PolicyBlog

If Your Erection Lasts Longer than a SEPTA Strike ...

Commonwealth Foundation — Mon, 09 Nov 2009 09:18:00 EST

Alex Charyna points out this tidbit in the Philadelphia Daily News - one demand of the SEPTA union was more Viagra:

Yes, it appears that labor issues are not the only dysfunction troubling SEPTA workers. The Daily News reported that some are unhappy that their current health-care plans cover - and here it's important to use caps for emphasis - ONLY 10 VIAGRA PILLS A MONTH.

Some union members want the pill - again, excuse the shouting - DAILY, which makes you worry that every bus, trolley, and subway route has the potential to turn into an express, particularly during those problematic four-hour peaks in service.

Worst Idea for Fixing State Pensions

Commonwealth Foundation — Mon, 09 Nov 2009 08:14:00 EST

Pennsylvania Treasurer Rob McCord told the Pocono Record that now is the time to address the state pension crisis, rather than later, a point the Commonwealth Foundation agrees with. However, McCord's proposed fix is extremely misguided:

Taxpayers would be better served in the long run if the state legislators and the governor agreed to borrow money now, while interest rates are low, to help cover pension costs. The bond would provide new investment capital for bargain stocks.
"We probably should be looking at a pension obligation bond because we're missing a lot of investment opportunities now," McCord said. "This is a prudent time to bring that debt onto the books."

Part of the refinancing could be used to invest in the state's infrastructure, he added.

So not only does McCord suggest borrowing money to invest in the stock market - a risky proposition for anyone to do - but he then suggests that we use the money from the bonds for something other than pensions. You will note that in Rick Dreyfuss's presentation on Pensions & Politics, pension obligation bonds is the number 1 "non-reform reform" identified on slide 34.

A Brilliant Idea to Balance Cities' Budget

Commonwealth Foundation — Sun, 08 Nov 2009 14:37:00 EST

The city of Harrisburg is hiring a consultant to give some tips to balance its budget, ABC 27 reports. Lancaster, PA hired the same firm a few years ago - at a cost of $200,000 to taxpayer (the bulk of which was inexplicably paid by the state).

Management Partners, Inc. suggested Lancaster needed to increase service fees and even cut staff. Of the 180 recommendations, the city acted on nearly half.

"Some of them we couldn't implement because of resistance from unions," Gray said. "Some of them we're still looking at and in the process of implementing."

Here is one suggestion: stop spending so much money on consultants ... or eliminate the budget office that can't do the job itself.

Big Government Leads to Big Lobbying

Commonwealth Foundation — Sun, 08 Nov 2009 13:25:00 EST

The Philadelphia Inquirer has a story today that Pennsylvania business groups - especially in natural gas, tobacco, and gambling industries - spent a lot of money lobbying during the state budget. Yet while several quoted in the article point on their problems with the lobbying, no one point out the obvious driver of all this lobbying - big government.

When the state spends over $60 billion each year, it is natural for lobbyists to spend a few million to get their share of that. No one should be shocked that tobacco and natural gas companies would fight a new tax that applies only to those business, or that casinos would pump money into legalization of new business (table games) that they would have a state-granted monopoly over. Nor should we be surprised to see school districts lobbying for hundreds of millions in increased subsidies for themselves, or the film industry lobbying for a tax credit for films, or Harley Davidson lobbying for corporate welfare.

When you have a government which regulates, subsidizes, or taxes nearly every aspect of our economy, you're only going to see more spent on lobbying. If you want to curtail the influence of high-powered lobbyists, you have to curtail the power of government.

Pennsylvania Voters Reject Property Tax Hikes

Commonwealth Foundation — Fri, 06 Nov 2009 12:53:00 EST

With an already-weakened economy that has put Pennsylvania families on a tight budget, Monroe County taxpayers finally said "enough is enough!" when confronted with two referendums on Tuesday's ballot calling for increases in county property taxes. Voters rejected these proposals, one to bailout an long-failing library system and the other to fund a $72 million expansion of Northampton Community College, by a 62 to 38% margin.

A library tax referendum also appeared on neighboring Pike County's ballot where taxpayers denied the tax increase by a sweeping 77 to 23% margin.

This taxpayer victory highlights the benefits an Initiative and Referendum process can bring to state and local government. By letting citizens, not spendthrift bureaucrats, decide which projects they deem worthy of their hard-earned tax dollars, perhaps we can bring some fiscal sanity back to the Keystone State.

Newspapers Endorse Pennsylvania Liquor Store Privatization

Commonwealth Foundation — Fri, 06 Nov 2009 10:32:00 EST

Following our report showing that moving from state-run liquor stores to licensure has little impact on alcohol consumption, underage drinking, and DUI rates, Pennsylvania papers are again joining the call for liquor store privatization.

On Thursday, the Patriot News editorialized that

Our legislators need to act. As the Commonwealth Foundation study said so well: "Evidence from 48 states over time shows no link between market controls and these social goals.
Divestiture of Pennsylvania’s state liquor stores would represent a financial windfall to the state, while posing no threat to public safety, as it would not result in the social ills many opponents of privatization fear."

It is no longer 1933. It is time for the state to get out of the liquor control business.

Today, the Pittsburgh Tribune Review also endorsed privatization:

"Government-Run Liquor Stores: The Social Impact of Privatization" (available at CommonwealthFoundation.org) says privatizing sales lowers per-capita consumption and DUI-related fatality rates and doesn't increase underage drinking....
Yet those advantaged by the status quo -- Harrisburg politicians beholden to unionized state store employees and turf-guarding beer distributors -- cite that bogus nanny-state rationale to deny this budget-challenged state and its beleaguered taxpayers and consumers that huge windfall.

It's past time that Harrisburg put the public's interests first by getting out of the alcohol business -- a business that the state never had any business being in.

Of course, some bloggers have suggested this is all part of a vast, right-wing conspiracy, noting that Richard Mellon Scaife owns the Tribune Review, and his foundation gives to the Commonwealth Foundation (though the attack-bloggers double count those contributions). Apparently, we have also brainwashed the Patriot News editorial board.

That is the same demagoguery on display by the unions.

Wendell Young, president of Local 1776 of the United Food and Commercial Workers, which represents 3,000 state liquor store employees, said he is not surprised that the foundation funds a study that is going after the state store system as a way for businesses to make more money. He describes the foundation as a "right-wing, pro-business group."

When you can't argue with the facts, you have to resort to ad-hominem attacks.

Bonusgate Developments and Senate Reforms

Commonwealth Foundation — Fri, 06 Nov 2009 08:39:00 EST

Tom Barnes of the Post-Gazette notes that the Pennsylvania Senate is outlining a number of new rules, largely related to legislative staff and taxpayer dollars being used to support political campaigns. A lot of the rules would forbid things that are already illegal, but the reforms would prevent legislative staffers from campaigning on "Senate time", using Senate resources for campaign, or serving as a "campaign officer" for a senate candidate.

In completely unrelated news, Todd Nyquist, chief of staff to President Pro-Tem Joe Scarnati - after taking leaves to work on campaigns for Joan Orie Melvin, and senate races for Bob Mensch and Dave Argall this year - is joining former Senate staffer Mike Long's political consulting and lobbying firm. According to Capitolwire, Nyquist will continue to run the Senate Republican Campaign Committee, while also helping Long on the lobbying end, representing interests like the Turnpike Commission and PennFuture.

There is also speculation of more developments in the on-going "bonusgate" investigation. The Post-Gazette suggest former Speaker of the House John Perzel may be indicted, and there is a buzz after former lawmaker Brett Feese resigned his position as counsel (where he was the highest paid legislative employee), given that Feese was considered a central figure in the bonusgate investigation.

V and American Politics

Commonwealth Foundation — Thu, 05 Nov 2009 11:20:00 EST

While attending a conference in North Carolina, and staying in the same room Yogi Berra did (though not on the same night), Joe Sterns and I caught the premier of the TV Series "V". We also caught a bit of the 1983 V mini-series on SyFy; we were both big fans, though Matt Brouillette was unimpressed with the acting and effects.

The connections with contemporary politics - and particularly Barack Obama and his administration - were pretty obvious. The aliens/"visitors" come and provide "hope" to the world, with almost a messianic adoration by many. The visitors refuse to give the media access if they don't offer positive coverage. And the visitors promise "universal health care" (though they actually mean healing the sick with their superior technology, rather than a low-quality insurance plan).

Of course, V (at least the original), is rooted more directly in historical Fascism, especially borrowing from the Nazis. They symbols used bear resemblance to the swastika, they have an intense youth recruiting program, and they engage in mass murder.

This is my major problem with V - at least as allegory. (The same is true of another of my favorite movies, also with V in the title, V for Vendetta). What if the aliens weren't lizards? What if they weren't trying to capture humans to use for meat? What if they weren't quite so evil - or even simply well-intentioned? (What if the government of V for Vendetta hadn't murdered hundreds of thousands of citizens?) Would the resistance be as clearly heroic, and the visitors so clearly villains?

That is, would the audience identify as clearly with the freedom fighters if the aliens were just run-of-the-mill Fascists?

Guide to Pelosi-Care

Commonwealth Foundation — Thu, 05 Nov 2009 09:06:00 EST

The Heritage Foundation has some resources on the latest health care bill being pushed by US House Democrats, including a summary of the legislation, and the full text of the bill.

The Wall Street Journal also has a side-by-side comparison of the various health care reform plans. You can view our guide to national health care reform here - it does not include analysis of the latest bill, but the ideas have not really changed at all.

SEPTA Union Doesn't Represent "The Working Class"

Commonwealth Foundation — Wed, 04 Nov 2009 12:05:00 EST

About 5,100 union workers for SEPTA went on strike early Tuesday, leaving 450,000 people to find new ways to travel. The union is demanding a 4% raise and an increase in their pension's contributions.

The union President, Willie Brown, said "I hope the public understands this is not only a fight for us, it's a fight for working class people." However, it is doubtful the "working class" who awoke yesterday morning unable to get to work because no warning was given before the strike, would agree. The average SEPTA union employee earns $52,000 per year, over a quarter more than the average annual salary for all Philadelphia workers.

Lower income workers who have no other means of transportation are effected worse by these strikes. Union picketers were compounding the already bad situation this morning by blocking bus stations that were still operating.

SEPTA is expecting to have a $120 million deficit next year, and the pension plan is already unaffordable for taxpayers. The increased salaries the union workers desire come largely off of taxpayer's back. Economists have shown widespread unionization slows down the recovery of the economy and decreases the number of jobs available. With Philadelphia's unemployment rate 5.8% higher than the national average, SEPTA employees need a reality check.

Lies, More Lies, and Statistics

Commonwealth Foundation — Wed, 04 Nov 2009 09:40:00 EST

On Oct 10, Pennsylvania released a preliminary report on received ARRA (i.e. "simulus") funds. The study concluded that "$262,592,907.68 has been spent to date and 1,408 direct full-time equivalent jobs have been created or retained." According to these figures, each job cost $186,501.

This report was not official because recipients of ARRA funds can adjust their reports between October 11 and October 29.

The federal government also provided updated data on stimulus funds on Oct 30, which claims Pennsylvania received $428,596,62 to create a total of 7,427 jobs. According to these figures, each job cost $57,708.

The vast discrepancy between the preliminary Pennsylvania figures and the Federal figures is odd at least. How did these numbers change so much during the late and revisionary periods? Perhaps these questions are moot points, but they should at least remind of us of the dangers of statistics.

It is appropriate to invoke the cautionary adage first spoken by the late British Prime Minister Benjamin Disraeli, "there are lies, damned lies, and statistics."

To learn more about unscrupulous statistics and government transparency, visit ATR's Center for Fiscal Accountability.

PA Homeowners Come Second To Horse Racing Industry

Commonwealth Foundation — Tue, 03 Nov 2009 13:58:00 EST

The Pennsylvania Legislature's willingness to succumb to special interests has been well documented by the Commonwealth Foundation, but the amount of attention given to the horse racing industry is fascinating. In fact, no other state gives more money to the horse racing industry than Pennsylvania.

Lawmakers decided in October to trim 2% off the 12% gaming tax that was going toward horse racing. But even with that minor deduction, the horse racing industry will rake in more than $200 million in state subsidies.

The Pennsylvania public, however, was made to believe that gaming revenue would go to property tax relief. The Taxpayer Relief Act of 2006 was sold on the premise it would ease the financial burden of home ownership through funding provided by gaming revenue (though fund for horse racing and "economic development" were always part of the plan).

The promised property tax reductions, though, have not materialized. While the administration estimated $1 billion in annual property tax reductions, the actual amount in 2008-09 and for 2009-10 was around $600 million each year. By contrast, promises to the horse industry have been kept, with the Pennsylvania Race Horse Development Fund receiving $210 million in the 2008-09 fiscal year.

Government should not be in the business of propping up failing businesses such as the horse racing industry. This is especially true when Pennsylvania taxpayers are denied promised payments during a recession in favor of special interests.

Transparency and Performance in Government

Commonwealth Foundation — Tue, 03 Nov 2009 12:12:00 EST

The Mercatus Center has a new working paper on the importance of government transparency. Authors Jerry Brito and Drew Perrault argue that, "Transparency is a means to an end and that end is accountability". The paper discusses how transparency can improve government on two fronts.

First, transparency naturally deters corruption by addressing the principal-agent problem. In other words, as investors are required to be informed about the true state of a venture in which they invest, taxpayers are entitled to be informed about the true state of the government they fund. You can't keep government accountable if you don't know what it's up to.

Secondly, governments can use transparency to improve efficiency, like for-profit business, by placing pressure on employees to exert themselves. But transparency isn't a panacea - competition is by far the most powerful solution.

Most importantly they stress that government transparency cannot be voluntary and exceptions must be few and far between. They also acknowledge the limits of transparency, namely sensitive information and the public' s apathy, but overall placing the burden of proof on governments will lead to better performance.

Several bills in PA legislature HB 1460 and 1461, HB 1264, and SB 105 would greatly improve transparency through a pubic database listing state expenditures. On the national level the rush to pass health care and cap and trade has produced a "read the bill" resolution designed to foster transparency in the legislative process.

Read full paper on Transparency and Performance in Government.

Pennsylvania's October Revenues Fall Short

Commonwealth Foundation — Tue, 03 Nov 2009 08:11:00 EST

The Pennsylvania Department of Revenue released October revenue collections. Once again, the numbers fell short of projections - the state is now $160 short of estimate for the fiscal year.

The tax collections were slightly higher than last year (note that $1.8 billion was "non-tax revenue", i.e. transfers from the Rainy Day Fund and other funds).

Prognosis - things are looking more and more like another budget shortfall.

Historical Budget Shortfalls: Projected vs. Actual Revenues (Monthly)
(in millions of dollars)
	2008-09			2009-10
	Actual	Difference	Percent	Actual	Difference	Percent
July	$1,746.20	($0.08)	0.00%	$1,650.89	($2.11)	-0.13%
August	$1,668.90	($117.50)	-6.58%	$1,605.50	($19.90)	-1.22%
September	$2,343.70	($163.80)	-6.53%	$2,050.50	($118.60)	-5.47%
October*	$1,649.00	($283.40)	-14.67%	$3,514.80	($19.50)	-0.55%
November	$1,640.90	($93.10)	-5.37%
December	$2,109.00	($156.63)	-6.91%
January	$2,173.80	($261.74)	-10.75%
February	$1,502.20	($196.95)	-11.59%
March	$3,873.30	($336.09)	-7.98%
April	$2,952.00	($942.50)	-24.20%
May	$1,613.30	($287.50)	-15.13%
June	$2,300.00	($415.00)	-15.29%
FY Total	$25,572.30	($3,254.29)	-11.29%	$8,821.69	($160.11)	-1.81%

* $1.8 billion in non-tax revenue in 2009-10

Rendell Teaches Obama How to Create Phony Jobs

Commonwealth Foundation — Mon, 02 Nov 2009 17:00:00 EST

A report released on Friday by the Pennsylvania Department of General Services shows 7,400 jobs have been either created or retained(Capitolwire Subscription) in Pennsylvania using federal stimulus dollars. Jim Creedon, the state's chief implementation officer for the stimulus funds, calls this estimate “conservative" because it accounts only for the amount of work completed.

Meanwhile, John Lott reports some fishy stories where one employer reported creating 4,231 jobs, although 3,000 of those workers were paid for five weeks or less.

The reports are reminiscent of Ed Rendell's economic development announcements with inflated job numbers and fabricated information. For example, Keystone Opportunity Zone (KOZ) participants provide little, if any, job creation or capital investment in return for the tax exemptions and investments they receive. In fact, some 75% of reported participants didn't create any jobs. Yet Rendell, is adamant that KOZ is an "important tool to attract and retain companies and the jobs they provide."

The White House is using the same fuzzy math with the same pitiful results. Despite all of PA's "economic development" spending, we continue to lag behind in job growth and state economic rankings. Likewise, the stimulus has done little to improve the national economy- including slowing unemployment rates.

Turnpike Drama Continues

Commonwealth Foundation — Mon, 02 Nov 2009 12:00:00 EST

Turnpike Officials have admitted that a grand jury has been investigating the commission for at least five months. Although this investigation is separate from the shady dealings surrounding the Valley Forge expansion- for which the commission voluntarily requested the help of the FBI.

Brad Bumsted has more details and Reason comments on the Commission's poorly conceived deny-and-then-confirm PR game--further undermining their next to non-existent credibility.

How Valuable is I-80 Tolling?

Commonwealth Foundation — Mon, 02 Nov 2009 08:21:00 EST

When the Federal Highway Administration rejected the Pennsylvania Turnpike Commission's proposal to toll I-80, one of the numerous reasons was there had been no market valuation of the sweetheart deal - i.e. the Turnpike Commission promised to pay exactly what legislators wanted to get in new revenue.

So, to prepare for another application to the feds, the Turnpike Commission submitted an after-the-fact study showing that, yes, their plan was perfectly within reason.

But surely there is no reason to question that study is there. I'm sure it was done by a company with a long history of evaluating transportation projects or other major assets, not by a company that has no experience in that area until they took the Turnpike Commission's check. Right?

Size Isn't Everything

Commonwealth Foundation — Sun, 01 Nov 2009 16:00:00 EST

Sen. Dave Argall has introduced another attempt to reduce the size of Pennsylvania's General Assembly.

Pennsylvania is ranked 2nd in the nation for largest state legislator size (totaling 253); 4th in the nation for highest paid legislators ($76,000, base pay per year), and 1st for most expensive operating legislature in the nation.

The proposed bill would eliminate 5 positions in the Senate and 50 positions in the House by 2053. Similar bills to reduce legislators' size have failed to gain support in the past, but Sen. Argall has also proposed extending House term limits from two to four years to gain endorsement.

Advocates for reducing the size of the General Assembly say it will save millions in the Legislature's operating costs. As we've repeated time and time again it is unlikely that minimizing the legislature's size without other reforms will affect Harrisburg's spending problem. Studies have shown it is a state's number of legislative staff that really drives the costs up. Pennsylvania is ranked 2nd in the nation in this area, with over 11.6 staff members per legislator.

States with larger staff sizes per legislature spend more per capita; have higher tax burdens, and less economic freedom. Any reduction in the size of legislature must be coupled with additional reforms, such as limited sessions and limited terms.

Spending Limits: Not Special Exemptions

Commonwealth Foundation — Fri, 30 Oct 2009 17:00:00 EST

Yesterday, Republican state Rep. Sam Rohrer of Berks County introduced legislation to help local governments cope with declining revenues, ever-increasing amounts of regulation and new programs from the state. The Emergency Mandate Suspension Act would allow municipalities, school districts, and counties to temporarily ignore unfunded mandates from the state -- including programs where the state has missed two consecutive payments to the local entity.

"Essentially, if there is no money, there will be no mandate," Rohrer said. "Local authorities would be given the option to opt out of expensive unfunded mandates. This is the fastest and most direct way that we can help school districts, local governments and the taxpayers who must fund them." HT: Capitolwire (Subscription)

While the proposal may prevent local tax hikes, it fails to address the underlying issue: out-of-control state spending and mandates. The Taxpayers Protection Act (TPA) would create a strong disincentive for the General Assembly to reduce funding for existing municipal mandates, and to enact new ones. The TPA proposes to cap annual spending growth from the state's General Fund at the lesser of: 1) the average rate of personal income growth for the preceding three years; or 2) the combined rates of inflation and population growth for the three preceding years. Also, under TPA, any cuts in funding for municipal mandates would result in commensurate reductions to the state spending limit.

Spending limits are highly correlated with strong economies; in fact, taxpayers in Maine and Washington State will vote on their own versions of spending limits next week.

Mandatory Minimum Sentences Increase Costs

Commonwealth Foundation — Fri, 30 Oct 2009 15:00:00 EST

A study by the Pennsylvania Commission on Sentencing found that mandatory minimum sentences increase the cost of the corrections system without decreasing crime. Corrections costs are already a major source of red ink for the Commonwealth. In 2007, one in 28 adults in Pennsylvania was in prison, on probation or on parole, costing the state more than $1.8 billion.

In Pennsylvania, more than 1,000 people received drug-related mandatory-minimum sentences in 2007, up from 384 a decade earlier. Pennsylvania lawmakers recently approved a $175.2 million increase in corrections spending, and the state will soon have four new prisons to house an inmate population that is growing by about 2,000 people every year.

There are alternatives to incarceration. We've advocated mandatory probation, treatment, and work requirements for first-time drug offenders caught with small quantities of drugs for personal use. With 49,000 inmates at $33,000 a year, redirecting first-time offenders could save Pennsylvania taxpayers millions in incarceration costs.