Third and State
Third and State This Week: Costly Pensions Plan, a Tax Cut that Should Be Delayed, Pittsburgh’s Economy & More
This week at Third and State, we blogged about the problems with the Governor’s pension plan, how critical the expansion of Medicaid health coverage is for low-income working families in Pennsylvania, why the state should delay a planned corporate tax cut, and a new report on how Pittsburgh’s economy is doing better than other neighboring rust-belt cities.
IN CASE YOU MISSED IT:
- On pensions, Stephen Herzenberg shared his Philadelphia Inquirer op-ed explaining that the Governor’s pension proposal will increase the state's pension debt and cost taxpayers more.
- On health care, Jamar Thrasher blogged that if Pennsylvania rejects federal dollars to expand Medicaid, many of the state’s low-income working families will have nowhere to turn for health coverage.
- With state budget action likely to pick up after Memorial Day, Chris Lilienthal blogged that policymakers should delay the planned phaseout of a corporate tax in order to preserve critical investments that make Pennsylvania a good place to live and do business.
- On the economy, Jamar Thrasher wrote about a new study finding Pittsburgh's economy has fared better than neighboring rust-belt cities Buffalo, Cleveland, and Detroit.
IN OTHER NEWS:
- Get the latest budget news at the Pennsylvania Budget and Policy Center's State Budget and Tax Policy Page.
- Learn more about public pension reform in Pennsylvania at the Keystone Research Center's Pensions Issue Page.
- Learn more about the federal opportunity to expand Medicaid coverage in Pennsylvania.
- Learn more about education in Pennsylvania with data on student enrollment, school funding and more.
MARK YOUR CALENDAR:
- Join the Pennsylvania Budget and Policy Center on Tuesday, May 28 from 4 to 5 p.m. for a webinar on education funding in Pennsylvania. Learn more and register to participate.
- Join the Keystone Research Center and Pennsylvania Budget and Policy Center on Thursday, June 13 for our Annual Awards Dinner at the Hilton Harrisburg. Learn more and purchase tickets.
Pittsburgh Fares Better Than Other Rust-Belt Cities Thanks to Education
From 1970 through 2006, rust-belt cities Buffalo, Cleveland, Detroit, and Pittsburgh have all seen a considerable decline in neighborhood population, but Pittsburgh has fared better than the rest.
A new study by the Federal Reserve Bank of Cleveland finds that universities and colleges have helped the Steel City weather the economic woes experienced more acutely by the other one-time manufacturing cities. As the Pittsburgh Business Times reports:
Pittsburgh is faring better than some of its fellow Rust Belt cities because residents became better educated and because of where the colleges and universities are located, according to a Federal Reserve Bank of Cleveland study that also looked at Buffalo, Cleveland and Detroit.
Pittsburgh, once known for its steel industry, is now known as a hub for education and technology. In 2009, Pittsburgh was host to the G-20 Summit, and President Barack Obama heralded the city's success in transforming from a manufacturing city to a more technological city.
The Federal Reserve Bank of Cleveland study found that incomes in higher-income neighborhoods grew faster in Pittsburgh than the other cities, and that the number of residents with college degrees in low-income neighborhoods is also increasing. Again, the Pittsburgh Business Times:
Incomes surged in the highest home price neighborhoods between 1970 and 2006 by almost 50 percent in Pittsburgh and 20 percent in Buffalo, according to Hartley’s report, reflecting the fact that these neighborhoods are located near centers of higher education, which in turn attracted highly skilled residents.
This story demonstrates just how important it is to regional economies for Pennsylvania to invest in K-12 and higher education.
With Pennsylvania entering the final weeks of the state budget process, the conversation is once again turning to education funding. If you are free Tuesday, May 28 at 4 p.m., join the Pennsylvania Budget and Policy Center for a webinar on the state of education funding in the commonwealth.
The Quiet Before the Storm
The State Capitol is quiet this week, but things will pick up quickly after the Memorial Day Weekend. Pennsylvania House leaders expect to introduce a 2013-14 budget bill on Tuesday, with a vote to follow the week of June 10.
As I wrote last week, balancing the budget without new deep spending cuts will be difficult, as lawmakers have to make up for a $518 million shortfall projected by the Independent Fiscal Office. Plus, the House bill will NOT include $177 million in savings from changes to the state's public pension systems proposed by Governor Corbett in his February budget.
To help close the budget gap, lawmakers should delay the phaseout of the capital stock and franchise tax, a corporate tax that has already been cut by 85%. Under current law, this tax will be completely eliminated in 2014.
At a Pennsylvania Press Club speech this week, Senate Democratic Leader Jay Costa proposed keeping the tax at 2012 levels. Even Budget Secretary Charles Zogby acknowledged in a Philadelphia Inquirer story that "whether we can afford to continue the phaseout is something we're going to have to examine."
The planned tax cut is just not affordable, especially at a time when critical investments in our schools and communities are already suffering. Keeping this very low tax in place would raise an estimated $390 million more to help prevent a new round of cuts to schools and other investments that make Pennsylvania a good place to live and do business.
Despite billions in new business tax cuts over the past decade, Pennsylvania’s job growth ranking among the 50 states has not changed much.
The bottom line is, after two years of deep state budget cuts, Pennsylvania cannot afford to trim more from schools, health care, and other critical investments in our future.
Morning Must Read: A No to Expanding Medicaid Will Leave Many in PA Out in the Cold
Pennsylvania is not the only state undecided about whether to expand Medicaid health coverage to low-income working families. As The Washington Post reports:
Twenty states and the District of Columbia have signed on to the expansion, and 14 are planning to decline. But 16 [including Pennsylvania] remain in limbo as lawmakers clash in the final days and weeks of the legislative calendar, when many must come to a decision in time for the provision to kick in next year.
We have blogged (here and here) in recent weeks about reports showing how an expansion of Medicaid will benefit Pennsylvania residents both from an economic and public health standpoint.
One aspect of the debate that has not gotten as much attention is that an expanded Medicaid is the only option for many low-income working Pennsylvanians.
Beginning in 2014, federal tax credits will help working families in Pennsylvania afford private coverage purchased through a new health insurance marketplace created by the Affordable Care Act. However, Pennsylvania families earning less than the federal poverty level will only qualify for health coverage if the state accepts federal funding to expand Medicaid.
That's because families with incomes of less than 100% of the federal poverty guidelines ($23,550 for a family of four) will not be eligible for tax credits under the Affordable Care Act. For those families who have some income from work but cannot afford to buy insurance out of pocket, an expansion of Medicaid is their only hope for health coverage.
Along with the economic benefits that expansion brings, the choice should be clear for state policymakers.
As the Washington Post notes:
Business groups say the huge influx of federal money would be a financial windfall for the states. And health-care advocates point out that, in states that choose not to expand, the people left out will probably be fast-food employees, grocery store cashiers, construction workers and other very low-wage earners- millions of people who were supposed to be some of the prime beneficiaries of reform.
Not What the Doctor Ordered on Pensions
I wanted to share my op-ed in today's Philadelphia Inquirer examining the added costs and other problems in Governor Corbett's public pension proposal:
In public policy, as in medicine, a guiding principle should be "first, do no harm." In other words, don't make the problem worse.
Unfortunately, Gov. Corbett's plan to radically restructure Pennsylvania's public pension system does serious harm to taxpayers, driving up the public cost of retirement benefits for years to come. It harms Pennsylvania's teachers, nurses, emergency responders, and other public servants by undermining their retirement benefits without saving a dime. And it harms efforts by Pennsylvania schools and other public employers to attract and retain high-quality employees.
Corbett and Budget Secretary Charles Zogby have sought to mobilize public opinion behind their plan by pointing to the billions in additional funds needed to pay for public pension benefits already promised.
Pennsylvania ran up its current pension tab during an unusual period - the most difficult for financial markets since the Depression. At the same time, three successive governors signed budgets that shortchanged pension plans. Every paycheck, teachers and other public employees faithfully contributed to their pensions - about 7 percent of their salaries on average. But after two stock market crashes and lawmakers' diversion of needed funds to other priorities, robust employee contributions alone were not enough. Now the bill has come due.
Enter Corbett's proposal to end the state's current pension plans and shift new public employees to 401(k)-type retirement accounts. This plan will actually increase Pennsylvania's current pension debt and the cost of future benefits for state and school employers.
Here's what happens. Once the current pension plans are closed and new employees are enrolled in individual accounts, those left in the pension plans will age and retire as a group. Investment managers will have to shift to more conservative and lower-return investments to be able to pay out benefits as they come due.
When investment returns pay for less of existing pension commitments, taxpayers will have to pay more. The office of Pennsylvania Treasurer Rob McCord estimates that the governor's plan will increase the state's pension debt by $25 billion by 2046.
It's not just the transition to this new system that will be rocky: replacing pensions with individual 401(k)-like accounts will make the retirement benefits of future workers permanently more expensive.
State pension reforms enacted in 2010 cut new employee pensions, reducing overall costs to only 3 percent of employee salaries. The governor's plan will raise new employee retirement costs to 4 percent of payroll. Once individual accounts are fully phased in, annual costs will increase by $179 million.
State and local taxpayers are not the only ones left holding the bag. Public employees will end up with lower retirement benefits. That's because 401(k)-type accounts waste more money than pooled pensions on administration costs, financial management, and trading fees. And individual retirement accounts offer only half the retirement security of today's pensions for the same level of contributions, the National Institute on Retirement Security estimates.
So, Wall Street gets more money to manage individual accounts, while Main Street Pennsylvania gets lower retirement income. It's not hard to see why financial firms are lobbying heavily for the governor's plan.
By contrast, the pension reforms enacted in 2010 reduced future employee pension costs by more than 20 percent and put taxpayer protections into law, requiring employees to kick in more for their pensions in a future economic downturn.
The governor's pension plan would undo those reforms. It is not what the doctor ordered.
Third and State This Week: PA Jobs Update, House Budget Bill Coming, Expanding Medicaid and More
This week at Third and State, we updated you on the latest Pennsylvania jobs numbers, asked whether a House budget bill to be introduced on May 28 will include new cuts, explained how a loophole bill does not get the job done, highlighted an editorial raising concerns about the Governor's pension proposal, and shared resources from a webinar on expanding Medicaid coverage in Pennsylvania.
IN CASE YOU MISSED IT:
- On jobs and the economy, Mark Price has an update on the Pennsylvania jobs report released Friday.
- On state budget and taxes, Chris Lilienthal blogged that as Pennsylvania House leaders plan to introduce a 2013-14 budget bill, some in Harrisburg are looking at a delay in the phaseout of the capital stock and franchise tax to help close a budget gap. Michael Wood blogged that a recently-passed House bill to close corporate tax loopholes would fall far short of its goal and aggravate the state’s financial problems.
- On the Marcellus Shale, Chris Lilienthal blogged about an Associated Press story highlighting just how much Pennsylvania is giving up over time by enacting a very low Marcellus Shale impact fee.
- On public pensions, Jamar Thrasher blogged about a Philadelphia Inquirer editorial raising concerns about Governor Corbett's pension plan.
- Finally, we shared a video of a webinar hosted by the Pennsylvania Budget and Policy Center on making the Medicaid expansion a reality in Pennsylvania.
IN OTHER NEWS:
- Read a Pennsylvania Budget and Policy Center (PBPC) policy brief on the problems with a House bill to close corporate tax loopholes.
- Get the latest budget news at PBPC's State Budget and Tax Policy Page.
- Learn more about pension reform in Pennsylvania at the Keystone Research Center's Pensions Issue Page.
- Learn more about the federal opportunity to expand Medicaid coverage in Pennsylvania.
- Learn more about education in Pennsylvania with data on student enrollment, school funding and more.
MARK YOUR CALENDAR:
- Join the Pennsylvania Budget and Policy Center on Tuesday, May 28 from 4 to 5 p.m. for a webinar on education funding in Pennsylvania. Learn more and register to participate.
- Join the Keystone Research Center and Pennsylvania Budget and Policy Center on Thursday, June 13 for our Annual Awards Dinner at the Hilton Harrisburg. Learn more and purchase tickets.
Good News on PA Jobs But Challenges Remain
Pennsylvania got some good news Friday from the Bureau of Labor Statistics as the state’s unemployment rate fell three-tenths of one percentage point to 7.6% in April. It is the lowest unemployment rate in Pennsylvania since March of last year — although it is still slightly higher than the U.S. unemployment rate.
Total nonfarm employment rose by 6,700 jobs in April, while employment as measured by a separate household survey climbed by 13,000. Strong growth in April was accompanied by upward revisions in March employment (initially, March employment fell by 5,900 jobs, but after the revision, it fell by 1,900 jobs). Over the last three months, Pennsylvania has added, on average, just over 2,000 jobs a month.
Employment growth in the last three months is positive but remains muted compared to previous years. To return to full employment in three years, Pennsylvania would have to add, on average, 8,000 jobs a month. In the household survey, the gain of 13,000 jobs was the first recorded gain in that survey since December.
The labor force declined again in April, although by just 3,000. Since January, the labor force in Pennsylvania has fallen by 48,072. Since January 2010, Pennsylvania’s labor force has grown by 2%, compared to 1.2% in the rest of the country.
Overall, April was a good month for Pennsylvania's jobs picture, with a marked drop in the unemployment rate that appears to be driven by solid employment gains. Still, with job growth slow overall, real challenges remain for Pennsylvania's economy.
Will There Be New Cuts in PA House Budget Bill?
Pennsylvania House leaders plan to introduce a 2013-14 budget bill on May 28, with a vote to follow the week of June 10.
Balancing the budget without new deep spending cuts will be difficult, as lawmakers have to make up for a $518 million shortfall projected by the Independent Fiscal Office. The task will be more complicated as House Appropriations Chairman Bill Adolph announced the bill will NOT include $177 million in savings from changes to the state's public pension systems proposed by Governor Corbett in his February budget.
To help close the budget gap, some lawmakers — and even the Corbett administration — are considering a delay in the phaseout of a corporate tax that has already been cut by 85%.
The capital stock and franchise tax, now at a record low rate, is scheduled to be completely eliminated in 2014. Lawmakers could freeze the rate at 2012 levels, raising an estimated $390 million more to help prevent a new round of cuts and preserve the modest spending increases proposed by the Governor in February. Just this week, Budget Secretary Charles Zogby told The Philadelphia Inquirer: "I think whether we can afford to continue the phaseout is something we're going to have to examine."
After two years of deep cuts, Pennsylvania cannot slash more funding to schools, health care, mental health services and other critical investments in our future. Delaying the phaseout of this very low tax is the fiscally responsible thing to do. The Legislature has delayed the phaseout in five of the last 15 years, during times the economy lagged. It will have little impact on most businesses that will continue to get all the other tax cuts that have been enacted over the past decade.
As we move into the final weeks of the budget process, all of us should do our part to ensure our communities are strong and Pennsylvania is moving forward.
Must Read: Inquirer Takes on Governor's Pension Plan
The Philadelphia Inquirer has an editorial today raising many of the same concerns about Governor Tom Corbett's pension proposal as we have at the Keystone Research Center.
The Governor's plan calls for new school and state employees, beginning in 2015, to enroll in a 401(k)-like retirement plan, closing out the state's current defined benefit pension plan. It also proposes to cut current employees' future pension benefits, among other changes. The Keystone Research Center has more on the added costs of the Governor's plan at its pensions issue page.
The Inquirer editorial observes that the Governor's pension plan does not address the current pension issue and will end up costing taxpayers more:
In the guise of a solution, Gov. Corbett's pension reform plan would make the problem worse. It would weaken employee retirement funds, eventually cost taxpayers $179 million more a year, and add $5 billion to unfunded pension liabilities by 2019, and even more afterward.
Those aren't the only reasons the legislature should reject the governor's plan. It also imperils the state's finances, and its proposed cut to current employees' benefits would not survive a legal challenge.
The state caused the pension problem by increasing employee benefits during the boom years while reducing the government's contributions to the pension funds. (State and school employees, it must be noted, never stopped contributing an average of 7 percent of their paychecks to the funds.) Now Corbett wants to balance the state budget by reducing the government's contributions for the next five years, which is the same reckless policy that deflated the funds in the first place.
Webinar: Making Medicaid Expansion a Reality in PA
Eight and counting, that’s the number of Republican governors who have determined that opting into the expansion of Medicaid health coverage under the Affordable Care Act is good for their state’s citizens and economy.
In a webinar this week hosted by the Pennsylvania Budget and Policy Center, health care experts looked at the nuts and bolts of the Medicaid expansion and what is being done to make it happen in Pennsylvania. You can watch the webinar below.
In the webinar, Jesse Cross-Call of the Center on Budget and Policy Priorities in Washington, D.C. presents an overview of the Medicaid expansion; Sharon Ward of the Pennsylvania Budget and Policy Center discusses recent studies showing the economic benefits of expanding coverage in Pennsylvania; and Antoinette Kraus of the Pennsylvania Health Access Network explains what's happening on the ground to make expansion in the commonwealth a reality.
You can get the PowerPoint from the webinar here and more details on our next webinar on education funding here.
Loophole Bill Does Not Get the Job Done
A recent proposal to close corporate tax loopholes that drain millions of dollars annually from Pennsylvania schools, colleges, and other vital services would fall far short of its goal and aggravate our state’s financial problems.
We have a new policy brief at the Pennsylvania Budget and Policy Center on House Bill 440, which passed the state House by a vote of 129-65 on May 6. The bill aims to prevent corporations from unfairly shifting profits earned in Pennsylvania to Delaware and other low- or no-tax states, but it would be largely ineffective at stopping the practice and even creates new tax loopholes corporations could exploit.
Because the bill’s loophole-closing measure would be largely ineffective, its cuts in corporate tax rates would end up costing hundreds of millions of dollars per year in lost tax revenue and force further cuts to the assets that make Pennsylvania a good place to do business in the first place.
Corporate tax avoidance is a growing problem that leaves Pennsylvania companies and individuals who play by the rules to pick up more of the tab. But fixing this must be done carefully, and there are better alternatives than House Bill 440. We have more on those alternatives in our policy brief. Check it out.
Morning Must Read: PA's Low Tax Rate on Shale Drilling
The Associated Press has a good story highlighting just how much Pennsylvania is giving up over time by enacting a Marcellus Shale impact fee that assesses one of the lowest tax rates on natural gas drilling among the nation's major energy-producing states.
A boom in natural gas drilling in Pennsylvania is generating billions of dollars for companies and private landowners, but some experts question whether the state's low effective tax on the bounty makes long-term sense.
Unlike most leading oil and gas producing states, Pennsylvania doesn't link fees to how much gas comes out of the well. Instead, each well pays an impact fee no matter how much it produces. That means that even as Marcellus Shale gas production has soared, revenue to local and state government isn't keeping pace.
For example, the impact fee generated about $204 million in 2011, when production was about 1 trillion cubic feet of gas. But when production doubled in 2012 to just over 2 trillion cubic feet, the impact fee revenue dropped to about $199 million. One billion cubic feet of gas equals about 180,000 barrels of oil.
"That gap is going to get bigger and bigger" over time, said Michael Wood, a research director with the Pennsylvania Budget and Policy Center, a progressive research group based in Harrisburg. ...
As time goes on, a policy center analysis and a review by The Associated Press came up with the same conclusion: Pennsylvania's effective tax rate on gas production could drop to as low as 1.3 percent over the next few years.
Kenneth Medlock III, a director at the Center for Energy Studies at Rice University, tells the AP that Pennsylvania's shale policy will have to be revisited in the future as production grows and Pennsylvania finds itself lacking the resources for "inspections, environmental and health monitoring, and other costs."
Third and State This Week: A Missed Opportunity, Unpaid Internships, Expanding Medicaid and Mother's Day
This week at Third and State, we blogged about a missed opportunity in the House to close corporate tax loopholes, the troubling trend of employers taking on unpaid interns to do work once performed by paid staff, the public health benefits of expanding Medicaid coverage, more on Pennsylvania's job growth ranking, and a Mother's Day look at the number of Pennsylvania moms who benefit from key federal tax credits that may be at risk.
IN CASE YOU MISSED IT:
- On state budget and taxes, Sharon Ward shared her statement on the passage of a House bill enacting hundreds of millions in new corporate tax cuts. The bill represented a missed opportunity to close tax loopholes, Sharon wrote. We also posted our live Twitter coverage of the House floor debate on that bill.
- On higher education and the economy, Jamar Thrasher blogged about the troubling trend of employers recruiting unpaid interns to perform duties that were once performed by paid staff.
- On health care, Chris Lilienthal wrote that expanding Medicaid in Pennsylvania will make Pennsylvanians healthier and more financially stable — and even save lives.
- On jobs and the economy, Stephen Herzenberg delved a little deeper into Pennsylvania's job growth performance in light of recent remarks by the Governor.
- And with Mother's Day this weekend, Sharon Ward blogged about the hundreds of thousands of working moms in Pennsylvania who rely on the Earned Income and Child Tax Credits to make ends meet.
ADDITIONAL RESOURCES:
- Get the latest budget news at the Pennsylvania Budget and Policy Center's State Budget and Tax Policy Page.
- Learn more about pension reform in Pennsylvania at the Keystone Research Center's Pensions Issue Page.
- Learn more about the federal opportunity to expand Medicaid coverage in Pennsylvania.
- Learn more about education in Pennsylvania with data on student enrollment, school funding and more.
MARK YOUR CALENDAR:
- Join the Pennsylvania Budget and Policy Center on Tuesday, May 14 from 4 to 5 p.m. for a webinar on making the Medicaid expansion a reality in Pennsylvania. Learn more and register to participate.
- Join the Keystone Research Center and Pennsylvania Budget and Policy Center on June 13 for our Annual Awards Dinner at the Hilton Harrisburg. Learn more and purchase tickets.
670,000 Working Moms in PA Rely on Key Federal Tax Credits
With Mother's Day approaching this weekend, we are highlighting new research showing that 670,000 working moms in Pennsylvania rely on the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Both tax credits also lifted nearly 118,000 Pennsylvania children out of poverty annually between 2009 and 2011.
In 2009, Congress made temporary improvements to these tax credits to better promote work and reduce the need for welfare. To benefit from the EITC and CTC, a family must be working. Research has shown that EITC increases employment and reduces poverty among families with children, particularly single-mother families.
The EITC and CTC help families working hard in low-wage jobs meet basic needs, such as paying the rent and putting food on the table. A single mother who works full time at minimum wage earns about $14,500 per year—about $4,000 below the poverty line for a family of three. The EITC and CTC help bridge that gap, extending a “hand up” to families who are working hard to provide for their children.
The Mother's Day Report is an important reminder that we have a lot at stake, and we’re working very hard to see that Congress doesn’t hurt Pennsylvania families by cutting these tax credits in the months ahead.
Learn more by reading a fact sheet from the Pennsylvania Budget and Policy Center. And Happy Mother's Day!
Unpaid Interns Doing Full-time Work
As American colleges and universities wind down another school year, many students will be seeking out summer internships. Interning at the right place can help new grads gain valuable experience and build a professional network, both of which are as key to future success as earning good grades in the classroom. But more and more, interns are doing work that was once performed by full-time paid staff — without the compensation.
Propublica reports that U.S. Department of Labor rules to protect students from employers that require them to perform duties similar to paid staff are in place but are not well enforced:
In April 2010, the Department of Labor released a six-point test to help determine whether an internship in the for-profit sector qualifies to be unpaid under federal law. One of the key criteria is that the position must be of more benefit to the intern than of benefit to the company.
Companies can’t just use interns to replace regular employees. The Department of Labor may examine internships during investigations of an employer’s compliance with wage standards and record-keeping provisions of the Fair Labor Standards Act, according to a spokesperson.
But Dr. Philip Gardner, director of the Collegiate Employment Research Institute at Michigan State University, says the government’s enforcement efforts have been passive.
The Economic Policy Institute has also been a leading voice on this issue:
Over the past decade, the illegal use of unpaid interns has exploded with little protest. EPI has been a crucial voice highlighting the inadequate regulation of student internships and has detailed why it is wrong, particularly with respect to for-profit employers not paying interns for their work. Unpaid internships don’t fairly reward hard work, they block economic mobility, and they leave young workers exposed to exploitation.
Many large companies, agencies, and nonprofits do not pay student interns. For example, the United Nations summer internship is an unpaid internship. Unpaid internships contribute to the widening economic gap between low-income and high-income students. Students from wealthier families can afford to live in high-cost cities like Manhattan and accept unpaid internships at the UN.
Low-income students, meanwhile, often have to work a job to stay in school. To take on an internship — especially an unpaid one — amounts to working two full-time positions.
In a quest to gain more insight on this topic, ProPublica is asking students to report on their summer interning experiences. If you are an intern out there, you can do so here.
At the end of the day (or summer), student internships should be experiences that, coupled with academic coursework, give students a leg up and allow them to improve skills that will lead to future careers. They shouldn't be free labor for a company unwilling to pay for the staff it needs to meet demand.
Expanding Medicaid Coverage in PA Will Save Lives
I have written about the economic benefits of expanding Medicaid health coverage in Pennsylvania, but what often goes unmentioned in this debate is just how critical the expansion is to the commonwealth's public health. It will make Pennsylvanians healthier and more financially stable — and even save lives.
Medicaid supports better public health by providing comprehensive health coverage to children, seniors and people with disabilities. Since 2011, The New England Journal of Medicine has published two studies by Harvard researchers showing that expanding Medicaid coverage improves health outcomes for enrollees.
One study showed that expanding health coverage reduced the death rate among enrollees by 6.1%. The study compared three states that expanded Medicaid between 2000 and 2005 with three similar, neighboring states (including Pennsylvania) that did not. Researchers found that Medicaid enrollees in expansion states lived longer because they were able to seek preventive care, take prescribed medications, and receive other necessary medical treatment.
Another study — of Oregon’s 2008 Medicaid expansion — showed that Medicaid enrollees have better health and financial security than non-enrollees. Oregon’s expansion was limited to 10,000 adults, chosen randomly from a waiting list. One year after expansion, enrollees were 25% more likely to report that they were in good health or better compared to people left on the waiting list. Enrollees were 40% less likely to report having to borrow money or skip payment on other bills due to medical expenses.
These studies provide good apples-to-apples comparisons, unlike earlier studies (sometimes cited in this debate) that failed to consider most current Medicaid enrollees are older, sicker, and poorer than the general population. The recent academic studies controlled better for age, disability, and income.
Accepting the federal dollars to expand Medicaid coverage in Pennsylvania will create jobs and strengthen the state’s economy. As these recent studies show, it will also improve the public health and save lives in Pennsylvania.
Thanks to Kristen Dama of Community Legal Services of Philadelphia for contributing to this blog post.
A Missed Opportunity to Close Corporate Tax Loopholes
The Pennsylvania House voted 129-65 Monday to approve legislation enacting hundreds of millions in new corporate tax cuts in the years ahead. This chart shows how much this bill will cost over time, coming at the expense of investments that matter to our economy and communities, including schools, safe streets, and infrastructure.
Below is a statement I issued late yesterday afternoon
We are disappointed that the House missed an opportunity to close corporate tax loopholes and level the playing field for all Pennsylvania businesses. Pennsylvania residents and businesses are no closer to having a fair tax system than they were when they woke up this morning.
This bill will enact tax cuts that the commonwealth cannot afford, giving away $7 for every $1 it brings in to state coffers and continuing the shift of responsibilities and costs to local governments. The irony is that this bill will increase property taxes for seniors and working families, and for the very businesses that proponents are trying to help.
Despite its high cost, the bill will have little meaningful impact on job growth. By the governor’s estimate, it will create 18,000 jobs in 2025 — 0.3 percent of total state employment and less than the 20,000 education jobs lost following deep state funding cuts. A better and more immediate way to boost job growth would be to return the $900 million cut from education and let school districts hire back reading and art teachers, language specialists and guidance counselors.
Last week’s revenue report from the Independent Fiscal Office underscores that now is the wrong time for costly corporate tax cuts. If signed into law, this bill will come at the expense of investments that really matter to our economy and local communities, including schools, safe streets, and infrastructure.
Live Tweeting House Debate on Corporate Tax Cut Plan
The Pennsylvania Budget and Policy Center is live-tweeting the debate on the floor of the state House over legislation that will cost the state hundreds of millions of dollars annually within just a few years. The result will be less money for the investments that boost Pennsylvania’s economy, such as a strong education system, roads and bridges, and safe schools, streets, and communities. Follow along below.
Don't Like to Look at Percents? Then PA's Job Rank Is Even Worse
When it comes to evaluating Pennsylvania's job growth performance, Governor Tom Corbett said last week, "I don't like to look at percents." (Watch this clip about 1 minute 15 seconds in for that quote.)
OK, let's compare what Governor Corbett does like to look at — "how many people got on payroll" (actual job growth) before he came into office and since then.
In the 12 months before the Governor came into office, Pennsylvania added 65,600 jobs, ranking the state third out of 50 states. In the most recent 12 months for which we have data (March 2012 to March 2013), the number of Pennsylvanians on payroll fell 5,800. Pennsylvania was the ONLY state over this period to see a reduction in the number of jobs — marking a drop in the state's job growth ranking from third to 50th.
Of course, absolute job change is not a good way to rank states. In normal times, with steady job growth across the board, more populous states will always have larger increases in the number of new jobs than small, less populous states (think California vs. Delaware). That's why percentage job change is a better measure of job growth (and job growth relative to population growth is a better one still).
Perhaps the Governor is counting on the advantages for populous states of using absolute change in jobs as a metric, which could put Pennsylvania, a big state, back in the top 10 by 2014.
Third and State This Week: Revenue Update, Assessing PA Job Growth, Expanding Health Care, Pensions Webinar & More
This week at Third and State, we blogged about a new Independent Fiscal Office report showing state revenues lagging earlier estimates, a study on salaries at nonprofit and for-profit human service providers, the budget and economic benefits of expanding Medicaid health coverage, a webinar on the public pensions debate, and job growth in Pennsylvania.
IN CASE YOU MISSED IT:
- On state budget and tax policy, Michael Wood blogged about a new report from the Independent Fiscal Office forecasting over $500 million less available for the next budget than revenue estimates in the Governor’s February budget proposal. Sharon Ward wrote about a new Legislative Budget and Finance Committee study of the salaries of nonprofit and for-profit human service providers.
- On jobs and the economy, Mark Price wrote that policy decisions made by governors impact whether a state’s economy takes on more water, or bails successfully, as it rides the wave of the national economy.
- On health care, Chris Lilienthal blogged about two studies demonstrating that Pennsylvania’s economy and state budget will get a big boost if the commonwealth accepts federal funding allocated to expand Medicaid health coverage.
- Finally, we shared a webinar hosted this week by the Pennsylvania Budget and Policy Center titled "Untangling Pennsylvania's Pension Reform Debate."
IN OTHER NEWS:
- The Keystone Research Center (KRC) put out a memo to members of the Senate Law and Justice Committee on the social impacts of privatizing Pennsylvania's wine and spirits stores.
- The Pennsylvania Budget and Policy Center (PBPC) published an analysis of April revenue collections and an overview of the Independent Fiscal Office's preliminary revenue estimate.
- PBPC released an analysis of House Bill 440, legislation that advances the Governor's corporate tax cut plan at the expense of investments that really matter in our schools and communities.
ADDITIONAL RESOURCES:
- Get the latest budget news at PBPC's State Budget and Tax Policy Page.
- Learn more about the federal opportunity to expand health coverage in Pennsylvania at PBPC's Medicaid Expansion Resource Page.
- Learn more about pension reform in Pennsylvania at KRC's Pensions Issue Page.
- Learn more about education in Pennsylvania at PBPC's Education Facts Page with data on student enrollment, education funding, and school poverty.
THIRD AND STATE BLOG
KRC ON TWITTER
KRC ON FACEBOOK