Posts Tagged Economy

Best of Times, Worst of Times


“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness . . . ”  So begins Charles Dickens’s novel A Tale of Two Cities.  It is set in in the years prior to the French revolution, but actually applies to the recent performance of Republicans in the Pennsylvania legislature.

As official Harrisburg prepares for what is shaping up to be another epic budget battle, the big question is: which GOP will show up in 2017?  Will it be the Republican-controlled legislature that last year stood its ground and fought Governor Tom Wolf’s historic tax and spending proposals, or will it be the GOP that this year folded like a cheap suit and approved $1.4 billion in new spending?

The $1.4 billion spending hike might not qualify as the worst of times, but coming on the heels of a successful struggle against the Wolf Administration’s spending demands it did leave a lot of folks puzzled.  After winning the longest budget fight in state history, why turn around and cave in months later? This leaves most observers – and quite a few participants – at a loss when it comes to predicting how the 2017 budget war will unfold.

We are certain of a few things.

The toxic stew of tax increases and new taxes cooked up to pay for this year’s massive spending increase has failed to live up to expectations.  To date, revenue collections for the 2017-2018 fiscal year are running $261.8 million below estimates.  This, coupled with a “structural budget deficit” pegged at over a billion dollars means the new budget will begin with a significant gap between spending and revenue.

We also can be sure that Governor Wolf will again demand massive spending increases and the taxes to pay for that spending.  He used his budget address this year to lecture the General Assembly for its refusal to accede to his spending demands.  Since most of his priorities have not been funded chances are they will be dusted off and included in his new budget proposal.

But should Republicans sit back and wait for the governor to set the agenda?  Leo Knepper of the Citizens Alliance of Pennsylvania, a pro-growth PAC, suggests a different course of action.  “If Republicans in the General Assembly were smart, they would upend a long-standing budget tradition and go on offense,” Knepper wrote in a recent policy brief.  “(They) should ignore tradition and pre-empt the Governor’s budget address with a plan of their own.”  Knepper observed this would “force the governor to play defense rather than the usual offensive position granted to governors.”

The question remains, however, whether or not legislative Republicans – or at least the leaders who actually sit at the negotiating table – want to go on offense.  Will the resolute leaders who fought and won the first budget battle show up to play, or the ones who forfeited this year’s game?

The final certainty is that all this will play out against the backdrop of the rapidly approaching 2018 election for Governor.  For his part, Governor Wolf will want to deliver the goods of higher spending to his largely urban constituency.

It won’t be so simple for Republicans.

With a number of legislators, including leaders who will negotiate the new budget, eyeing a race for the Republican gubernatorial nomination, the upcoming budget battle is fraught with peril.  There are pressures for leaders to “be responsible” and give into spending demands.  But with a veto proof Senate majority and a historically large majority in the House, voters are not likely to be either understanding or forgiving if the GOP doesn’t stand firm.

Will it be the “best of times” with legislative Republicans going on offense and standing up to a tax and spend governor, or will it be the “worst of times” with the taxpayers of Penn’s Woods getting stuck with yet another round of tax hikes?  As the budget process begins a new cycle it is impossible to tell which of the GOP’s split personalities will emerge dominant in 2017, but both the pocketbooks of taxpayers and the political fortunes of many politicians will be affected by the outcome.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.  His e-mail address is lhenry@lincolninstitute.org.)

Permission to reprint is granted provided author and affiliation are cited.

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This Week on Lincoln Radio Journal: Cleaning Up the Chesapeake Bay


Radio Program Schedule for the week of December 10, 2016 – December 16, 2016

This week on Lincoln Radio Journal:

  • Lowman Henry talks with Dominic Bassani from the Coalition for Affordable Bay Solutions about cost effective policies to clean up the Chesapeake Bay
  • Eric Montarti and Frank Gamrat have an Allegheny Institute Report on financial challenges at the state’s symphony orchestras
  • Anna McCauslin has a Lincoln Radio Journal commentary on things to be thankful for as 2016 draws to a close

This week on American Radio Journal:

  • Lowman Henry talks with Robert Graboyes from the Mercatus Center at George Mason University on why states should focus on health care delivery, not insurance
  • Andy Roth of the Club for Growth has the Real Story on how congress can repeal and replace Obamacare
  • Eric Boehm of Reason magazine says future President Trump will control the Consumer Financial Protection Bureau
  • Dr. Paul Kengor from the Center for Vision & Values at Grove City College has an American Radio Journal commentary on the death of Fidel Castro

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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PA’s Economic Climate Challenges Nonprofits


‘Tis the season when many Americans donate to their favorite charity.  While leaders in the nonprofit sector remain firm in their conviction that they are best suited to deal with Pennsylvania’s social and economic challenges they are concerned that public trust in charities is not as high as it should be.  Those are among the findings of the 2016 Pennsylvania Charitable Organizations Survey conducted during the month of November by the Lincoln Institute of Public Opinion Research, Inc. in cooperation with the Pennsylvania Association of Nonprofit Organizations (PANO).

Among the participating nonprofits just ten percent said that public trust in charities is “high,” while 77% rated public trust as “medium.”  Nine percent felt public trust in charities currently is “low.”  Twenty-two percent of the nonprofit executives said the level of public trust in charities has gotten better over the past few years, but 31% said it has gotten worse.

Having said that, the nonprofit leaders feel their sector is best positioned to address Pennsylvania’s social and economic challenges.  Forty-five percent identified their own sector as best suited to address those needs; 22% think state government is most effective; while 6% cite the for-profit sector.  Just three percent said the federal or municipal governments can best handle those challenges.

“Public trust,” said Anne Gingerich, Executive Director of PANO, “is critical to the sustainability of any business – nonprofit, for-profit or government.  When one nonprofit fails to live up to the highest standards it can damage the reputation of all.”  She continued: “Unfortunately these stories overshadow the hundreds of nonprofits who give selflessly to ensure that lives are changed, not just during the holidays, but all year long.”

Like their counterparts in the for-profit world, leaders in Pennsylvania’s nonprofit sector say business conditions in the state have gotten worse over the past year rather than better.  Concerns over potential new federal regulations and the growing likelihood of another extended state budget stalemate feed concerns that the commonwealth’s business climate will continue to deteriorate during the year ahead.

The survey found 15% of the nonprofit executives view business conditions in Penn’s Woods over the past year as having improved, 22% say business conditions have gotten worse.  The majority – 63% – say the state’s economy has remained about the same.  But “about the same” is not good as business confidence, whether for-profit or nonprofit, has been low for the past two years.

By comparison, a September 2016 survey of owners/chief executive officers of for-profit businesses found only five percent saying the state’s economy has improved in recent months while 50% said it had gotten worse.

Looking ahead, a third of the nonprofit leaders expect the state’s business climate to get worse while 22% predict it will get better. Forty-four percent say the Pennsylvania business climate will remain about the same during 2017.

Despite their overall pessimism about the direction of the commonwealth’s economy, employment was up at a quarter of the nonprofits, and down at 16%.  That could be explained in part by some nonprofits stepping up hiring after having cut back staff during the budget stalemate of two years ago.  However, looking ahead 22% say they expect to add employees while 14% predict staffing cuts.

Federal Regulation

Hanging over all sectors of the economy including nonprofits are U.S. Department of Labor (DOL) regulations that would increase the minimum salary requirements for “white collar” workers from $23,600 to $47,476 per year.  The effect would be a significant increase in overtime costs.  This is perhaps more significant for the nonprofit sector in that employees at many smaller nonprofits view their jobs as being community service as much as employment and often put in hours well in excess of those for which there are paid.

The 2016 Pennsylvania Charitable Organizations Survey found that the new regulations would increase payroll costs at 43% of the responding organizations as well as increase the amount of time spent tracking employee hours.  The regulations are now on hold due to a federal court ruling, but should they go into effect 30% of the nonprofits surveyed said they would have to cut staff to pay for the increased costs of complying with the regulations; 11% would have to cut services and another 16% would respond by seeking additional volunteer help.

State Issues

Pennsylvania’s nonprofit organizations were among those most significantly impacted by the lengthy state budget stalemate of two years ago.  In light of that experience, 68% would support putting into place legislation that would incentivize lawmakers to adopt a state budget in a timely manner. Sixty-eight percent (some with board approval) said they would support legislation that would progressively penalize state lawmakers for missing the state budget deadline, with penalties increasing for each day past the June 30th deadline.

PANO’s Gingerich said nonprofit support of legislation penalizing lawmakers for budget stalemates is not surprising.  “Not only clients suffer as a result of the impasse, but nonprofits themselves had to lay off staff and borrow money to continue operations.  As partners with state government in providing mandated services, nonprofits should ask to be at the budget negotiation table.”

Unlike executives in the for-profit sector, nonprofit leaders are open to supporting a wide range of tax hikes.  Thirty-seven percent said they would support an increase in the state’s Personal Income Tax (PIT), while 22% said they would not.  Another 41% offer no opinion on the question.  Likewise 43% would support imposing a new natural gas drilling tax of up to 6.5% specifically to support human services.  Thirteen percent would oppose such a tax, and 43% offered no opinion.  Similar support levels were voiced for the imposition of a new public health tax (ie: sugar tax, soda tax) of 1.5 cents per ounce dedicated to human services.  The highest level of support – 50%  – is for dedicating a portion of taxes generated by Pennsylvania’s gaming industry to support human services.

Organizational Issues

Despite their overall negative assessment of the direction of Pennsylvania’s business climate, more of the nonprofits participating in the 2016 Pennsylvania Charitable Organizations Survey said funding for this calendar year has increased than have seen decreases.  A third of the nonprofits said funding is up, a quarter reporting funding has dropped and 43% said their funding levels have remained about the same.  Looking ahead to 2017 about half of the nonprofits predict funding levels at their organization will remain static; 30% say they expect funding to increase; 20% are braced for funding to decrease.

By a two-to-one margin nonprofits have seen state funding levels decrease over the past five years.  Twenty-one percent said funding from the state had dropped during that period of time while ten percent saw an increase in state funding.  The other half of the organizations said funding from state government has remained about the same.  Likewise there has been a slight drop in federal funding.  Sixteen percent said their organization’s funding from the federal government has dropped over the past five years, 12% said federal funds have increased.  Federal funding remained about the same at the remaining 45% of organizations surveyed.

Property tax exemption challenges remain a concern at some nonprofit organizations.  Seven percent report having had their property tax exemption challenged over the past two years and 13% are concerned their municipal or county government may challenge their exemption next year.

Nonprofit organizations are not participating in lobbying activities in a major way.  Just six percent say they have someone from their organization registered as a lobbyist under the Pennsylvania Lobbying Disclosure Act. Twenty-two percent have lobbied on a public policy issue at some level of government over the past year.  Twenty-seven percent expect to lobby government at some level during the coming year.  Gingerich urged nonprofits to engage in more lobbying activities.  “Nonprofits must understand that not only can they lobby, but they are not doing their jobs if they do not.  Together, the collective voice of the nonprofit sector has powerful, yet untapped power.”

Methodology

The 2016 Pennsylvania Charitable Organizations Survey was electronically conducted during the month of November 2016.  A total of 177 nonprofit organizations responded to the survey invitation.  Complete numeric results are available at http://www.lincolninstitute.org.

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This Week on Lincoln Radio Journal: Labor Bosses Lose Big


Radio Program Schedule for the week of December 3, 2016 – December 9, 2017

This week on Lincoln Radio Journal:

  • Matthew Brouillette from the Commonwealth Partners Chamber of Entrepreneurs and Neal Lesher from the National Federation of Independent Business-PA have a Capitol Watch look at labor union losses in this year’s elections
  • Lowman Henry has a Town Hall Commentary on the latest state budget skirmish

This week on American Radio Journal:

  • Lowman Henry talks with Phil Kerpen of American Commitment about how the GOP will go about repealing and replacing the Affordable Care Act
  • Dough Sachtleben of the Club for Growth has the Real Story on the upcoming U.S. Senate race in Louisiana
  • Eric Boehm of Reason magazine talks with Collin Roth from the Wisconsin Institute for Law and Liberty about occupational licensing reforms
  • Colin Hanna of Let Freedom Ring, USA has an American Radio Journal commentary on the Trump transition process

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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This Week on Lincoln Radio Journal: Public Sector Labor Climate


Radio Program Schedule for the week of November 26, 2016 – December 2, 2016

This week on Lincoln Radio Journal:

  • Lowman Henry talks with Elizabeth Stelle of the Commonwealth Foundation about their new report on Pennsylvania’s public sector labor climate
  • Joe Geiger from the First Nonprofit Foundation has Risa Paskoff of Aaron’s Acres in the Community Benefit Spotlight
  • Beth Anne Mumford from Americans for Prosperity-PA has a Lincoln Radio Journal commentary on Pennsylvania’s Economic Freedom Partners

This week on American Radio Journal:

  • Lowman Henry talks with Brittany Hughes producer of the Media Research Center’s new film Collateral Damage: Forgotten Casualties of the Left’s War on Coal
  • Andy Roth of the Club for Growth has the Real Story on issues that will dominate the first 100 days of the Trump Administration
  • Eric Boehm of Reason Magazine talks with Christina Sandefur of the Goldwater Institute about Chicago’s attempt to regulate AirBNB
  • Col. Frank Ryan, USMC (Ret.) has an American Radio Journal commentary on illogical government

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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This Week on Lincoln Radio Journal: Challenges Facing Governor Wolf


Radio Program Schedule for the week of November 19, 2016 – November 25, 2016

This week on Lincoln Radio Journal:

  • David Taylor of the Pennsylvania Manufacturers Association and Matt Brouillette from the Commonwealth Partners Chamber of Entrepreneurs have a Capitol Watch look at challenges facing Governor Tom Wolf
  • Lowman Henry has a Town Hall Commentary on election winners and losers who were not on the ballot

This week on American Radio Journal:

  • Lowman Henry talks with John Philip Sousa, IV of the 2016 Committee about how Donald Trump won a larger percentage of minority votes
  • Doug Sachtleben of the Club for Growth has the Real Story on possible return of congressional earmarks
  • Eric Boehm of Reason magazine takes a look at Republican dominance of state legislatures
  • Dr. Paul Kengor from the Center for Vision & Values at Grove City College reflects on the real meaning of Thanksgiving on his American Radio Journal commentary

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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Leo Knepper has Election Results on Lincoln Radio Journal


Radio Program Schedule for the week of November 12, 2016 – November 18, 2016

This week on Lincoln Radio Journal:

  • Lowman Henry has a Newsmaker interview with Leo Knepper from the Citizens Alliance of Pennsylvania examining General Election results
  • Dr. Jake Haulk and Eric Montarti have an Allegheny Institute Report on why the lack of job creation is creating a state revenue shortfall
  • Beth Anne Mumford of Americans for Prosperity-PA has a Lincoln Radio Journal commentary on the upcoming lame duck session of congress

This week on American Radio Journal:

  • Lowman Henry talks with John Gizzi of Newsmax about the impact of the presidential election on the Supreme Court of the United States
  • Andy Roth of the Club for Growth has the Real Story on the policy agenda for the first 100 days of the Trump Administration
  • Eric Boehm of Reason magazine and Matt Kittle of Wisconsin Watchdog discuss how Wisconsin and Pennsylvania put Donald Trump into the White House
  • Colin Hanna of Let Freedom Ring, USA has an American Radio Journal commentary on why Trump won

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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