The Leaders of the Pennsylvania General Assembly have a unique perspective and experience with all aspects of government. events over the past year, along with the morass of the budget process, have exposed some areas in desperate need of reform.
PACB sat down with these Legislative Leaders and posed the question, “What is your top legislative priority to move Pennsylvania forward in 2016?”
Representative Mike Turzai
Speaker of the House
The number one priority this year for Pennsylvania families and workers is to create the most business–friendly Commonwealth possible.
Pennsylvania can make a choice: Do we want to be number one in taxation or would we rather lead the nation in family-sustaining job growth?
This should be a rhetorical question, but as you know, Gov. Wolf has demanded massive, broad-based tax increases on everything from bank shares tax to personal income tax and corporate net income tax among others.
The Independent Fiscal Office (IFO) released an analysis of Gov. Wolf’s tax proposal and concluded taxpayers in every income bracket will see a net tax increase.
This is simply not a vision that will retain and attract new businesses, investors and most importantly people who want to live and work in Pennsylvania and statistics prove it.
Pennsylvania ranks 39 out of 50 when it comes to WalletHub’s “Best and Worst States to Be a Taxpayer,” and 39th in economic performance in the “Rich States, Poor States” competitiveness rankings.
Clearly, we cannot improve our economy with more taxes.
By contrast, House Republicans placed an on-time, fiscally responsible budget with no tax increases on Gov. Wolf’s desk along with substantive public pension reform that addresses unsustainable cost drivers and increased revenue drivers without raising taxes on families and businesses.
He fully vetoed each.
Subsequently, we passed two more fiscally responsible budgets that rejected tax increases – one Wolf fully vetoed and the other he signed nearly 90 percent of the General Appropriations bill into law on December 29.
Yet, the governor continues to demand more tax increases.
We must continue to fight this archaic approach to governing.
The recent Capital Stock and Franchise Tax phase out stands as a great case study.
Pennsylvania was one of only two states that taxed both business earnings and assets regardless of profitability.
Because the CSFT was levied on business assets, it discouraged growth and expansion. Under existing law, the tax was scheduled to reach a rate of zero and be repealed on January 1, 2016.
Interestingly, Gov. Wolf said the CSFT an “unfair tax on business,” as he simultaneously campaigned to increase bank shares tax while picking tax winners and losers among other business sectors.
Let me be perfectly clear: There is no reason to revisit bank shares tax just as there was no reason to interfere with the CSFT phase out.
Instead, we must pass the most important issue in front of us – public sector pension reform.
In the budgets we passed, spending on contributions to the public pension systems for the state teachers and state employees went from $2.6 billion out of a $29 billion dollar budget to $3.2 billion in a $30 billion budget.
That number continues to rise.
As you know, the private sector moved into 401k type plans since the mid 1990’s. For the public sector, it’s not a question of if, it’s a question of when.
When we do so, Pennsylvania becomes a much more business-friendly state.
Representative Frank Dermody
House Democratic Leader
Budget remains top issue for House Democrats
The top issue this year continues to be achieving a sustainable and balanced budget so that Pennsylvania does not relive a prolonged budget impasse year after year.
The budget impasse of 2015 (now extending into 2016) was caused by a fundamental difference in approach to governing. There are some who believe Pennsylvania can continue to fund schools, provide essential services and operate the government using a mix of one-time revenue generators and accounting gimmicks to cover ever-rising costs.
Community bankers know that’s no way to manage a complex financial puzzle, and House Democrats believe the past five years are a convincing proof that deficit budgeting is unwise.
In 2015 Governor Wolf put forward a plan to fix the structural budget deficit while restoring adequate funding for schools, human services, and job-creation efforts, and balancing future budgets with sustainable, predictable revenues that grow with the economy.
Failure to put our state budget on the right path will mean even more hardship for people and communities in the future.
House Democrats will continue working for a responsible budget that’s truly balanced, a budget that will protect the state from arriving right back at the same crisis point in another year or two. That’s the kind of budget Pennsylvania needs.
Attack the budget deficit and thrive.
The state’s inability in recent years to ensure that revenues met expenditures in our state budgets led to multiple credit downgrades from the three main rating agencies. This is making it harder and more expensive for local governments and school districts to borrow and fund important services and projects.
The structural deficit and its consequences are putting Pennsylvania taxpayers at extreme risk. We must reduce that danger using sound budget practices moving forward.
Restore critical education funding.
Massive education funding cuts made five years ago disproportionately harmed poorer school districts. As a result Pennsylvania now has the biggest funding disparity among schools in the country.
This robs children and communities across the state of the access to quality education and important opportunities. And it inevitably leads to higher property taxes for homeowners and business property owners alike.
As part of passing a balanced budget, we want to begin to restore the money that schools lost in recent years. Our insistence on this is part of the reason the budget is not done yet. We are convinced it’s a fight worth having.
Tax gas drillers.
Pennsylvania’s natural gas industry is so well established that we are now the second-largest gas producer among states. Natural gas development should be responsible and well-regulated, and it should generate more revenue to benefit Pennsylvanians more fairly.
We want to replace the current impact fee which is based only on the number of wells drilled with a genuine severance tax like other states use, which would tax drillers by the volume of gas they produce and sell.
The lack of such a tax in Pennsylvania forces middle-income families and small businesses to pay more in taxes while the large, out-of-state drillers avoid paying their fair share. We hope to change this in 2016.
Pay working people more.
Thousands of full-time workers in Pennsylvania are trapped in poverty because of the state’s low minimum wage. That forces many families onto the state’s safety net programs and it holds back our state’s economy.
People who follow the rules and work hard shouldn’t have to live in poverty.
We support increasing the minimum wage in Pennsylvania to at least $10.10 an hour. This would help working people to lift themselves out of poverty, while also giving a needed boost to the state’s economy.
The Center for Economic and Policy Research found that the 13 states that increased their minimum wage in 2013 had stronger economic growth than the 37 that did not.
It’s time to get to work.
House Democrats will continue working to make Pennsylvania better. We believe that passing an honest budget, one that is balanced and begins to shrink the deficit, is the most important step to be taken.
Senator Joe Scarnati
Senate President Pro Tempore
Pension Reform: A Critical Part of Balancing PA’s Budget
As we begin looking towards the new fiscal year, it is clear that many issues from 2015-16 will remain at the forefront of discussions for fiscal year 2016-17. Pension reform and education funding will continue to be top priorities. The pension crisis has constantly been devouring state resources and driving up property taxes. It has become very apparent that in order to ensure enough funding is available for vital state programs, we must address the cost drivers that are causing a huge strain on the state budget.
Public employee pension systems were initially designed with the goal of balancing the retirement benefits of employees and interests of taxpayers. Unfortunately, economic conditions over the past several years have tipped the scales heavily against taxpayers. Restructuring the state’s public employee pension systems will restore balance, while also ensuring that employees are given a fair retirement plan for years to come. By bringing our state retirement system more in line with the 401-K style plans in the private sector, we will take a large step forward to help provide for budget stability.
With addressing cost drivers like pensions, we will be able to provide for many important priorities across all areas of our Commonwealth. In the Senate I have the privilege of serving as President Pro Tempore, while also proudly representing the largest geographical senatorial district across our Commonwealth. My constituents reside in a total of eight different counties across northwestern Pennsylvania. Each day, hardworking men and women from the 25th Senatorial District take time out of their busy lives to share with me their concerns and thoughts regarding our state government. Chief among their concerns are access to strong family sustaining jobs and good educational opportunities.
The concerns voiced by my constituents in rural Pennsylvania are very similar to those also shared by individuals from suburban and urban communities across our Commonwealth, such as increased cost effective post-secondary educational opportunities for students. One priority which will continue to be a focus of mine is the Rural Regional Community College. Groundwork for Pennsylvania’s Rural Regional Community College was initially launched in 2014, with the goal of offering two-year associate degrees, as well as training and certificate programs to underserved areas of the Commonwealth. With additional resources able to be focused towards educational opportunities, we will be ensuring that students have the necessary skills to meet the demand for new jobs.
As we approach a new budget one thing has become quite apparent – Pennsylvanians are tired of the stalemates and expect their elected officials to work together to reach agreements. It is clear that we have a divided government in Pennsylvania. Pennsylvanians elected a Democrat Governor, and elected strong Republican majorities in the House and Senate. While we have division, we all have one clear mandate – the people of Pennsylvania expect results. As we enter a new year, I look forward to working with my colleagues to deliver those results.
Senator Jay Costa
Senate Democratic Leader
Senate Democrats: Budget Investments Power Legislative Priorities
Pennsylvania finds itself in uncharted budget territory. We are in the uncomfortable and frustrating position of trying to repair the ills of the past while planning for the immediate future. The governor signed an emergency spending plan but those dollars will only go so far. The commonwealth is in budget limbo, suspended in a sphere of uncertainness.
Despite the current cloudy budget picture, Senate Democrats have clear vision for a brighter future and responsible legislative priorities for the upcoming year. This starts with the passage of a full, 12-month budget that invests in education, human services and job creation.
The job lawmakers were elected to do is unfinished. We had a five-party (governor, House and Senate majority and minority caucuses) budget framework agreement that would have put Pennsylvania back on a path to fiscal stability with sound investments in the future. Unfortunately, this framework was hijacked by a House majority that wants to do little or nothing. Political grandstanding trumped governing.
While there is no question that challenges are before us because we failed to deal with the past fiscal issues, we cannot turn a blind eye to the reality we now face: a $1.3 billion structural deficit that will balloon to more than $2.3 billion next year unless action is taken. Simply put, as we witnessed during the Corbett years, when we do not invest properly, we manage decline. That is a stark and unfortunate lesson learned over the last four years.
We are at a stalemate. Pennsylvania has divided government and needs a bridge to a solution. Many were shocked when House Republicans chose to pack up and go home for the holidays. While this political maneuver seemed like a plausible path for House majority bent on inaction, it meant that they abdicated their responsibilities. All are suffering because House Republicans failed to do their jobs.
Their action set the stage for Governor Tom Wolf to sign a spending plan that is significantly scaled back from the agreed upon framework. Importantly, while he used his line-item veto authority to set the stage for continued discussion, like minds must meet with a shared vision.
There is no question that there is work to do. We need to find sustainable ways to generate revenue and address the revenue shortfall. We have to properly fund schools, plug holes in the social safety net and foster the restoration of job-creation programs.
There are potential options to generate revenues to put Pennsylvania on firm financial ground, with any enhancement evaluated in the context of a general budget agreement. In the same vein, lawmakers should look to the energy industry and a responsible Marcellus Shale extraction tax to be part of the solution.
As we move toward a resolution of our current budget situation, Senate Democrats will remain committed to making strategic investments. Schools, human services, job-creation tools and services that reach our most vulnerable must be sustained.
We will continue to be centered on issues that positively impact the lives of those we serve. At the top of the list is overcoming the growing wage disparity that has helped drag down the middle class and fighting for an increase in the minimum wage. Attention also needs to be directed toward rectifying inequities in our unemployment compensation system and property tax relief via a reasonable plan like our PA Home Rebate – that offers up to $1,990 per homestead – and should be strongly considered.
Senate Democrats realize that dealing with municipal fiscal issues – such as municipal pension reform – are important to sustaining healthy communities. Meanwhile, the caucus will remain a force for the legalization of medical cannabis, providing hope and help to families in need.
Finally, our focus will remain fixed on health issues affecting women. Far too many women in Pennsylvania still do not have adequate access to screening and treatment to prevent and treat their health issues. With early detection and treatment, lives can be saved and hope offered. We can achieve results if there is a continued push for quality care for those in need.
Senate Democrats have a robust agenda that will improve Pennsylvania for years to come. We welcome partners among lawmakers from both parties and chambers as we continue to look to the future instead of repeating the past.
These exclusive editorials can be found featured in the February 2016 issue of Transactions. Not a subscriber? Visit the Transactions page on this website or call PACB at 717-231-7447 to start receiving the magazine.