Pennsylvania Budget

Prevailing Wage Opponents Fail to Look at the Research

The Final Part of a Three-part Series on Prevailing Wage by Mark Price and originally published at Third and State. Read Part 1. Read Part 2.

In the first two posts of this series, I explained why the numbers being tossed around by advocates of repealing prevailing wage don’t add up. I explained that the claims of cost-savings are not based on any actual experience and that they represent the result of laughable hypothetical, or “what if,” calculations. 

This leads to the most important point that the Pennsylvania School Boards Association, the Pennsylvania State Association of Boroughs, the Harrisburg Patriot-News Editorial Board and others keep missing: we can do much better than a hypothetical when assessing the impact of prevailing wage laws.

There is a body of research that examines construction costs (and other construction outcomes, like safety, training investment, wages, benefits, etc.) in states with and without prevailing wage laws as well as in states that eliminated prevailing wage laws. We don’t have to conjecture what “might” happen: we can look at what did happen. The preponderance of the evidence shows that prevailing wage laws do not raise construction costs.

Back in the late 1990s, Pennsylvania actually ran this real-world experiment itself — we lowered our prevailing wage levels, particularly in rural areas. That means we can look at what happened to construction costs. What happened is the same thing that has happened in other places — lower prevailing wages did not translate into lower construction costs. 

Prevailing Wage Opponents Fail Labor Market Statistics 101

Part Two of a Three-part Series on Prevailing Wage by Mark Price, originally published at Third and State. Read Part 1.

The overwhelming weight of evidence based on the actual cost of public construction projects shows that prevailing wage laws do not raise costs. Therefore, advocates of repealing the law in Pennsylvania ignore this evidence. Instead of “evidence-based policy,” we have “lack-of-evidence-based policy.” Go figure.

Repeal advocates use a hypothetical calculation that makes assumptions about cost, rather than empirically examining the relationship between higher wages and total construction costs. (As discussed here, even these hypothetical cost estimates don’t make sense once you apply real world data to how much labor costs represent of total construction cost.)

Another key ingredient in the hypothetical calculations used by proponents of repeal is the claim made most recently by the Pennsylvania State Association of Boroughs (PSAB) that “the prevailing wage is 30 percent to 60 percent higher than the average wage for the same occupation.”

Nowhere to Go, More Addicts on the Street and a Ringing Irony

Based on blog posts by Chris Lilienthal originally published here and here at Third and State.

The Philadelphia Inquirer reports this morning on the impact of Pennsylvania Governor Tom Corbett's proposed budget cuts on the lives of people in Southeastern Pennsylvania. Who is getting hit? Adults with disabilities, the homeless, people with mental-health illnesses, HIV patients needing hospice care, children aging out of foster care, and seniors, among others.

Miriam Hill, The Philadelphia InquirerPeople who will be affected by Corbett's cuts:

Brittany Stevens doesn't talk a lot, but she's a bit of a social butterfly. She was a prom queen and, after a recent performance of the musical Fela!, she spontaneously hugged the dancers, nearly tackling them in excitement.

But Brittany, 21, who is disabled and suffers from seizures, incontinence, hearing loss, and other problems, spends most of her days alone in her North Philadelphia home, while her mother, Harlena Morton, goes to work as a high-school counselor.

Morton had hoped to find Brittany a job in a workshop that employs disabled adults. Now that Gov. Corbett has proposed large cuts to social services programs, Morton fears that Brittany and thousands like her will never get off waiting lists for those spots and for other services...

In Philadelphia, the cuts total about $120 million, not including reductions in medical care, city officials say; across Pennsylvania, $317 million, according to state officials.

The Return of Bigfoot: Telling the Truth about Welfare Spending in Pennsylvania

A blog post by Sharon Ward, originally published at Third and State.

BigfootYou may remember that the Commonwealth Foundation put out a report about welfare spending a couple of weeks ago that we likened to “Bigfoot” because it found something in the Department of Public Welfare — massive fraud, millions of non-working adults — that just didn’t exist.

I had a chance to debate Matt Brouillette of the Commonwealth Foundation on WITF’s Radio Smart Talk, and I thought it might be a good time to share the facts and give you my four big ideas about how we push back on the destructive framing that the “Bigfoot” report perpetuates.

First, let me give a shout out to the people who called in to Smart Talk to set the record straight on welfare spending and challenge Matt directly on his use of the welfare frame. It was clear to the listeners that Matt was quite deliberately trying to invoke the image of Ronald Reagan’s welfare queen by describing welfare as everything from afterschool programs to autism services. The audience wasn’t buying it and we shouldn’t allow it.

The first step  when talking about this issue, is to define welfare accurately.

1. Welfare is cash assistance.

Spending Twice as Much on Prisons as on Universities

A blog post by Chris Lilienthal, originally published at Third and State.

It is no secret that Governor Tom Corbett has proposed deep cuts to higher education institutions in Pennsylvania for the second year in a row.

But just what do those cuts mean? Well, we have two charts at the Pennsylvania Budget and Policy Center's web site that speak louder than words when it comes to funding cuts for colleges and universities.

If enacted, the Governor's 2012-13 budget will result in a funding cut for higher education of one-third since the start of the recession.

Public Colleges Cuts by One Third Since Start of Recession

This budget will also mean that come 2013 Pennsylvania will be spending twice as much on prisons as on colleges and universities.

In 2013 PA Will Spend Twice as Much on Prison as on Colleges and Universities

Let the Facts Get in the Way of a Good Story: Private School Bus Services in PA Cost More

A blog post by Stephen Herzenberg, originally published at Third and State.

The standard conservative narrative is that private delivery of services and goods trumps government delivery. In Harrisburg, for example, Governor Corbett’s Council on Privatization and Innovation often presents its goal as privatization, taking for granted that this will be more efficient and cost-effective.

In fact, the record on privatization shows that in many cases privatization fails to deliver promised savings and can undercut service quality. That’s part of why Cornell Professor Mildred Warner has found that local governments often bring work back in house.

The Governor's Math Requires Fewer Math Teachers

A blog post by Mark Price, originally published at Third and State.

PA Job Growth Slowed in 2011Pennsylvania’s 2011-12 General Fund budget made deep cuts to education and health care while leaving unspent $620 million from a revenue surplus last year and other unused funds.

We have estimated the failure to spend that revenue will by itself translate into the loss of 17,714 jobs (including private jobs lost due to the ripple effects of public job cuts) over the course of the 2011-12 fiscal year.

So it is no surprise that Pennsylvania's job growth slowed in 2011 compared to 2010 and when compared to most other states.

On Wednesday, Governor Tom Corbett resumed his business tour to pitch his 2012-13 budget, which offers another round of budget cuts for the coming fiscal year.

As Economy Picks Up, PA Revenues Take Turn for the Better

A blog post by Michael Wood, originally published at Third and State.

After months of falling short of targets, Pennsylvania's General Fund tax collections edged past the monthly estimate in February by $16 million, or about 1%. The good showing was driven largely by higher-than-expected personal income tax collections. Corporate tax collections continued to trail estimates.

The improving revenue picture for both January and February may signal that tax collections (other than corporate levies) have taken a turn for the better. There have been many signs of a growing economic recovery, including a decrease in the unemployment rate, which bodes well for many state tax streams in the second half of the 2011-12 fiscal year.

February collections trimmed the revenue shortfall for the fiscal year to $482 million, or 3%. Tax collections for the fiscal year trail estimates by $449 million.

Compared to the prior fiscal year, total tax collections are up $507 million, or 3%, as of February — another sign that the economy is improving.

Fiscal Year to Date Tax Collections Trail Estimates, Still Growing Over Prior Year

Before we break out the champagne, the continuing — and largely self-inflicted — shortfall in corporate tax collections is a cause for concern.

Corporate taxes fell 13% short of estimate in February, bringing the shortfall for the year to just under $300 million, or 18%. Much of the corporate tax shortfall can be laid at the feet of the Corbett administration's February 2011 decision to adopt the federal "bonus depreciation" — something Pennsylvania previously had not done.

'Cutting Training for Jobs the Economy Needs Most'

A blog post by Michael Wood, originally published at Third and State.

When you have a moment, check out this New York Times article on the impact of state cuts to public higher education across the country — and the impact they are having on our economy. These types of short-sighted cuts, like the 20% reduction in higher education funding proposed by Governor Corbett this year, put us in a worse position today and down the road.

The article highlights some of the "efficiencies" we could see if the cuts keep coming:

As state funding has dwindled, public colleges have raised tuition and are now resorting to even more desperate measures — cutting training for jobs the economy needs most.

Technical, engineering and health care expertise are among the few skills in huge demand even in today’s lackluster job market. They are also, unfortunately, some of the most expensive subjects to teach.

Pennsylvania has a long history of shortchanging higher education funding, coming in 45th (as a share of personal income) or 46th (per capita) in the the amount of state support for higher education in FY 2011, according to annual Grapevine survey.

If we want a well-educated workforce to fill the jobs of tomorrow, we have to invest in educating them today.

adultBasic: A Year of Struggle for Many Working Pennsylvanians

A blog post by Chris Lilienthal, originally published at Third and State.

One year after Pennsylvania’s adultBasic program came to an end, many working Pennsylvanians are still struggling with the lose of this critical lifeline. Anxiety and financial pressures are common, and many are allowing chronic health conditions to go untreated.

That was the message delivered by health care providers, advocates and former adultBasic enrollees during a media conference call hosted by the Pennsylvania Health Access Network (PHAN) Wednesday.

adultBasic was created more than a decade ago to provide affordable health coverage to low-income working Pennsylvanians who either lacked job-based coverage or were denied outright because of pre-existing health conditions.

But when a funding agreement between the commonwealth and Pennsylvania’s four Blue Cross/Blue Shield plans expired, Governor Corbett opted to end the program rather than renegotiate the agreement. The adultBasic program shut down one year ago today.

Rick Mossinghoff, a part-time worker from Robinson Township, Allegheny County, was one of the Pennsylvanians who suddenly found himself without health coverage. He opted to enroll in Special Care – a plan for low-income people offered by the Blues and touted by the Corbett administration as an alternative. His new premiums were five times the cost of adultBasic.

“When I had adultBasic, I was able to have physical therapy to combat the arthritic degeneration in my hip,” Mossinghoff said during the conference call. “That all ended, when I lost my coverage – because Special Care doesn’t cover any rehabilitative or physical therapy care.”

What Works in Pennsylvania

The Campaign for What Works has a great video illustrating the interconnectedness of the investments our state makes in a variety of areas from early childhood education to public transportation to workforce training. These investments not only improve the quality of life of Pennsylvanians but create jobs and build a stronger economy.

As the campaign says on its home page: "Pennsylvania works when our state budget supports what works."

Take a minute to watch the video and pass it on.

PA Budget Summit: Resources and a Recap

The Pennsylvania Budget and Policy Center hosted its annual Budget Summit on Thursday in Harrisburg, providing an in-depth look at the state and federal budget plans and what they mean for communities and families across Pennsylvania. With nearly 200 in attendance, it was our largest Budget Summit yet.

Check out our web site where we have posted materials from the Summit, including presentations on the state and federal budgets. And check back next week when we will have more, including video clips from the Summit.

And take a minute to watch this report from Fox 43 for a nice (and quick) recap of the Summit.

From the Fox 43 report:

Educators, political candidates, and community leaders gathering to discuss how Governor Corbett's proposed budget would affect them at the Pennsylvania Budget Summit.

"The ultimate goal is for everyone in this room to understand what's happening in Harrisburg. To be able to talk to their lawmakers intelligently, and bring their messages back to their communities to get involved, and speak up about the things that they value," says Sharon Ward with the Pennsylvania Budget and Policy Center.

Some Hope for PA Revenue in January but Corporate Taxes Still Lag

A blog post by Michael Wood, originally published at Third and State.

Pennsylvania’s revenue performance has been pretty uneven this fiscal year due in part to a stubbornly slow growing economy and to policies that have cut the tax bills of big profitable corporations. After months of significant revenue shortfalls, however, January provided some hope.

General Fund collections came in close to estimate in January – falling $10.2 million, or 0.5%, short of monthly targets. This is a marked improvement over the previous several months, when revenues fell between 3% and 6% short of estimate. Get my full analysis of the January revenue numbers here.

January is an uneventful month for most revenue streams, with personal income tax collections being the exception. January is second only to April, when tax returns are due.

Corporate collections continued to fall significantly short of estimate in January and account for more than half of the General Fund’s revenue shortfall so far in 2011-12.

Revenue collections for the 2011-12 Fiscal Year are $497 million, or 3.5%, below the Corbett administration’s revenue estimates. The administration is now projecting a year-end revenue shortfall of $719 million, although the Independent Fiscal Office (IFO) believes this to be too pessimistic, based on recent economic trends. The IFO expects the year-end shortfall to be in the $500 million range.

Combine and Cut: Governor's Block Grant Plan for County Human Services

A blog post by Chris Lilienthal, originally published at Third and State.

A week after Governor Tom Corbett rolled out his state budget, many people are still trying to make sense of it.

Perhaps the biggest reshuffling in the Department of Public Welfare budget involves the expansion of the Human Services Development Fund, a flexible funding stream used for a wide variety of human services at the county level. This fund has been repeatedly reduced over the past few year. The new budget combines and cuts funding for other programs into a single Human Services Development Fund Block Grant.

All told, the new block grant is funded at nearly $674 million. That reflects a cut of more than $168 million, or 20%. Portions of a variety of health and human service programs ranging from homeless assistance to mental health services to protecting children from abuse would be impacted (see the table below).

Pa. Marcellus Shale Fee Among the Lowest in the Nation

A blog post by Michael Wood, originally published at Third and State.

Lost amidst our work this week on Governor Corbett's 2012-13 budget was the state Legislature's passage of a Marcellus Shale package that will give Pennsylvania one of the lowest drilling tax or fee rates in the nation. The bill is now awaiting the Governor's signatures.

As The New York Times wrote this week:

Critics, among them some municipalities and environmental groups, said the bill was a capitulation to the energy industry and would all but eliminate their ability to decide where gas development could happen. The measure would limit it in densely populated urban areas but not in suburban spaces, critics said. They also said the environmental and safety standards, like the requirement that wells be at least 500 feet from any house, were weak.

The Times also cited our estimates that "at the current price of natural gas, the fee would amount to an effective tax rate of 2.6 percent, far less than the 5.4 percent in Texas."

The fee sets a 15-year rate schedule for Marcellus wells that rises and falls based on the price of natural gas and inflation. The Associated Press made the point, again citing our work, that this is much lower than drillers pay in other states:

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