation you shouldn’t be surprised that lopsided dependency on local revenue is reflected in the low state share of funding.[2]

This low state share is not an “illusion” but a fact that results in extreme funding inequalities as poor school districts are unable to raise sufficient local revenue to make up for the low state share.  Pennsylvania’s average in total revenue per student ranks ninth highest among states but masks two things:

 Figure 2: Washington Post analysis

  1. Price levels across states are not the same.  You cannot compare the total revenue per student across the states as if all states have the same price level.  They don’t.  A Pennsylvania dollar goes a lot further in a state like Idaho, so it makes no sense to compare the two based on dollars alone.
  2. Pennsylvania ranks as the worst state in the nation for state and local funding inequality between the poorest and wealthiest school districts.  Funding does not meet need.  Those with the highest need, the poorest school districts, should receive the highest state and local funding. Instead, they receive, on average, 34% less state and local revenue per student than their peers in the wealthiest school districts.  That’s more than double the national average of 16%.

When you add federal funding, Pennsylvania still ranks as the third worst in the nation among states.  Keep in mind that federal funding is not supposed to help lessen the funding inequality between the poorest and wealthiest school districts.  Instead, it’s supposed to provide high-need students and districts with additional money.

The voters made education their top priority in the last election for a reason: our public schools need help.  A system that is lopsidedly dependent on local revenue, and thus rising property taxes, does not match need with funding.  Instead, it perpetuates a status quo that determines whether a child receives a quality education based on their zip code.

 

[1] U.S. Census Bureau, Public School System Finances, accessed June 16, 2016, http://www2.census.gov/govs/school/elsec13_sttables.xls (tab 5)

[2] Ibid, (tab 11).

First of Top Five Facts About Drilling and Taxes in Pa.

June 25, 2015 - 12:56pm

Gov. Wolf has proposed a severance tax on the extraction of natural gas in Pennsylvania to provide funding for public schools. Lawmakers in both parties have introduced severance tax bills every year since 2009, and every year the gas drillers have successfully fought the tax, spending $46.8 million on lobbying since 2007.  Much of the industry’s lobbying money has gone into manufacturing a narrative, built on a foundation of myths, about the economic benefits of drilling and the fragility of the industry.

The Pennsylvania Budget and Policy Center has compiled five facts, supported by research and independent data, which tell the real story. For the next five days we will post a fact a day on this blog. Today, we give you:

Fact 1. Oil and gas development companies often pay little to no corporate income tax in Pennsylvania due to federal energy development tax incentives.  Gas drillers pay less now in state income taxes than they did in 2008 at the beginning of the boom. And even as production soars, the drillers are paying slightly less in impact fees.

  • Range Resources, the No. 3 PA producer, says it is “currently not in a taxpaying-position for federal income taxes,” and admits “we generally do not pay significant state income taxes.” 
  • Cabot Oil and Gas, the No. 2 PA producer, reports it paid no state income taxes in 2014.
  • Chesapeake Energy, the No. 1 PA producer, paid a combined federal and state effective income tax rate of only 1.5% in 2014.
  • Combined, these three companies reported more than $4 billion in net income in 2014.

A Victory for the Health of America: Supreme Court Upholds Affordable Care Act Subsidies in All States

June 25, 2015 - 12:08pm

The Supreme Court has ruled 6-3 that President Obama’s health care law may provide tax subsidies to help poor and middle-class people buy health insurance in states that rely on the federal health-care exchange (where people can shop for health insurance), according to the New York Times.

This decision is a victory for the health of our country. Millions of families across the nation can have peace of mind that the federal subsidies that make it possible for them to afford health insurance will remain in place. Nationwide, about 85 percent of customers using the exchanges qualify for income-based subsidies to help pay for their health coverage.

Roughly three-dozen states did not set up their own health-care exchange, including Pennsylvania. While Gov. Wolf had begun to make contingency plans to establish a Pennsylvania exchange if necessary, according to Twitter feeds, Pennsylvania will now continue to rely on the federal exchange for the foreseeable future.

 

 

Voters like Gov. Wolf’s Budget Plan

June 18, 2015 - 2:50pm

The latest poll from Franklin and Marshall’s Center for Opinion Research shows that a solid majority of voters – 58 percent – support Gov. Wolf’s budget plan to increase the sales and state income taxes and tax gas drilling to increase education funding, reduce property taxes, and plug the state’s structural deficit. Voters’ top issue is increasing public education funding, while only 10 percent cite passing a state pension plan as a priority, and a paltry 2 percent think privatizing the state liquor store system is a high priority.

 

Voters say that what they like best about the governor’s budget is the tax on gas drilling. More education funding and property tax relief round out the top three reasons they like the plan.

The difference between voters’ top priorities and those of Republican leaders in the legislature   – pension reform and liquor privatization – is striking. It will be interesting to see whose priorities prevail in budget negotiations.

Bursting the Shale Jobs' Balloon

June 17, 2015 - 3:46pm

The Pennsylvania Department of Labor and Industry has corrected “glaring errors” in the way it counts jobs related to gas drilling and drastically revised downward the number by 160,000 jobs. Instead of the 200,000 to 339,000 jobs the industry claims it has created, Labor and Industry now counts around 90,000 gas drilling jobs in Pennsylvania, with 30,000 of those in core drilling industries.

This is not news to us. Our research repeatedly has shown that the industry’s exaggerated job claims could not be supported. As we’ve found, the industry’s jobs’ balloon was filled with workers who have nothing to do with gas drilling. For example, Labor and Industry’ inflated numbers included every road construction worker, truck driver and steelworker in the state, even if those jobs had nothing to do with gas drilling. Drilling jobs, in fact, make up less than one percent of all Pennsylvania jobs.

A look at county unemployment rates also reveals that gas drilling is not the super-charged jobs engine the industry claims it is. Generally, counties without any drilling had lower unemployment rates in March than counties with substantial drilling activity. Tioga County’s unemployment rate was above 6 percent while Perry County’s stood at 4.5 percent.

 

The gas industry is supporting a substantial number of jobs. But with major policy questions on the table -- like whether to enact a severance tax on gas extraction -- decision-makers need real numbers, not an inflated industry jobs’ balloon. There never were 200,000 shale jobs in Pennsylvania.

Report Ranks Pa. 23rd Among States, Gives It C+ Grade, for Status of Women

June 15, 2015 - 6:20pm

A new report by the Institute for Women’s Policy Research ranked the 50 states and the District of Columbia based on the status of women in six different categories: poverty and opportunity, work and family, violence and safety, reproductive rights, health and well-being, and political participation.  Minnesota, Connecticut, Massachusetts, and Vermont scored highest overall.   Pennsylvania received an overall ranking of 23 in the nation and an overall C+ grade.  The commonwealth fared poorly on several measures of the status of women: Work & family and political participation were the two worst categories.  

Some key findings:

  • Pennsylvania women only earn, on average, 76 cents for every dollar a man earns, which is the 11th worst gender wage gap in the nation.  At the current rate, they will not receive equal pay until the year 2072. 
  • 32.1% of employed Pennsylvania women work in low-wage jobs, and few (27%) own businesses compared to men (56.3%). 
  • Almost half of women living in the commonwealth -- 47% -- do not live in a county with an abortion provider. 
  • Pennsylvania ranked 48th for number of women serving in elected office, better only than Georgia and Louisiana.     

However, Pennsylvania ranked highly on a few measures of women’s status. 

  • The state ranked 9th best on the Paid Leave Legislation Index and 11th best on the Women Institutional Resources Index. 
  • Fewer women in Pennsylvania live below the poverty level than in all but 14 states, with 86.5% of women and 89.3% of men living above the poverty level. 
  • Pennsylvania ranked 9th best in healthcare coverage.  The vast majority of residents, 88% of women and 83.7% of men, have health insurance.        

 

KRC/PBPC's Insider News for Week Ending June 12, 2015

June 15, 2015 - 5:57pm

The Pennsylvania Budget and Policy Center said another bittersweet good-bye this week, to long-time research director Mike Wood. We will miss Mike’s unflappable demeanor, formidable work output and sly wit. But we are proud to make another excellent contribution to the new administration. Mike joins former PBPC director Sharon Wood in the Governor’s Budget Office. His new title is Executive Budget Manager – Division of Education (we’re saluting as we write that). Congratulations and best of luck, Mike!

PBPC Research Director Mike Wood on Budget Night 2015

PBPC is advertising for a new director, and budget and tax analyst. Read the announcements (and apply or forward to someone you know who should) here.

Just the fact sheets, ma’am … PBPC released a valuable new tool this week that shows how Gov. Wolf’s budget proposal would impact each legislative district. Easy-to-read, one-page fact sheets reveal the property tax relief for homeowners, increased funding for local schools, additional preschool slots created, number of local workers who would benefit by a minimum wage increase and other important information for each district. These fact sheets provide local numbers not found anywhere else. See how your legislative district would fare here.

Testifying on tax proposals … Keystone Research Center Executive Director Steve Herzenberg testified before a Senate Finance Committee public hearing on Wednesday on proposals to increase Pennsylvania’s personal income and sales taxes. Steve told the committee, “together with his severance tax proposal, the Governor’s sales and income tax proposals would provide revenue to reinvest in education, in communities, and in job creation. These investments would reverse the cuts and austerity within the 2011‐12 budget, which contributed to the layoff of 27,000 public school employees and help explain the states low‐job growth ranking. The Governor’s proposal would also solve the state’s structural budget deficit, not only this year but going forward, reassuring bond rating agencies”. You can read Steve’s full testimony here.

Signing on to raise the wage … KRC labor economist Mark Price and KRC/PBPC summer interns Anna Berch-Norton, Ellis Wazeter and Patrice McKenzie joined other members of the Raise the Wage PA coalition in the Capitol on Monday to submit more than 10,000 petition signatures calling on the state legislature to raise Pennsylvania’s minimum wage to at least $10.10 per hour. 

Gov. Wolf accepts minimum wage petition signatures

For more on why the minimum wage should be raised, check out Franklin and Marshall Economics Professor Sean Flaherty’s op-ed today on Pennlive.com.

Soaring production and sliding impact fees … As if we needed further proof that it’s time for Pennsylvania to join every other major gas-producing state and enact a severance tax, PBPC consultant Jan Jarrett blogged this week on Third and State about how gas drillers last year exceeded their production record from the year before by 30 percent, yet their impact fee payments dropped slightly.  “That drop proves that the impact fee does not generate increasing revenues for Pennsylvania as the drilling industry’s production and profits climb. “A severance tax on production, like the one proposed by Gov. Wolf, would generate increasing revenue as production increases and gas prices rise,” Jan writes.

You can read more about the severance-tax-versus-impact-fee debate in a June 10th WESA 90.5 story that quotes PBPC’s Mike Wood on the gas industry’s many excuses over the years.

Smokin’ mad about cigarette tax loophole in Allentown … Mike was also quoted in a June 6th Morning Call story about a lucrative loophole in Allentown’s one-of-a-kind Neighborhood Improvement Zone that allows developers to use taxes on cigarettes stamped in the zone, but sold across the state, in addition to other state and local tax dollars, to help finance their projects in the city.

Mike called it “a legal shell game providing a cash machine for developers.”

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Artist’s rendering of proposed Waterfront riverside district that could be developed with help of cigarette tax
                                                                                         from The Morning Call

Exceeding estimates but lowering expectations … And in his last revenue report for PBPC Mike notes that while General Fund revenues exceeded estimate once again in May that’s likely to be of little help to the 2015-16 budget. Read his blog post on Third and State to find out why.

 

 

 

General Fund Revenues Once Again Exceed Estimate in May, But Likely Little Help for the 2015-16 Budget

June 12, 2015 - 1:58pm

General Fund revenue collections exceeded official revenue targets by just under $50 million in May. This pushes the fiscal-year-to-date revenue surplus to $619 million, or 2.3% above estimate. Compared to this time last year, this represents growth of nearly $2 billion. While revenues exceeding estimate are a good signal that the economy is doing better than expected, the 2014-15 surplus is unlikely to have the positive impact on the 2015-16 budget that one would normally expect.

The reason is that most of the additonal revenue in 2014-15, over $400 million or 72% of the surplus, is due to corporate taxes and non-tax revenue, both of which are unlikely to be as high next budget year. Corporate taxes exceed estimate by $168 million, or 3.9%, this fiscal year. This is driven by corporate net income tax payments, and both Wolf administration and Independent Fiscal Office officials aren't counting on that trend to continue. Some of the increase may be in response to federal tax changes that have had a ripple effect on payments made this year.

Non-tax revenues are currently $276 million, or 33.4%, higher than expected. Much of this is due to a change in the holding period of unclaimed property, which generated more money than was anticipated. Again, while this is good news for the current year budget, it is one-time revenue that won't be seen in 2015-16 or beyond.

Here is how the revenues currently stack up to revenue targets.

Compared to last year, every major category of revenue shows marked growth. Of the $1.97 billion, or 7.7%, overall revenue growth, personal income tax and sales tax (the two largest revenue sources for the General Fund) account for $922 million of the growth. Non-tax revenues are $707 million higher than last year - largely due to the laundry list of transfers and one-time revenues enacted as part of the 2014-15 budget.

As the budget for 2015-16 is negotiated between the Governor and the General Assembly, there is still a need for recurring revenue - such as a severance tax on natural gas - if Pennsylvanians are serious about providing additional funding for our schools or erasing the commonwealth's ongoing structural deficit.

While Drillers’ Production Soars, Pennsylvania’s Impact Fee Stumbles

June 10, 2015 - 3:58pm

 

The impact fee isn’t working for Pennsylvania, but it is for the gas drillers.

 

Last year, the drillers far exceeded their production record from the previous year by 30 percent. They produced 4 trillion cubic feet of natural gas. Yet their impact fee payments went down slightly, even as production soared.

 

That drop proves that the impact fee does not generate increasing revenues for Pennsylvania as the drilling industry’s production and profits climb. A severance tax on production, like the one proposed by Gov. Wolf, would generate increasing revenue as production increases and gas prices rise.

 

Gov. Wolf has also proposed retaining the impact fee at its highest level, a deal which should now look better to the communities in the gas field that receive those payments.

 

The current impact fee is no substitute for a reasonable severance tax. Some of the money flowing from our gas field should go where the governor wants it to go – to restore education funding and extra-curricular program cuts, to rehire laid-off guidance counselors, librarians and nurses, and to expand early childhood education at our public schools.


Schools Report on How They Would Put Restored Funding to Use

May 29, 2015 - 4:30pm

School districts were hit hard by state funding cuts over the past several years. Gov. Wolf's first state budget proposal would help fix that; not only by restoring $400 million in basic education funding in 2015-16, but by using a large share of the revenue from a natural gas severance tax in 2016-17 and beyond to invest in schools.

The Wolf administration asked districts how they would use the funds, and over 90% responded. The results are not surprising. Expanding full-day kindergarten, pre-K, and other early childhood programs were common answers. Restoring support staff, nurses, and counselors - after many staff cuts - and reducing classroom sizes were also frequent responses.

Funding for these program increases, staff restorations, and classroom-size reductions are dependent on new revenues - including a proposed severance tax on natural gas. While public support for the tax paid in every other major oil- and gas-producing state (but not yet in PA) is high, the oil and gas industry is fighting hard to defeat it.

We are testifying Monday at a joint Senate Environmental Resources and Energy/Finance Committee hearing on the proposed severance tax  - but it will be an uphill battle as the agenda is dominated by oil and gas and business interests that will likely oppose any tax at any time.

Many lawmakers have said they favor a reasonable severance tax and support more education funding. The two are linked in the 2015-16 budget, and new funding won't magically appear.

As Chesapeake Energy said in 2009, "We gladly pay a severance tax in every state where we're active, except New York and Pennsylvania." The sky won't fall, and the industry won't be crippled if a tax they pay everywhere else is enacted in Pennsylvania.

It is time to let our lawmakers hear that we support this common tax on big oil and gas. If we don't speak now, the oil and gas industry wins, and our kids lose.

 

Powerful Study Shows Why More State Dollars Are Needed For Schools

May 22, 2015 - 11:06am

Within three years, MOST school districts in Pennsylvania will be cutting programs and laying off staff if we continue on the current path of school funding. While program eliminations and staff reductions are already the case in a number of lower-income districts, they could soon become the norm across the state, according to an updated report from Temple University's Center on Regional Politics (authored by Drs. William Hartman and Timothy Shrom).

State limits on property tax increases and the very modest increases in state funding we've seen in the past few years mean that revenues in a growing number of districts aren't able to keep up with known increases in costs. As school districts exhaust their reserves, cuts will follow if we don't change this dynamic. We've already seen the impact of program and staffing losses on our schools during and immediately after the recession, and it isn't a recipe for success. 

This cuts to the heart of why we need a major infusion of additional state funding for school districts, and why it must be a key part of the 2015-16 state budget.

Doing the same thing is no longer a viable option if we want kids across the state to succeed.

From the report summary's key findings:

Most school districts in Pennsylvania will not have sufficient revenues over the next three years to support their mandated and necessary expenditures. Sixty percent of the districts in the state will face severe and prolonged program and staff reductions to balance their budgets, which will reduce the quality of education in those districts and substantially widen the academc and fiscal gaps with more well-off districts.

One of the things the study makes clear is that a dollar-for-dollar swapping of state dollars for local property tax revenues  (as would be done by HB 504 which was recently passed by the House) makes zero difference for the school districts and their ability to provide critical services.

The report also recommends targeting new state Basic Education dollars to districts with the most need, rather than across-the-board increases in state funding.

The report offers some good news on school pension costs, where the increases will moderate beginning in 2017-18.

The 2015-16 budget offers a stark choice for Pennsylvania - doing more of the same and seeing many of our schools deteriorate, or finding new state funding for schools (in part, from a severance tax on natural gas) to make a major improvement. It is up to us to let lawmakers know which path to choose.