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State Capitol

Lawmakers Mull Expanded Education Tax Credit

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Potential education reforms are being debated under the capitol dome ahead of Saturday’s state budget deadline.  One of them would expand the state’s Educational Improvement Tax Credit (EITC) program with a sub-program that targets low-income families in the state’s worst performing schools.  It was characterized at Monday’s House Education Committee hearing as “EITC 2.0.”

While the existing EITC program has long enjoyed bipartisan support, critics are characterizing the proposed expansion as a school vouchers program.  “85% – 90% of the kids who would get those vouchers are already in private schools,” says minority education chairman James Roebuck (D-Philadelphia).  “It’s not a means to get kids out of so-called failing public schools… it’s a subsidy to private education.” 

But the bill’s prime sponsor says it’s irresponsible to characterize his effort as school vouchers.  “Despite the fact that the student leaves to go to another school, their state, local and federal dollars remain in that classroom – thus elevating significantly the per-pupil spend of those classrooms they are leaving,” explains state Rep. Jim Christiana (R-Beaver).  He tells the House Education Committee the scholarships would be funded by businesses that choose to participate in the tax credit program.

The Pennsylvania School Boards Association (PSBA) opposes the bill, because they say it would siphon valuable dollars from the General Fund at a time when school districts are struggling.

While it appears the push is on to pass an expanded EITC along with the state budget, Republican chairman Paul Clymer (R-Bucks) characterized the bill as a work-in-progress.

Negotiators Agree to Budget Framework, Tax Credit

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Governor Tom Corbett has repeatedly said that June 30th means something to him.  With Wednesday night’s announcement that he and top Republican lawmakers have agreed to a $27.656-billion dollar budget framework, it appears that Pennsylvania is on pace to meet a second consecutive budget deadline.

Neither Corbett nor the legislative leaders were willing to discuss the details, as rank-and-file lawmakers are still being briefed on the specifics and a few details are still being finalized.  However, $27.656-billion is the same spend number the state Senate used when it passed a budget bill in May.

One of the Senate’s top priorities at the time was the restoration of proposed 20% cuts to the State System of Higher Education and proposed 30% cuts to the three big state-related universities (Penn State, Pitt and Temple).  The planned restorations came with a promise from those universities to keep next year’s tuition increases below the Consumer Price Index.  Whether these restorations made it into the final deal has yet to be confirmed.

We do know that 40.3% of the budget is comprised of education spending and 38.9% is spent on social services.  So, any movement in the spending plan – either up or down – will likely come from those two categories.

In addition to the budget framework, negotiators have confirmed agreement on an ethane tax credit that’s designed to lure a massive new petrochemical plant to western Pennsylvania.  “We are investing I believe… in a new industrial revolution in Pennsylvania,” Governor Corbett said earlier on Wednesday.  “We are investing in the opportunity for thousands of Pennsylvanians to have a good job.”

The American Chemistry Council estimates 10,000 construction jobs, 400 direct plant jobs in 17,000 spinoff jobs in chemical and manufacturing industries if the proposed Shell Oil petrochemical plant comes to fruition in Pennsylvania.

While Corbett was joined at the capitol by a large & diverse group of tax credit supporters, critics are wary of giving taxpayer money away to big industry.  One of those critics is state Rep. Jesse White (D-Washington).  He’s already proposed an alternative that would fund the incentives through a surcharge on Pennsylvania’s natural gas wells.  “We should not be socializing costs while privatizing profits,” White said in a statement this week.

State Capitol Facing North Office Building

PA’s Pension Woes Not Unique

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Wisconsin is the only state with a fully-funded public pension system, according to a new report from the Pew Center on the States.  “Overall the 50-states have a $1.38-trillion dollar funding gap between what they should have set aside to pay for their retirement promises – both pensions and retiree health care – and what they actually have on hand,” explains Pew Center senior researcher David Draine.

Draine tells Radio PA the economic downturn has definitely hurt state pension plans, but the problem has also been decades in the making.  “Lawmakers in states like Pennsylvania and others failed to make the recommended contributions both in good times and bad.”

The current state budget includes $1.1-billion dollars in pension obligations.  That number is expected to nearly quadruple to $4-billion dollars by 2016, and Governor Tom Corbett is making pension reform a top post-budget priority.

“We’ve got to get pension reform done… the vast majority of the money that the school districts say they need is to go to the teachers’ pensions.  That’s where it’s going,” Corbett said at an unrelated news conference last week.

Republican leaders in the Senate appear ready to move on legislation that would move all new hires to a 401K-style defined contribution pension plan.  “It is overdue for Pennsylvania state government to move in that direction,” says spokesman Erik Arneson.  Numerous pension-related bills have been introduced in the state House as well.

A 2010 law increased employee contributions, raised the retirement age to 65 and extended the vesting requirement to ten years for all new hires.  Draine says that will slow the growth of Pennsylvania’s unfunded pension liability, but will not solve the problem.

Advocates Fight to Save Cash Assistance Program

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On the chopping block this budget season is the cash portion of the state’s General Assistance program in the Department of Public Welfare.  The $150-millon dollar effort provides more than 60,000 recipients with monthly checks of around $200-dollars.

Those recipients most often include the disabled, sick and those fleeing domestic violence.  “General Assistance is the last knot of the safety net… many of those are persons who have no other means of support,” says Stephen Drachler, executive director of United Methodist Advocacy in Pennsylvania.

Numerous faith-based groups recently joined a diverse, statewide coalition to write the General Assembly in hopes of saving the welfare program.

Housing advocates are even adding their voices to the chorus.  Housing Alliance of Pennsylvania executive director Liz Hersh says General Assistance is typically used for basic living expenses and homeless shelters are already stressed.  She fears more people would wind up on the streets.

“As taxpayers, while it may be unpalatable to have a program like General Assistance, it actually saves us money,” says Hersh, noting that the aid actually keeps people out of more costly public programs.

The governor’s 1,000+ page executive budget (released in February) notes that eliminating the cash portion of General Assistance will allow the DPW to maintain health care for individuals who do not qualify for Temporary Assistance to Needy Families or Medicaid.

Governor Tom Corbett’s spokesman Kevin Harley tells Radio PA that federal programs will be there to assist the truly needy.  “The state program was always above and beyond what the federal government provided, and many states have eliminated or drastically cut back similar programs because of difficult budget situations.”

Like the governor’s budget plan, the Senate budget bill does not include funding for the cash portion of General Assistance.  “There is competition for limited resources,” noted Senate Majority Leader Dominic Pileggi whilie meeting with capitol reporters late last month.

But advocates say there is room for compromise, as they seek to preserve General Assistance for those most in need.

Governor Tom Corbett and top Republican lawmakers continue to negotiate next year’s state spending plan.  The final budget is expected to spend more than the $27.1-billion proposed by Corbett in February, but less than the $27.7-billion passed by the Senate in May.

Capitol, State Capitol, Dome

Top Republicans to Meet with Governor Tom Corbett

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As the 2012 budget season prepares to enter the final stretch run, top Republican leaders from the state House and Senate were planning to meet with Governor Tom Corbett on Tuesday to present their negotiated budget package.

The state Senate passed a general fund budget last month that spends about a half-billion dollars more than the governor’s original proposal, which was unveiled in February. Senate Majority Leader Dominic Pileggi says the two chambers have ironed out “about 90%” of their differences in preparation for talks with the administration. Indications are that lawmakers are hoping to restore some of the governor’s proposed cuts to higher education if the universities promise to rein in any tuition increases for the coming year. Cuts to basic ed and county services could also be partially restored after the Commonwealth saw increased revenue collections in recent months.

The governor proposed a $27.1 billion general fund budget in February. He is scheduled to visit PAMatters.com for his monthly Ask the Governor program on Thursday.

 

Senate Votes to Fund Mortgage Assistance Program

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State budget pressures have taken their toll on the Homeowners’ Emergency Mortgage Assistance Program (HEMAP).  The program, which provides small loans to financially distressed homeowners on the brink of foreclosure, has not accepted any new applications since last September. 

State lawmakers now believe they’ve found a solution, and the Senate has voted unanimously to tap the recent national mortgage abuse settlement for HEMAP funding.  Pennsylvania will be receiving about $65-million dollars specifically for consumer protection purposes.  Senator John Gordner’s bill (SB 1433) would direct 90% of that money into the HEMAP program.  The remaining 10% would be split evenly between the attorney general’s office and legal services for consumers.

“Since 1983, we have saved 46,000 homes through our HEMAP program,” Gordner explained from the Senate floor prior to Wednesday’s vote. 

United Way of Pennsylvania President Tony Ross tells Radio PA that HEMAP is one of the wisest investments the state can make, “Because we know that homelessness is a major cost driver in terms of social services.”  Ross points to a recent study that found hundreds of millions of dollars in savings. 

If it becomes law, the bill is expected fund HEMAP for the next five years.  It’s now headed across the capitol where it will await consideration by the state House.