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The Road Not Taken

October 6, 2015 - 3:48pm

Over the past few years, many other states, similar to Pennsylvania in 2011 and again today, have faced critical choices about whether to raise state revenues, hold firm to “no new taxes” or even cut taxes further. Today we released the results of our examination of the experience of four states, as well as Pennsylvania, and the different roads they each took.

Two of the states – California and Minnesota – raised taxes to improve their fiscal health and to reinvest in education. The other two states – Kansas and Wisconsin – followed the same path as Pennsylvania under Gov. Corbett, cutting taxes to varying degrees and cutting education spending.

The results of this policy experiment are in:

  • The two states that raised revenues have enjoyed percent job growth since 2010-11 that is one-and-a-half to three times larger than the three states – including Pennsylvania – that cut taxes.
  • The states that increased taxes have seen revenue growth – both as a result of the tax changes and as a result of stronger recoveries – of 15 percent and 19 percent. Kansas has seen its revenues fall 5 percent and Pennsylvania and Wisconsin have seen revenue growth of 5 percent and 7 percent, respectively,  a meager enough recovery from the Great Recession to make fiscal stability and reinvestment in vital programs difficult.
  • State school funding per pupil has increased 15-21 percent in Minnesota and California while plunging 9-14 percent in the three tax-cut states. That means the ratio of funding per pupil in Minnesota and California compared to any of the other three states has shifted 26-41 percent in just four years.

It seems likely that this 26-41 percent shift in relative funding per student means that fifth-graders today in California and Minnesota have a substantially better chance in life than fifth-graders in Pennsylvania, Wisconsin, and Kansas.

As we look back five years from now on Wednesday's vote, what will be the story that we have to tell about the choice lawmakers in Harrisburg made on that fateful Oct. 7, 2015? Will it be remembered as the day that legislators in both parties began governing based on the lessons of Pennsylvania’s own – and other states’ – past experience, the day they made common cause to raise revenues essential to giving all kids a fair chance – and to fixing the state’s finances? Or will this Wednesday be remembered as a day when Pennsylvania lawmakers again rejected common sense, dooming our children to more years of disinvestment in their schools?

Read the full analysis here

Wednesday’s tax vote – legislators’ golden opportunity to honor their words

October 5, 2015 - 7:28am

Gov. Corbett’s first budget, passed by the Republican-controlled General Assembly, cut funding for education by nearly $860 million. Two-thirds of these cuts – $570 million – remain in place, an average of $330 per student. In school districts attended by a quarter of students in the state – districts with lower incomes and higher poverty than in the rest of the state – the cuts remaining in place are much higher, $832 per student.

Each year, surveys conducted by the Pennsylvania Association of School Administrators and the Pennsylvania Association of School Business Officials document the impact of inadequate school funding. In 2013-14, for example, 47 percent of school districts expected to increase class sizes; 37 percent planned to reduce elective courses in subjects such as foreign languages, arts, music, physical education and, in some cases, math, science, English and social studies; and 23 percent planned to delay the purchase of textbooks.

The 2012-13 budget made deep cuts to seven county human service programs when the county human services block grant pilot program was implemented. These cuts impacted mental health services, services for those with intellectual disabilities, county child welfare, homeless assistance, and the Human Services Development Fund. These programs provide a bridge to a better life for hundreds of thousands of Pennsylvanians.

So it was heartening to hear strong Republican support for education funding and funding for services to the elderly, disabled, abused and addicted during the debate over the stopgap budget proposal.

House Majority Leader Dave Reed of Indiana County said, “Schools without textbooks and crisis centers with limited hours or closures are not ‘temporary inconveniences’ and are unacceptable.”

Speaker of the House Mike Turzai said, “That children sit in Pennsylvania schools today without new textbooks and victims of violence may not be able to get necessary support is unacceptable.” 

Rep. Thomas Quigley of Montgomery County said, “I refuse to sit on the sidelines and watch as so many people needlessly do without necessary resources and services.” 

Rep. Jack Rader of Monroe County said, “Human service programs are critical and valuable to those most in need, and ensuring they are adequately funded should be our priority.”

Rep. Doyle Heffley of Carbon County said, “At the end of the day, we need to be responsible and fund these vital services."  

On Wednesday, these legislators will have the opportunity to turn their words into action. They can vote to finally enact a severance tax on the gas drillers to fund our schools and to increase the personal income tax to provide funding for the human services they so clearly recognize are needed for healthy communities.

Or they can demonstrate that they did not mean what they said by voting down the revenue necessary to honor their words.

They cannot have it both ways.

Collapse or growth – what’s at stake in next Wednesday’s revenue vote

October 1, 2015 - 5:25pm

Pennsylvania does not bring in enough revenue through current taxes and other fees to support budgets that adequately fund education and programs that improve the lives of thousands of our fellow Pennsylvanians. That is the reality that is captured by the term “structural deficit.” It is the situation that has led Wall Street to downgrade the commonwealth’s credit-worthiness five times in the last three years.

Gov. Wolf has proposed a package of solutions to remedy this unsustainable situation – increases in the personal income tax, the sales tax and a new tax on gas drilling. The new revenue would increase funding for public education and programs that help the elderly, disabled, abused and addicted. In addition, some of the new revenue would be returned to taxpayers in the form of reduced property taxes. And some of it would fill the holes in the state budget so that there is enough money to pay the bills – this year and in future years.

News reports indicate that there will be a vote in the state House next Wednesday on a modified version of the governor’s revenue proposals.

There is a lot more at stake in that vote than “just” this year’s budget. If the House rejects the governor’s plan to put an adequate yearly stream of revenue into state coffers, the budget next year will fall off the cliff. We know this because the Republican budget vetoed by Gov. Wolf – which had one-time but no recurring revenue sources – would have ballooned the state’s structural deficit to $3.1 billion in 2016-17. As a result, in a mere nine months, on July 1, 2016, the budget will simply collapse and to balance the state books will require radical action, such as $1 billion cuts EACH to education funding and the Department of Human Services.

The last $1 billion cut to public education funding put 33,000 teachers, guidance counselors, school nurses, coaches and other education workers on the street. Schools shed music, art, language and sports programs. The last cuts to human service programs left people who desperately need treatment for mental illness or addiction or a safe place to escape an abuser on waiting lists or unable to get any help altogether. The drag of these devastating cuts slowed down the private-sector economy and made Pennsylvania 48th in job growth under Gov. Corbett.

That’s what is at stake in next Wednesday’s vote. Either House members vote for revenues that will begin to restore educational opportunity – and pay the bills – or they allow the state budget to collapse on the backs of school children and our most vulnerable citizens.

Stopgap veto – Hard decision for the right reasons

September 29, 2015 - 12:52pm

Gov. Wolf made a hard and painful decision when he vetoed the stopgap funding for schools and human service agencies. It is obvious to everyone that non-profits that rely on state and federal funding to serve the needs of the elderly, the disabled, the hungry and the abused cannot operate on thin air and good intentions. They need to pay staff, buy supplies and keep the lights on just like any other business. If they can’t pay their staff or their bills, they have no choice but to cut back services or close down altogether.

That’s the cold reality that Gov. Wolf had to face when he decided to veto the legislation that would have opened the funding spigots just enough to pay the bills through October. Hard as that decision must have been, the governor did the right thing to force the Republicans in the General Assembly to negotiate a responsible budget.

Last November voters, dismayed by the damage to public schools brought about by the disastrous budget cuts of the last four years, elected Tom Wolf. It turned out that Pennsylvanians apparently believe that every child deserves a decent education in safe, well-staffed public schools. When former Gov. Corbett cut $1 billion from public school funding 33,000 teachers, school nurses, guidance counselors and other education staff lost their jobs. School districts cut sports, music, art, language and other programs even as local school boards raised property taxes to keep the doors open.

Tom Wolf told the voters he would find the money to restore public school funding by enacting a severance tax on gas drillers, as every other major gas-producing state does. He also promised to disrupt Harrisburg’s politics-as-usual culture by refusing to play the cynical partisan games the voters are so tired of.

Unfortunately, he ran into intransigent opposition to increasing taxes on gas drillers. So far, legislative leaders will not discuss a severance tax, even if it means thousands of four- and five-year-olds will not get life-altering early childhood education, and their older siblings will find themselves in crowded classrooms within schools where programs such as music, art and foreign languages have been treated as disposable luxuries.

The new governor is getting a lesson in Washington, DC-style politics-as-usual. But Gov. Wolf is not a career politician. He has clearly articulated the values that underlie his budget – responsibility, equity, fairness, and transparency – values that the voters endorsed when they sent him to Harrisburg.

The governor was right to veto the stopgap budget to uphold the values that he and Pennsylvania voters share. That’s not politics-as-usual. It’s political courage.

Why the Budget Matters: Way No. 2 -- Higher Education

September 29, 2015 - 11:19am

The Pennsylvania Budget and Policy Center launched Why the Budget Matters – Let’s Count the Ways to compare specific funding choices and priorities in the budget Gov. Wolf unveiled in March and the Republican budget (HB 1192). This series lets Pennsylvanians count for themselves the many ways that a sustainable investment budget will positively impact real people.

Way No. 2: Higher Education Funding

Wolf Budget Would Help Stem Higher Education Tuition Hikes

Republican budget would continue PA’s underinvestment in higher education, sabotaging opportunity, long-run growth and quality of life

For decades, Pennsylvania has chronically underfunded higher education, crushing students with heavy debt burdens and undermining their future opportunities as well as the state’s economic growth and quality of life. The Republican budget would continue this destructive pattern because it would increase state funding for two- and four-year colleges by only $36 million, barely compensating for inflation and making up little to no ground after the deep funding cuts in 2011. This increase is only about two-thirds as big as the increase in funding the Republican budget proposes for the legislature ($51.5 million).

In comparison, the Wolf budget would increase funding for higher education nearly four times as much ($141 million). It would reverse, over a two-year period, the deep 2011 funding cuts. This increase would give the state a chance to develop a long-term bipartisan plan to reinvest in higher education, including in underserved rural regions.

For a comparison by legislative district of the impact of the two budgets click here.

Across the nation, student loan debt is now a staggering $1.2 billion. In Pennsylvania, college graduates’ debt averages $32,528, third-highest among the 50 states. “Pennsylvania stands out, in that public college graduates have about the same amount of debt, and are more likely to have debt, than private college graduates,” says Debbie Cochran, research director of the Project on Student Debt. Pennsylvania also ranks low among states – 41st – for the share of the adult population with at least some college education.

As PBPC reported last October, high student debt and low educational attainment reflect paltry state funding: Pennsylvania ranks 48th among states for higher education funding per capita. Pennsylvania has long ranked low on this measure yet still implemented a 12% reduction since 2010, the fifth-largest cut nationally.

Given strong evidence that higher education fuels opportunity for individuals and growth for regions, Pennsylvania’s underinvestment is short-sighted. College graduates typically earn more and have much lower levels of unemployment.

Growing student debt exacerbates the extent to which underinvestment in higher education undercuts growth, opportunity and quality of life. Mitch Daniels, president of Purdue University and the former Republican governor of Indiana, notes that student debt is “postponing marriage, childbearing and home purchases, and ... limiting the percentage of young people who start a business or try to do something entrepreneurial. … Every citizen and taxpayer should be concerned about it."

Researchers at the Federal Reserve Bank of Philadelphia and Penn State recently documented that more student debt led to fewer small businesses being formed. High student debt also undermines quality of life and the social fabric by leading more people to choose jobs that pay the bills instead of the pursuit of mission-driven careers.

Pennsylvania’s public four-year State System of Higher Education (SSHE) colleges pledged to freeze tuition for 2015-16 if the legislature enacted the funding increase in the Wolf budget proposal. When that budget was not passed, however, SSHE colleges increased tuition by 3.5%, a $240 increase for about 100,000 students.

Why the Budget Matters: Way No. 1 -- Basic Education

September 28, 2015 - 3:46pm

The Pennsylvania Budget and Policy Center launched Why the Budget Matters – Let’s Count the Ways to compare specific funding choices and priorities in the budget Gov. Wolf unveiled in March and the Republican budget (HB 1192). This series lets Pennsylvanians count for themselves the many ways that a sustainable investment budget will positively impact real people.

Way No. 1: Basic Education Funding

Wolf Budget Would Begin to Restore Educational Opportunity for All Pennsylvania Children

Republican budget would leave in place $500 million in 2011-12 classroom funding cuts, continuing class size increases and vital program eliminations

Gov. Wolf’s 2015-16 budget proposal would increase basic education funding by $410 million.

The Republican legislative majority budget would increase basic education funding by about a quarter as much – $100 million. The sustainable increase in funding is only $8 million, or $4.60 per student (versus $238 per student with the Wolf budget). [1] For a comparison by legislative district of the impact of the two budgets click here.

The Republican budget would leave in place about half a billion dollars in classroom funding cuts made in 2011-12.[2] Pennsylvania would likely continue to have the widest funding gap between wealthy and poor school districts of any state in the country.[3]

Since 2011, funding cuts across the commonwealth have caused school districts to close schools, increase class sizes and end music, arts and other educational enrichment and sports programs.[4] These cuts also led to 33,000 lost jobs in public education in Pennsylvania, slowing the state’s economic recovery.

The Republican budget would derail or scale back the plans of:

  • 209 school districts to establish or expand full-day kindergarten;
  • 120 school districts to expand tutoring and individualized assistance;
  • 107 school districts to reduce class sizes in grades K-3;
  • 93 school districts to restore art and music programs, library services and/or technology instruction cut during the past four years.[5]

It is also expected to lead 71 percent of school districts surveyed to raise local property taxes and 41 percent to reduce staff.[6]

Recognizing the need for increased school funding, Republican lawmakers have put forward a proposal that would increase education funding by $400 million. They have not specified a funding source.[7]

“Educational opportunity is a core American and Pennsylvania value, but even more, it is the foundation for a stronger and more productive economy. Research makes it clear that investments to provide equal opportunity for Pennsylvania’s students will generate billions for the state’s economy,” said Charlie Lyons of The Campaign for Fair Education Funding.  “A significant basic education funding increase of at least $410 million in this year’s budget is the right thing to do and the smart thing to do.”

[1] As well as $100 million for basic education funding, the Republican budget includes $20 million more for special education funding. Only $8 million of the $120 million for basic and special education is sustainable, however, because $112 million comes from delaying pension and Social Security payments to 2016-17. This one-time funding source would not be available in future years.

[2] The estimate of “about half a billion dollars” is based on the following. As of 2014-15, classroom funding remained $572 million below its 2010-11 levels (see Pennsylvania Department of Education data for 2010-14 here; 2014-15 classroom funding data from the Governor’s Budget Office). In 2015-16 under the Republican budget, counting the entire $120 million for basic and special education would still leave a shortfall of $452 million in classroom funding; counting only the $8 million of this $120 million that is sustainable funding leaves a shortfall that still exceeds half a billion. 

[3] Emma Brown, “In 23 states, richer school districts get more local funding than poorer districts,” Washington Post,

[4] See A Strong State Commitment to Education: A Must Have for Pennsylvania’s Children, April 2014, online at

[5], p. 5

[6] Pennsylvania Association of School Administrators (PASA) & Pennsylvania Association of School Business Officials (PASBO). “Continued Cuts: The PASA-PASBO Report on School District Budgets.” June 2015

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[7] Jan Murphy, “Wolf weighs GOP offer that includes $400 million for schools,” Patriot-News, August 19, 2015,

The State of Working Pennsylvania

September 22, 2015 - 2:52pm

Below is the third in a series of excerpts from The State of Working Pennsylvania 2015 report, released by Keystone Research Center on Sept. 2, which will appear on Third and State in the coming weeks:

Over this and the last economic expansion (taken together) monthly job growth in Pennsylvania has averaged 3,200 jobs.[1]  This is roughly half the pace of job growth during the 1990s expansion (Figure 1).  Although job growth has been stronger since 2010 it still substantially lags the best years of the late 1990s (1997 to 2000) when the Pennsylvania economy added 7,400 jobs a month. 

To examine monthly job growth in the late 90s and since the turn of the century in your county and metropolitan area go to  

Strong job growth in an economy nearer full employment directly translated into a 6.6% increase in real wages for the typical Pennsylvania worker from1997 to 2001 (50th percentile in Table 3).[2]  Notably, the lowest-paid workers enjoyed the fastest wage growth from 1997 to 2001 (10th to 30th percentile in Table 1).[3]

Thanks to two recessions and two weak expansions (Figure 1) wages for the typical Pennsylvania worker are down 2% since the turn of the century (2001).  The lowest-paid workers (the 10th to 30th percentile) have seen the largest real declines in hourly earnings of any group of workers since 2001. But for an increase in the Pennsylvania[4] minimum hourly wage in 2007 (to $7.15 from $5.15, followed by a very small federal minimum wage increase to $7.25 in 2009) low-wage workers would likely have fallen further behind. Even over the course of the current recovery 2009 to 2014, real hourly earnings have fallen for the bottom 70% of Pennsylvania workers.

The years since the turn of the century have also been accompanied by a breathtaking growth in the gap between the incomes of most families and the highest earners (CEOs, financial executives, and other high earners in the private sector). While market incomes (income before taxes and transfers like unemployment insurance payments) climbed 9.1% for the bottom 99% of Pennsylvania families from 1997 to 2000, they have fallen 5% since 2001 (Table 4). At the same time the highest earners in Pennsylvania have seen the growth in their market incomes accelerate from 19.2% in the late 90s to 27% since 2001.[5]  

In order for the majority of Pennsylvania families to see income growth in the years ahead we will need a combination of faster job growth and economic policy that actively seeks to raise wages for more workers.   




[1] Using seasonally adjusted data Pennsylvania has created an average of 3,600 jobs a month in a period that includes each month from 2003 to 2007 and each month from 2010 to June 2016. 

[2] Change in inflation adjusted wages 1997 to 2001.

[3] There was also a modest minimum wage increase in 1997 from $4.75 to $5.15. This was the second step of increase from $4.25 that occurred in the previous year  


[5] State and county level data on top incomes while the most accurate is only available through 2012. 2013 data will be released later this fall. Preliminary estimates of top incomes through 2014 for the U.S. have been published by Emmanuel Saez. 2015. “Striking It Richer: The Evolution of Top Incomes in the United States.” Saez’s data indicate the average income of the bottom 99% of U.S. families fell 5.1% between 2001 and 2014.  The average income of the top 1% of families increased over this period by 15%. 

Significant excess capacity remains in Pa. labor market

September 17, 2015 - 1:42pm

Below is the second in a series of excerpts from The State of Working Pennsylvania 2015 report, released by Keystone Research Center on Sept. 2, which will appear on Third and State in the coming weeks:

Although job growth has picked up, the Pennsylvania labor market continues to be characterized by substantial excess capacity. As of July, the share of the working-age population with a job stood at 59.3% (Table 1, 1st column).[1]  Before the full impact of the Great Recession was felt,[2] the percent of the population with a job averaged 61.5%. If as high a share of working-age Pennsylvanians were employed this July as before the Great Recession, there would be 225,685 more employed people in the commonwealth than there are currently.[3]

Narrowing our focus to prime-age workers, those between the ages of 25 and 54, confirms that there is substantial excess capacity in the Pennsylvania labor market. On average in 2014, 77.4% of the prime-age population in Pennsylvania had a job. This compares to an average of 80.2% during the strongest years of the last economic expansion.

A decline in the share of working-age people gainfully employed tends to increase the number of applicants for new job openings. This, in turn, reduces the pressure employers feel to raise wages to retain existing workers or to increase the pool of applicants for new job openings. 

In the late 1990s (see below for more detail), especially after 1997, Pennsylvania experienced much more rapid job growth than in the 15 years since then. As we have illustrated  (Table 1 again), that strong job growth occurred in an economy with much less excess capacity in the labor market than exists currently.  In the next section we reveal how these differences in the tightness of the labor market impacted wage and income growth.

[1] 6,077,452 people in Pennsylvania reported paid employment in July or 59.3% of the civilian non-institutionalized population, which was estimated in July at 10,249,003

[2] The employment-to-population ratio averaged 61.5% from July 2005 to July 2008. Readers will note the Great Recession officially began in 2008 but large-scale employment losses didn’t begin to register until after July of that year.

[3] To put that employment gap in context, at the pace of job growth in the last 12 months, it would take over three years for Pennsylvania to add another 225,000 jobs. 



Professional Wrestling and the Donald's Popularity

September 14, 2015 - 5:19pm

Our friend Charlie Bacas shared a link to "This French Philosopher is the Only One Who Can Explain the Trump Phenomenon." Semiotics is a bit of a stretch for an economist, and I'm not sure I entirely follow it. But it made me laugh. So maybe it will make you laugh.

The article's point that "...Trump is able to take advantage of the obvious dysfunction of the traditional political system" also seems well taken.

Trump's understanding of the role of money and politics helps explain some current Pennsylvania legislative policies -- such as why we don't have a severance tax yet.  "When they call, I give. And you know what? When I need something from them, two years later, three years later, I call them. They are there for me. And that's a broken system."

Here's hoping that the Pennsylvania legislature will prove that it's not that broken yet -- by rising above the fact that the deepest pockets oppose a severance tax and enacting a severance tax in the best interest of the state.

The State of the Pennsylvania Economy

September 10, 2015 - 4:05pm

Below is the first in a series of excerpts from The State of Working Pennsylvania 2015 report, released by Keystone Research Center on Sept. 2, which will appear on Third and State in the coming weeks:

In the 12 months ending in July, Pennsylvania created 66,500 jobs.  At 1.1% increase, that’s the fastest year-over-year job growth reported in any July since 2005.  That was the 34th fastest pace out of the 50 states and the best Pennsylvania has ranked since July 2011 when it ranked 26th.

July 2011 is of note because former Gov. Corbett’s first budget was signed shortly before the stroke of midnight June 30, 2011. While on time, the budget was even more remarkable because it cut $1 billion from education spending and set off a wave of school district layoffs that, as of the end of the last school year, tallied to 33,000 jobs. Not surprisingly, layoffs on that scale delivered a body blow to a state economy still recovering from the worst recession since the Great Depression. This body blow reduced Pennsylvania’s job growth ranking within a year to 44th and by July 2013 to 48th.

Every week the current deadlock continues raises the risk that the budget standoff could set back the state’s economy yet again. All Pennsylvania public schools and many service providers receive a portion of their operating budget from the state. Without a state budget, these schools and service providers will have to dip into their cash reserves to meet payroll and pay vendors. When those funds run out, furloughs will follow.  Therein lies the risk to all Pennsylvanians – another round of layoffs and reduced consumer spending that injures an already bruised economy that has yet to produce meaningful wage or income gains for the bottom 99 percent of families (see below).

While Pennsylvania needs a budget soon it also needs a sustainable budget that eliminates the state’s structural deficit and strengthens the economy – by investing in education, communities, and job creation. To raise the revenue for a sustainable budget the state needs to enact a severance tax on gas drillers. Communities would also be strengthened if the budget included property tax relief – which many Republicans have championed in the past.

The need for a quick budget resolution – but also for a sound budget that will strengthen the recovery – stems from the still fragile nature of the Pennsylvania job market.


[1] See Senate Proposal Goes Backwards, Not Forwards, on Pensions, Pension Primer #12, Keystone Research Center, June 3, 2015, online at The 70 percent figure is based on estimates by the actuary for the Public School Employees’ Retirement System of benefit cuts under the original SB 1. Small increases in employer contributions to the SB 1 retirement plans proposed recently by Senate Republicans likely reduce these benefit cuts slightly.


KRC/PBPC Insider News for the Week Ending Sept. 4, 2015

September 8, 2015 - 11:05am

The Associated Press reported that Gov. Wolf is trying a new strategy as the state budget impasse extended into its ninth week – negotiating in private meetings with top Republican leaders instead of in brief but large gatherings with dozens of legislators and their staff. On Sept. 1, Gov. Wolf met at his official residence with Senate Majority Leader Jake Corman and House Majority Leader Dave Reed.

As Jeff Sheridan, the governor’s press secretary, explained: “"The path that negotiations have been on has not been productive. I think there's been a lot of people in the room, a lot going on outside the room. I think the governor is really trying hard to get a final budget, and he's trying a different tactic.”

On Sept. 3, Keystone Research Center Executive Director Stephen Herzenberg appeared on WHYY’s Radio Times show in Philadelphia to talk about the budget deadlock and opportunities for compromise. Elizabeth Stelle of the Commonwealth Foundation also appeared on the show. You can listen to their discussion here.

Explaining why any budget resolution must include a minimum wage increase … In his latest Third and State blog post, Pennsylvania Budget and Policy Center Interim Research Director and KRC Labor Economist Mark Price looks at how long it would take a minimum wage worker to pay for a year at Penn State at University Park, and how long it took in 1998 and 1985. This comparison illustrates the declining buying power of Pennsylvania’s minimum wage and also the impact of rising tuition. Mark also notes the differences in proposed funding for higher education between the Wolf and Republican budgets. He argues for taking a two-pronged approach to the problem of paying for higher education: increasing the minimum wage so people can more easily afford it and increasing state funding of it so it will be more affordable. 


Wolf Plan

Republican Plan

Community colleges

$15  million

$6.5 million

State system universities

$44 million

$12.4 million

State-related universities

$83  million

$17.4 million



State of Working PA improving but still fragile … KRC released on Sept. 2 its annual State of Working Pennsylvania report in time for Labor Day. This year’s report, co-authored by Mark Price and Stephen Herzenberg, finds that job growth in Pennsylvania is finally back to normal, but wage and income growth are still lagging. And the longer the budget impasse continues, the more PA’s economic progress is threatened. The report makes a number of recommendations, including raising the minimum wage to $10.10 an hour. Mark talked about the report on WITF’s Smart Talk radio show on Sept. 4.

How to recover from classroom cuts and raise PSSA scores … PBPC Education Analyst Waslala Miranda shows in her latest Third and State blog post how, of the two state budget proposals (Gov. Wolf’s and the Republicans), only Gov. Wolf’s would result in a net increase in classroom funding per student. And there is a documented link between increased education funding and higher PSSA scores.

Congratulations and welcome to the rolls … to the nearly 5,000 Pennsylvanians who, by Sept. 2, had registered online to vote, after Gov. Wolf launched online voter registration in Pennsylvania on Aug. 27.  “Online voter registration is about making the voting experience more convenient and more accessible,” Gov. Wolf said. “It is about giving citizens an easier way to exercise their right to vote and establishing a clearer connection between the political system and the citizens.” This pro-democracy innovation contrasts with the unsuccessful effort, by Gov. Corbett, to make voting more difficult by requiring photo id.




Resolution of State Budget Must Include Minimum Wage Increase and Greater Investments in Higher Education

September 4, 2015 - 11:35am

The director of Pennsylvania Working Families wrote an excellent op-ed calling for the General Assembly to raise the minimum wage as it resolves the state budget. You will remember Gov. Wolf made raising the state’s minimum wage a key priority in his initial budget address in March. As yet, the Republican leadership has not advanced for consideration by the full House and Senate any of the legislation that would raise the minimum wage in Pennsylvania, including a bill to raise it to $10.10 per hour co-sponsored by the Republican chairman of the Senate Appropriations Committee.

In related news, Sandhya Kambhampati and Meredith Myers at the Chronicle of Higher Education unveiled a handy calculator that estimates how many years of minimum wage work it takes to afford tuition and fees at the flagship university in each state. Here in Pennsylvania it would take a minimum-wage worker 2.4 years working 20 hours per week to afford one year at Pennsylvania State University at University Park. That's up from 1.7 years in 1998. Last summer, Nick Malawskey of The Patriot-News/ reported that a year’s tuition at Penn State in 1985 was $2,555, a sum requiring about 38 weeks of work by a minimum-wage worker at the time. It's important to note that Kambhampati and Myers' calculations only include tuition and fees, which are just one part of the cost of attending college. They don’t include room and board, books, supplies and other expenses. At flagship universities, these estimated costs can range from $8,000 to $19,000 a year.

As you can see in the figure below, New Hampshire and Pennsylvania, the only two states in the Northeast that still haven’t raised their minimum wage above $7.25 an hour, stand out as the least affordable states for low-wage workers seeking to pay tuition and fees out of their earnings.


The bottom line is that the minimum wage doesn’t have the purchasing power it once did (down 24% from its 1968 peak). That's especially true relative to the rapid increase in college tuition and fees, making them nearly impossible to fund on a low income.  It shouldn't be surprising to learn that low incomes are a substantial barrier to college completion for high-achieving students. What that means in practice is that your physician, your accountant or your boss weren’t necessarily the most gifted and skilled for their position, but the ones with the parents who had the wealth sufficient to finance a degree and the opportunity that came with it.  

Circling back to the state budget, below are the increased funding amounts for higher education in the Wolf and Republican budget proposals (see our factsheets for more comparisons of the Wolf and Republican budgets). In exchange for $44 million in funding for the state system universities, Gov. Wolf secured a pledge from them to freeze tuition. With tuition and fees in state system universities averaging $9,651 a year, those schools are more affordable than Penn State at University Park. Still, at the current minimum wage of $7.25 an hour covering tuition at a state system univerity would require 67 weeks of work, compared to 47 weeks at $10.10 an hour.  Raising the minimum wage while investing more state dollars in higher education to help hold down tuition would work simultaneously on both parts of the affordability problem -- what people can afford and what higher education costs (you can read more about the need to invest in higher education in Pennsylvania here).


  Wolf plan Republican plan Community colleges $15  million $6.5 million State system universities $44 million $12.4 million State-related universities $83  million $17.4 million


Gov. Wolf’s Education Budget Helps PA Schools Recover from former Gov. Corbett’s Cuts

September 1, 2015 - 2:08pm

Note: This blog post has been updated since its initial posting.

With approval from the Republican-led House and Senate, former Gov. Corbett cut about $860 million in classroom funding in 2011-12. Of the two budget proposals on the table this year – Gov. Wolf’s and the House Republicans’ -- only Gov. Wolf’s proposal would help Pennsylvania’s schools finally recover from those classroom funding cuts.  Today, about $570 million of those cuts still remain in effect, and we can see their continued impact on our ever-declining PSSA scores across all major student sub-groups.[1]

Four years of classroom cuts—from 2011 to 2015—have resulted in four straight years of falling PSSA scores.

The PSSA scores in 2014-15 (not shown in the graph below) significantly deepened the decline among students in grades 3-8:

  • On average, across grade levels, math proficiency or advanced rates dropped by about 35 percentage points.
  • On average, across grade levels, English language arts proficiency or advanced rates dropped by about 9 percentage points.


Figure 1: Pittsburgh Post-Gazette and PBPC Analysis of PDE Data

Figure 2: PBPC Analysis of Budget Data

In the years prior to these classroom cuts, Pennsylvania enjoyed increased funding and steady annual increases in PSSA scores.

The House Republicans’ budget proposal would increase classroom funding by $100 million, simultaneously shift $87 million in school Social Security payments to next year, and lower the state contribution to the Public School Employees Retirement System (PSERS) by $25 million.   Even if you ignore this creative accounting and pretend classroom funding would rise by $100 million, that amount would not be enough to undo the damage done to classroom funding since 2011-12.[2]  Remaining cuts per student would still be $274.

Only Gov. Wolf’s proposal would significantly improve classroom funding by decreasing the remaining cuts down to $94 per student and help set us on the path towards full restoration of those cuts.

After years of drastic cuts only the governor's proposal offers our children a way out.

[1] PBPC Analysis.

[2] The number is the result of multiplying the $8 million net figure for basic and special education by the basic education share of the $120 million total for basic and special education.  The calculation is as follows:

KRC/PBPC Insider News for the Week Ending Aug. 28

August 31, 2015 - 2:23pm

This eighth week of the budget impasse turned theatrical as the Pennsylvania House spent hours Tuesday casting line-item veto override votes on 20 items in the Republican budget that Gov. Wolf vetoed in its entirety back on June 30. The Legislative Reference Bureau issued an opinion that under the state constitution the General Assembly must reconsider a vetoed bill in the same manner in which it was vetoed. Therefore, because the governor vetoed the whole budget, it must be reconsidered as a whole “and not on a line-by-line basis.” The Pennsylvania Budget and Policy Center urged legislators not to waste time on these likely unconstitutional line-item veto overrides.

It was all for naught. They voted anyway and failed to get the two-thirds majority required to override the governor’s veto. PBPC then called for legislators to begin seriously negotiating a sustainable budget. With talks still apparently on hold, a new poll released this week reveals that voters blame the legislature for the budget impasse.


                                                                                        Daniel Shanken/

Stopping the game-playing … The day after the line-item veto override votes, the Pennsylvania Budget and Policy Center joined budget coalition partners at a press conference in the Capitol Rotunda to challenge legislators to stop playing games and bring real compromises to the negotiating table. PCN will rerun the press conference at 11:35 tonight and at 3:30 p.m. on Sunday, or you can watch the PLS Reporter’s video of it.


PBPC's Jeff Garis & Rev. Sandra Strauss of PA Council of Churches     

Fed Up with the Fed talking about raising rates … KRC Executive Director Stephen Herzenberg joined an Action United delegation from the Philadelphia Fed region at a gathering of the “Fed Up Campaign” at the Jackson Lake Lodge in Wyoming in the second half of this week. The campaign is urging the Federal Reserve -- which is holding an annual symposium at the lodge with policymakers, economists and bankers from across the country – to focus on wage and job growth for average Americans instead of raising interest rates.

As Steve said in a KRC press release on the event, “The heartbreaking struggles of people trying to support their families and the hard numbers – on the lack of inflationary pressure, the Depression-era unemployment rates among people of color and wage stagnation – drive home the same message: reducing unemployment and driving up wages need to be the top priority of the Fed for the foreseeable future.”


                                                                                                  Fed Up Campaign

Calling for sensible budget compromises … Interim PBPC Research Director and KRC labor economist Mark Price related Pennsylvania’s latest job growth numbers to the need for a sustainable state budget in an op-ed that appeared this week in the Shamokin News-Item and the York Dispatch.

A Goldilockian severance tax … Check out PBPC consultant Jan Jarrett’s latest blog post on Third and State. She notes that the proposed severance tax on gas drilling meets the modified “Goldilocks Standard” in that it’s not too big and not too small but “just right” to produce a stable, recurring source of revenue to help adequately fund education in Pennsylvania.

Just getting by … KRC’s Mark Price issued a press release this week announcing updates to the Economic Policy Institute’s Family Budget Calculator, which shows what a family needs to achieve a modest standard of living in rural and urban Pennsylvania communities. Mark linked the new figures to the need for an increase in the minimum wage.

Majority of Voters Blame Legislature for Budget Impasse, Poll Shows

August 27, 2015 - 3:16pm

In a story on Lancasteronoline today, East Hempfield Township resident Duane Smith made the same observation that our analysis of the property tax relief plans of Gov. Wolf and House Republicans revealed a month ago: The two proposals aren’t all that different.

That observation led Smith to tell the reporter, “To me, Republicans are the ones that are holding up the (budget) process.”  He is not alone in his thinking. Fifty-four percent of voters surveyed in a new Daily News/Franklin & Marshall poll released today said they blame the legislature for the budget impasse, compared to only 29 percent who hold the governor responsible.

Poll director Terry Madonna explained the results this way in a Daily News story: “Wolf gets elected by 10 points and says he wants to increase education spending. That was a big issue. How’s he want to pay for it? With a shale tax. What he has proposed to do, the voters want.”

Let me repeat that last part because it’s important for Republican legislators to remember eight weeks into the budget impasse and two days after their constitutionally creative line-item veto override votes failed: “What he has proposed to do, the voters want.”

So let’s do a quick review here. Gov. Wolf has proposed a property tax relief plan that is similar to House Republicans’ plan. He also has proposed a funding increase for education and a severance tax that voters like.

The poll also revealed a certain amount of voter impatience: two out of three respondents said lawmakers shouldn’t be paid until the budget situation is resolved.

You don’t need more research to conclude that it’s time for the legislature's leadership to bring some real compromise to the negotiating table.


Proposed PA Severance Tax Meets Modified Goldilocks Standard – Not Too Big or Too Small, But Just Right

August 26, 2015 - 5:03pm

To restore funding for education, boost economic development and strengthen oversight of the gas drilling industry, Governor Wolf proposed enacting a severance tax on gas drilling. Pennsylvania is the number two producer of natural gas in the country, but the only major producer without a severance tax.

According to a study by the U.S. Energy Information Administration, other major gas-producing states generate significant percentages of their revenue from severance taxes. Here are some states where severance taxes make up substantial shares of revenue:

  • Alaska -- 72 percent
  • North Dakota -- 54 percent
  • Wyoming -- 39 percent
  • Texas -- 11 percent

As the EIA notes, Pennsylvania “currently derives less than 1 percent of its revenues” from its impact fee per gas well. The EIA adds that, if Pennsylvania imposed a severance tax on production similar to West Virginia’s, which the governor has proposed, the revenues generated “would still be less than 3 percent of the state's total tax collections”, and only a little above the national average of 2 percent. West Virginia’s severance tax, which applies to coal and other commodities in addition to gas drilling, generates about 12 percent of its total revenue.

As we’ve seen over the last several years, fossil fuel prices are volatile. So an over-reliance on severance taxes could expose states to sharp fluctuations in revenues that are painful when prices fall. At an anticipated 3 percent of Pennsylvania’s overall revenue, a West Virginia-like severance tax would generate stable, recurring revenue that could be used to adequately fund our schools and help repair the structural deficit while limiting the commonwealth’s reliance on it for total revenues.

The governor’s proposed severance tax is not too little, as is the current impact fee, and not too large of a portion of total state revenue. It’s just right.

KRC/PBPC's Insider News for the Week Ending August 14, 2015

August 17, 2015 - 5:24pm

Last week’s budget negotiations were marked by what WITF called “glimmers of progress,” and Gov. Wolf classified as “good discussion.” WITF said the governor “remains committed to a historic $400 million increase in education funding.”

Capitolwire quoted House Majority Leader Dave Reed as saying: “We’ve spent the last two days focused on pensions and education, and obviously those two items are needed to get a final budget agreement. We still have differences that exist. We’re working through those differences. We’re hoping to do so in a timely fashion because there a number of other issues that need to come to the table before we have a final budget agreement.”

Reed “quipped” that “I think we have a tentative agreement on the fact that pensions and education funding are going to have to be part of a final budget agreement,” according to The PLS Reporter.

Foretelling the future of unions Keystone Research Center Executive Director Stephen Herzenberg drew on Kati Sipp’s interview of founder Michelle Miller, about her brief “The Union of the Future,” as he contemplated what unions will look like in the future on Third and State last week.

Michelle Miller

Decanting competing property tax proposals … A recent Pennsylvania Budget and Policy Center op-ed asked Republican legislators to imagine that the Wolf and House Republican property tax relief plans are fine wines, invited them to take a blind taste test of the two, and predicted they would find that more middle- and low-income and rural Pennsylvanians would benefit under the Wolf plan.  Last week The Delaware County Daily Times, The Allentown Morning Call and The York Daily Record published the op-ed.

The Union of the Future

August 11, 2015 - 2:09pm

Kati Sipp's latest blog post on "Hack the Union" has a link to a thought-provoking interview with Michelle Miller, founder of The interview was prompted by Sipp's discovery of Miller's article "The Union of the Future," published as part of the Roosevelt Institute's Next American Economy project.

Miller's article and interview focus on the issue of how labor unions must adapt to the new economy. This has been a central concern of Keystone Research Center since our creation in the mid-1990s (see, for example, here, here, and here).

Overlapping Miller's view, our position has been that unions need to become more multi-employer and that the association of unions with individual companies or work sites was a unique and temporary aspect of U.S. manufacturing-based industrial unionism. We have also argued that unions of the future will often be anchored within regional service industries that are (mostly) non-mobile because they will have to operate in proximity to their geographically localized customers. Here we are thinking of unions in service industries such as janitorial services, retail, fast food, other restaurants, health care, and higher education (within which contingent faculty are now organizing metro campaigns in Philadelphia and elsewhere).

In addition, Miller and Sipp highlight the growing importance of occupational networks that extend beyond geographic regions. And they highlight that there is positive, as well as negative, potential for workers to earn money in more flexible ways than traditional full-time jobs: i.e., through part-time jobs with varied hours, whether at Starbucks, in ride-sharing, or, to use the example of my singer-songwriter daugher, through a combination of employment at Trader Joe's and managing the rental of two rooms in her house via Airbnb. Realizing the positive potential for workers requires that flexibility about hours serves them as well as the company and customers (so no just-in-time scheduling please). It also requires sharing the benefits of productivity growth (as highlighted in analysis by Dean Baker summarized here). This sharing could happen through area-wide wage and benefit standards (as established, for example, by the fast food wage board in NY) or, yes, through area-wide collective bargaining (as with building trades unions).

What's most heartening about the Miller brief and her interview with Sipp is the optimistic sense that union forms can be -- and are being -- adapted to shifts in technology and business organization. These young organizers and social observers do not conflate the death of traditional industrial union forms with an end to unionism in general. That, I suspect, is partly a generational optimism.

Progressives and unionists now in their mid-50s or older experienced the old middle-class economy distintegrate. They understandably went through a long period of mourning. Sipp, Miller, and their peers were barely born in 1980. Their optimism speaks to a growing appetite among a new generation to paint a picture of -- and to build-- an economy of the future that once again has a robust middle class. This appetite comes not a moment too soon.

Also: if you want to buy that new album by my Nashville singer-songwriter daughter, you can do that here.

KRC/PBPC's Insider News for the Week Ending August 7, 2015

August 10, 2015 - 2:10pm

It’s week six without a state budget and still no end in sight to the impasse – although negotiations between Republican legislative leaders and Gov. Wolf continue. House Speaker Mike Turzai has cancelled a trip to Israel scheduled for next week so he can continue to participate in budget talks, the Pittsburgh Post-Gazette reported.

Senate President Pro Tem Joe Scarnati said proposed tax increases in the governor’s budget remain the sticking point for Republicans, according to the Associated Press. Revenue from proposed increases in the personal income and sales taxes, and a new severance tax on gas drillers, would restore funding cut from education over the last four years, pay for property tax relief for homeowners and renters, and close a structural deficit in the state budget, under Wolf’s plan. Patriot-News quoted Gov. Wolf as saying, "I could just roll over, but I'm not going to do that. I don't think the people of Pennsylvania want us not to invest in education."


                        Gov. Tom Wolf, top. Sens. Scarnati (left) and Turzai (right), bottom.
                                                                                (Christian Alexandersen, Pennlive)

Better late than awful … Check out Monday’s Philadelphia Daily News editorial which makes the argument that a late budget is better than a bad budget. The editorial also cites a Pennsylvania Budget and Policy Center report that noted that drilling companies extracted more than $11.8 billion worth of gas from Pennsylvania in 2013 and paid $223 million in impact fees that year, an effective tax rate of less than 1.9 percent. “It’s hard to understand why,” the editorial states, “until you look at the campaign contributions from the Marcellus gas companies.”

Feeling better about paid sick leave … On Monday, Pittsburgh City Council passed an ordinance, by a 7-1 vote, to require employers in the city to provide their employees with paid sick leave. That’s just what Keystone Research Center Executive Director Steve Herzenberg urged them to do in an editorial in Monday morning’s Pittsburgh Post-Gazette. Steve also appeared on the Essential Pittsburgh show on 90.5 WESA radio on Wednesday to discuss the issue.

Supporters of paid sick leave during public comment period before Pittsburgh City
Council voted on Monday.         (James Knox | Trib Total Media)

Following “Follow the Property Tax Money” report … The Pennsylvania Budget and Policy Center’s report comparing the Wolf and House Republican property tax relief plans, released last week, is still drawing lots of attention. An editorial based on the report appeared in the Delaware County Daily Times on Saturday, the Pottstown Mercury News on Sunday and  Montgomery Media’s Roxborough Review on Wednesday.

Report co-author Steve Herzenberg also wrote a blog post on Third and State this week about the report, likening the two property tax relief plans to wines and urging legislative Republicans to take a “blind taste test” of the two.

Mad Men worrying about the tax man … An Advertising Age story published yesterday about four states, including Pennsylvania, which are considering taxing advertising services, quotes KRC’s Steve Herzenberg.

Making it up as they go along … PBPC consultant Jan Jarrett provides the numbers from Gov. Wolf’s budget proposal to prove, in a blog post this week on Third and State, that the lion’s share of revenue from a proposed severance tax, would go to increase education spending, despite what the drilling industry, some Republican legislators and their think tank supporters have been falsely claiming.



How About a Blind Taste Test of Two Property Tax Relief Proposals?

August 5, 2015 - 10:43am

Blind taste tests often produce surprising results. In our family, for example, the men often struggle to discern which wines are red and which white.

We think that if Pennsylvania’s Republican lawmakers are subjected to a blind test (without party labeling) of which of two property tax plans they like – Gov. Wolf’s or the Republican-sponsored plan that passed the House in mid-May – many would be surprised to find that they prefer the blue (Democratic) one to the red. The similarities between the two plans – and the benefits of Wolf’s plan for many Republican areas of the state – SHOULD make property taxes one area for potential compromise in the current state budget debate.

The Pennsylvania Budget and Policy Center laid out the facts on the blue and red property tax plans in a package of three briefs released last week. Gov. Wolf’s "blue" plan was unveiled as part of his 2015-16 budget proposal in March. The Republican property tax proposal passed the Pennsylvania House of Representatives in May.

PBPC’s analysis was the first to calculate and compare how much property tax relief typical homeowners in each of Pennsylvania’s 500 school districts would receive under each plan. We also used color-coded maps so all Pennsylvanians and their representatives can see at a glance which districts would get the biggest share of tax relief under each plan as well as the actual dollar amount of relief to be received.

Here’s what we found.

  • Both proposals would raise the state income tax by the same amount (from 3.07% to 3.7%) and also would raise revenues by increasing the state sales tax: the House proposal would raise the sales tax from 6% to 7% while the Wolf proposal would increase the sales tax to 6.6% but also impose it on some additional items not currently subject to the tax.
  • In most school districts, typical homeowners would receive similar dollar amounts of tax relief under both plans.

The two plans also have key differences:

  • HB 504 would use all the additional revenues raised for dollar-for-dollar property tax relief. The Wolf proposal would distribute less total tax relief ($3.8 billion versus $4.8 billion) and would use some revenue raised to meet other state needs, including closing the state’s structural budget deficit and reversing recent cuts to education funding. Given this difference, anti-tax advocates – who hate any net increase in revenues – prefer the House plan. But wouldn’t a true conservative favor fiscal responsibility and plugging the state’s deficit? There’s also broad support on both sides of the aisle – and among voters – for increasing the adequacy and equity of education funding.
  • While the Wolf proposal would give out less total property tax relief, a higher proportion of that relief would go to homeowners. The House proposal would lavish more property tax relief on non-residential properties such as golf courses, malls and other businesses, even though Pennsylvania’s property taxes on business are already below average.
  • The Wolf proposal would distribute more of its tax relief to lower-income and lower-wealth districts, including many Republican-represented rural and “property tax revolt” areas. In fact, typical homeowners in a majority of school districts in rural counties (128 of 238) would receive more dollars of property tax relief under the Wolf plan. The 10 school districts in the state in which residential property taxes are highest relative to income would receive very similar amounts of property tax relief under the House and Wolf plans.
  • A larger share of the tax relief under the House proposal would go to homeowners in more affluent school districts who have high property taxes partly because they want to generously fund local schools. For example, typical homeowners in affluent Radnor Township outside Philadelphia would receive $2,960 in property tax relief, while those in the city of Philadelphia would receive $474 in relief.

So this is our plea to Republican lawmakers and to their constituents. Put on a blindfold. Have a sip. Roll it around in your mouth. “Hmm, similar and sometimes more property tax relief. A state budget no longer put together with smoke and mirrors. More funding for local schools.” How does that taste? Now have a little water, and try the other glass. “More tax cuts for shopping malls. More property tax relief for people who aren’t clamoring for it and arguably don’t need it. A perpetuation of the state's underfunding of schools and of the largest gap in funding between affluent and poor districts.”

Longstanding champions of property tax relief on both sides of the aisle in the capitol should find a lot to support in the Wolf plan if they give it a fair and objective look. If they do, Pennsylvania has a once-in-a-generation opportunity this year for real property tax reform. Here’s hoping a spirit of bipartisan problem-solving for the good of all Pennsylvanians wins out over a ritualistic thumbs-down on a proposal simply because of its blue package.