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Labor Secretary Defends PA Jobs Climate

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Through three weeks of state budget hearings Senate Democratic Appropriations Chairman Vincent Hughes (D-Philadelphia) has repeatedly pointed out the fact that – for the first time in years – Pennsylvania’s unemployment rate is now worse than the national average.  So he took issue with Labor & Industry Secretary Julia Hearthway’s positive assessment of the state’s economy.  “How can you sit here and say – we were 8th in job creation, now we’re 34th in new job creation – that we’re going in the right direction?”

Hearthway was ready with her response.  On the job creation issue she notes that 42-states lost more jobs than Pennsylvania did during the recession, so some of them are now posting sharper increases simply because they have more ground to make up. 

As for the state’s persistently high unemployment rate, Hearthway cautioned that we can’t look at any of these figures in a vacuum.  “When you grow your labor force… you’re unemployment’s going to show higher,” she explained. 

Hearthway boasts of a state labor force that now stands at 6.56-million, breaking records in each of the past four months.  “That means individuals who have dropped out [of the labor force], not looking, are now looking again… it’s usually the first indicator of your economy coming back strong.” 

The latest numbers, for December 2012, show a 7.9% statewide unemployment rate.  A new jobs report may shed some more light on the situation.  It’s due out on Friday.

Liquor Board’s Balancing Act on Display at Budget Hearing

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As the battle lines are being drawn on Governor Tom Corbett’s liquor privatization plan, the legislative debate may come down to privatization vs. modernization.  But the issues can be mutually exclusive.  Peppered by repeated questions from the Senate Appropriations Committee, Liquor Control Board Chairman Joseph Brion said he is not personally opposed to privatization.  “I don’t think the state should be in the liquor business.  But – by the same token – we are in the liquor business.  So my attitude is – if we’re going to have a liquor business – make it the most profitable and best that you possibly can.” 

Others have suggested that modernizing the system now, will make it more valuable for possible privatization in the future. 

The Liquor Control Board transferred $530-million dollars to the state’s General Fund in the current fiscal year, but Monday’s testimony in the Senate hearing room indicated that more than 80% of the cash was generated by taxes, which would still be in place under a privatized system. 

Not lost on lawmakers weighing these difficult issues is the cost of enforcing the state’s liquor laws.  “Clearly if you’re going to have more licensees, you’re going to need more feet on the ground, and that’s okay, but we have to take that into contemplation when we review the legislation,” says state Rep. Scott Petri (R-Buck), a member of both the House Appropriations and Liquor Control committees.   

State Police Commissioner Frank Noonan, last week, estimated that his agency would need an additional $5-million dollars under a privatized liquor system.  Liquor Control Board officials have indicated that they’re regulatory costs total $38-million dollars today, but those are currently covered by the revenue they generate. 

Forthcoming legislation would appropriate $5-million more dollars for PSP’s Bureau of Liquor Enforcement and hike fines for liquor law violations.  House Majority Leader Mike Turzai’s latest bill is set to be introduced on March 4th.

Pennsylvania Finance Building

Bills Could Benefit PA’s College Savings Plans

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After receiving unanimous votes in the House Appropriations Committee the pair of bills awaits action on the Senate floor.  One would ensure that state tax benefits are only applied to state-sponsored college savings plans.  “Pennsylvania is one of just a few states that allows for tax credits for investments out of state,” says Senator Jake Corman (R-Centre), the prime sponsor. 

State Treasurer Rob McCord (D-PA) applauds the bipartisan effort.  “It will help current account holders by lowering fees.  It will help future account holders by making it crystal clear that they’ve got a best of breed program, top-ranked, Vanguard-provided, right here in Pennsylvania,” McCord explained in a telephone interview.    

Corman’s second bill would put the full faith and credit of the Commonwealth behind the state’s Guaranteed Savings Plan.  “I don’t think anyone here believes that if this program came under financial distress that we wouldn’t step in,” he said at this week’s Appropriations Committee meeting. 

Treasurer McCord supports this bill too, telling us the explicit guarantee would assure even the most cautious consumers and advisors.  But he adds that the GSP is extremely healthy.  “We’ve had record-breaking investment return rates under the McCord Treasury, I’m singularly proud of that.” 

Both bills (SB 1135 & SB 1090) could soon be called up for final Senate votes.  The timing seems right, as May 29th is “529 College Savings Day.”

Budget Bill Clears Committee, Awaits Senate Vote

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The $27.65-billion dollar state spending plan cleared the Appropriations Committee with a unanimous vote late Tuesday morning.  It would spend about a half-billion dollars more next year that what Governor Tom Corbett proposed in February.

Senate Appropriations Chairman Jake Corman (R-Center) cites a recent Independent Fiscal Office report in telling the committee that the budget bill reflects the revenues of today. 

“This has restorations to basic education, particularly in the area of early childhood education, with Pre-K Counts and Head Start restorations,” Corman explained.  “This also sees significant restorations to higher education, back to level funding from last year.” 

He says that the state-owned and state-related universities have agreed to hold tuition hikes at or below the rate of inflation if their funding is restored. 

Senate Democrats want to see even more of the proposed cuts restored, but backed the bill to move the process forward.  “Now that the dollars have come in we have a document in front of us that better represents the dollars that are available,” says minority Appropriations Chair Vincent Hughes (D-Philadelphia). 

The Corbett administration is encouraged by the recent trend in state revenue reports, but isn’t ready to commit to spending more money until they see exactly how much revenue will be available.  “We think it will be a little better than what our original projections were,” Corbett spokesman Kevin Harley told us by telephone.  “We’re hopeful that will continue to be the case in May and June.” 

The Senate budget bill is likely to be the document from which high-level budget negotiations can begin in earnest.

Capitol, State Capitol, Dome

Key Higher Ed. Budget Hearings set for Tuesday, Wednesday

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For the second straight year, proposed budget cuts in higher education are creating a stir under the capitol dome.  Senate Appropriations Chairman Jake Corman (R-Centre) referred to the state-related universities as the “state barely related universities,” as he lamented planned 30% cuts to Penn State, Pitt and Temple’s state support.  Corman’s Centre County district includes the Penn State University Park campus. 

Using Penn State as an example, the governor’s office will tell you that the planned spending reductions only amount to 1.5% of its overall budget.  Corman, however, turns those numbers around and points out that the state’s share of PSU’s overall budget would only be 3.8% next year. 

In a direct line of questioning with Education Secretary Ron Tomalis, Monday, Appropriations Committee member John Rafferty (R-Montgomery) asked if there’s an effort to privatize the state-related universities.  “No sir, there is not,” Tomalis replied.  “A lot of these decisions, as you know, are budget-driven decisions.” 

The three major state-related universities would see 30% cuts in state support under the governor’s budget plan.  The State System of Higher Education would receive 20% cuts, and community colleges’ state funding would be reduced by roughly 4%.  Governor Tom Corbett recently addressed the issue on Radio PA’s Ask the Governor program.     

Jake Corman

State Sen. Jake Corman

“If we truly want these to continue to be public universities, then I look forward – at the state-related level, at the state system level and at the community college level – to restoring all of these cuts,” Corman said at Monday’s hearing, which focused on the State Department of Education. 

On Tuesday afternoon, the State System of Higher Education will sit down with the Senate Appropriations Committee.  Then, the committee has carved out all day Wednesday to meet individually with the four state-related universities.

PSP Commissioner Addresses Vacancies, Cadet Class

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The governor’s proposed budget includes $8-million dollars to pay for 115 new State Police cadets.  Even with the new troopers, PSP faces a projected 500 vacancies by the end of June 2013.  At Thursday’s Senate Appropriations Committee, Tina Tartaglione (D-Phila.) asked PSP Commissioner Frank Noonan if he is worried they are being spread too thin.  “I am concerned,” Noonan responded.  “But I do believe we will be able to fulfill our mission.  We will fulfill our mission.”

While attrition is eating away at their compliment, Noonan stressed to lawmakers that his top priority is putting troopers on the road, which means PSP’s ever-growing list of auxiliary duties may bear the brunt of staff shortages. 

Frank Noonan

State Police Commissioner Frank Noonan

“These numbers, and as the numbers go down, it’s going to require us to do some things that are going to be individually sometimes unpopular,” Noonan said.  “We may be thinking of station consolidations.”   But Noonan told the panel that a thorough review would be conducted before any decisions are made. 

Per Governor Tom Corbett’s request, Noonan is leading a comprehensive review of all PSP operations to ensure that resources are being used effectively.  Aside from the new cadet class, PSP is slated for a zero-growth budget that must address nearly $29-million dollars in increased pension and health care costs.

Pennsylvania Finance Building

Budget Hearings: Straight Talk from the Auditor General

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Continued budget cuts could cost the state’s independent fiscal watchdog its bite.  Under next year’s proposed spending plan, the Auditor General’s Office is slated for a $2.2-million dollar (or 5%) cut.  It would make it an aggregate 25% cut over the past four years, according to Auditor General Jack Wagner. 

“I’m not complaining.  We realize that there had to be substantial cuts in state government across the board.  But, yes, we are at the bone,” Wagner told the Senate Appropriations Committee on Wednesday.

Jack Wagner

Auditor General Jack Wagner

Wagner’s office conducts 4 – 5,000 audits a year, which have pointed out billions of dollars in wasteful state spending.  Now, he’s warning lawmakers that it’s becoming difficult to fulfill the mandates of the office.  “I’m not going to be here for this next budget – for half of it – but in the process you are harming information flowing, or audits flowing, that help you make decisions.” 

Due to term limits, 2012 will be Wagner’s final year as Auditor General.  The Democrat received bipartisan praise from members of the Appropriations Committee throughout the hearing.  “Whether it was a Republican administration or Democratic administration, I think you were on the side of the taxpayers,” said Chairman Jake Corman (R-Centre).

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Budget Secretary Speaks of the ‘New Normal’

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Virtually no line item will be left unturned as the Senate and House Appropriations Committees convene dozens of budget hearings over the next three weeks.  Leading off the agenda was Budget Secretary Charles Zogby, who told the Senate Appropriations Committee that the $27.14-billion dollar, no tax increase budget plan is reflective of the ‘new normal.’ 

“We have constrained revenue growth,” Zogby explained.  “We’re seeing less revenue growth coming out of this great recession than we’ve seen in any recovery in recent time.” 

The governor’s new budget is built on estimated revenue growth of 3.8% next year.  “While some may regard it as optimistic, it’s certainly trending below what have been historical trends,” says Zogby, who points out that a robust recovery is usually accompanied by 6 or 6.5% revenue growth. 

While the budget secretary was reminding the panel about this ‘new normal,’ Democrats were reminding him that there are real people behind every one of the line items.  “You’re cutting the budget at the state level,” State Senator Jim Ferlo (D-Allegheny) said.  “You’ve fulfilled your ideological, dogmatic role that you’ve been elected to serve.  But what is the impact, what is the analysis of what those cuts mean back at the local level?”

Keeping government costs under control will allow the private sector to create jobs, according to Governor Tom Corbett, who’s been making a series of stops at Pennsylvania companies to tout his budget plan.  “Government doesn’t grow the economy, the private sector grows the economy,” Corbett said during Monday’s stop at a York County manufacturing plant. 

Governor Tom Corbett

Gov. Corbett discussed the state budget, Monday, at Johnson Controls in York.

State Capitol Facing North Office Building

Appropriations Hearings to Start on Monday

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Four weeks of budget hearings commence on Monday when the state Senate Appropriations Committee sits down with the Governor’s Budget Office, Independent Fiscal Office and State Treasury for three separate hearings in their North Office Building hearing room. 

The $27.14-billion dollar no-tax increase budget has been generating plenty of buzz around the state capitol complex, and plenty of rhetoric too.  “If you are on the low rung of the economic ladder in Pennsylvania, this governor has his foot on your neck,” exclaimed Senate Democratic Appropriations Chair Vincent Hughes, who’s sure to scrutinize the public welfare spending plan. 

Between mandatory increases in welfare spending and aggressive cost-containment measures, the Department of Public Welfare budget received a net $30-million dollar cut in proposed budget.  “We need to make sure we take care of the neediest of citizens and reform is necessary to do that,” says Commonwealth Foundation President & CEO Matthew Brouillette, a supporter of the Corbett budget. 

The Department of Public Welfare will get its first budget hearing before the Senate on February 28th.  The House DPW Appropriations hearing is scheduled for March 7th. 

Governor Tom Corbett continues to make appearances throughout the state to plug his budget plan.  “This is a very difficult time, I understand that,” Corbett said during Thursday’s stop at a Lancaster County manufacturing facility.  “But we have to start living within our means so that companies and the people can start saving and growing, and getting new jobs.” 

National Federation of Independent Business state director Kevin Shivers tells us the small business community is buoyed by the stability that the Corbett administration brings to the state budget process.  “It’s an important message that government is no longer going to spend at a prolific rate and then hand the tax bill to small employers and other taxpayers in the state.”

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Amended Budget Goes to Full Senate

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    Senate Republicans unveiled the latest version of the FY2012 state budget late Monday during a Senate Appropriations Committee meeting in Harrisburg. The measure passed 16-10 along party lines. The $27.148 billion spending plan also has the approval of Governor Tom Corbett and House Republicans, who signed off on it during closed-door budget talks.

    The budget restores hundreds of millions of dollars in education spending cuts, but Democrats say it’s not enough. Democratic members of the Senate Appropriations Committee tried unsuccessfully to restore or increase funding to several line items through amendments that attempted to bolster human services, AIDS funding, the now-defunct AdultBasic health plan, the arts and tourism, among others. Each amendment failed by the same 16-10 party line vote.

    Senate Appropriations Chairman Jake Corman (R-Centre) says this budget proposal spends responsibly while respecting the billions of dollars in debt the Commonwealth is now carrying.

    The budget bill is expected to go to the full Senate today.