Posts Tagged elected officials

Uncharted Waters


On one point there is unanimous agreement under the capitol dome in Harrisburg: Pennsylvania is in uncharted fiscal waters.  Never before in the history of the commonwealth has a state budget impasse lasted this far into the fiscal year.  There are no signs of agreement on a pathway forward.  And the deadline for next year’s budget is now on the horizon.

Despite all of this there has been little public outcry.  Recent polling suggests Governor Tom Wolf’s approval ratings have taken a hit, but the filing deadline for candidates to run for state House and Senate seats came and went in mid-February leaving most lawmakers with no or token challengers.  And, for the most part, the machinery of state government chugs onward.

Unlike past periods of budgetary disagreement state workers have continued to be paid throughout this impasse.  This as a result of past court rulings that held employees who in fact show up for work and perform their jobs must be paid.  As a result, essential – and many non-essential – state services have continued unabated.

Since the state constitution requires passage of a budget before spending can take place you might think state coffers would be overflowing with unspent tax money.  You likely have noticed that despite the lack of a budget, state income taxes are being deducted from your paycheck and you continue to pay sales tax on purchases.  The state, however, is broke.

The state treasury a couple of months back took out a $2 billion loan supposedly to keep the cash flowing.  But, without a budget how can the state spend so much money it actually had to take out a loan to stay in business?  The answer is over $37.5 billion has been expended, much of it prior to the partial budget resolution that occurred in January.

This has caught the attention of Republican legislators who point out Governor Wolf does not have the authority for such spending.  Worse, what gets paid and what does not get paid is basically happening at the discretion of the Governor.  Senate Republican spokeswoman Jennifer Kocher told the Pittsburgh Tribune-Review that Wolf is spending as if he has “an open checkbook.” She pointed out, for example, the governor continues to fund the state corrections system even though he line-item vetoed that portion of the state budget.

The governor’s spending priorities have been controversial.  Last Fall the state treasury floated a “loan” to the House Democratic Caucus because they had run out of money to pay staff due to the budget impasse.  A couple of months later that same treasury denied the City of Erie School District a loan to keep schools open.

Worse, the Wolf Administration has been less than transparent in making public details of its unauthorized spending.  State Representatives Chris Dush (R-Jefferson) and Seth Grove (R-York) have had to file Right to Know requests to obtain information.

All of this has prompted calls for Auditor General Eugene DePasquale to conduct an audit of the state spending that is occurring during the budget impasse.  The GOP brought out the heavy artillery to make the request which came from House Appropriations Chairman Bill Adolph (R-Delaware) and Senate Appropriations Chairman Patrick Browne (R-Lehigh).  They head the legislative committees vested with budgetary power.

Governor Wolf triggered the ongoing budget battle by requesting, actually demanding, a massive increase in state taxes and spending.  Interestingly, the amount of money spent by his administration over the past seven months surpasses the total annual budget passed by the legislature and partially vetoed by the governor.  This has given rise to concerns that the governor plans to spend to his preferred level regardless as to whether or not he ever receives legislative approval.  That could turn the current fiscal and political crisis into a constitutional crisis.

Much like President Obama at the national level Governor Wolf has made it plain he plans to implement his agenda by whatever means necessary even if it means trampling the constitution.  His unchecked and unauthorized spending spree is proof positive he is doing just that.

(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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Ending Corporate Welfare


Adoption of an annual budget is a core function of government.  Both the federal and state governments have failed to get the job done. At the national level there has been no budget for years, as congress passes “continuing resolutions” that keep the money flowing.  The budget impasse in Harrisburg is now in its third month, with Governor Tom Wolf rejecting the equivalent of a continuing resolution passed by legislative Republicans.

There are many reasons for this lack of agreement, but the bottom line is the age-old problem of too much demand for too few resources.  Eating up a large portion of both federal and state budgets is entitlement spending.  Taking away that which someone already receives is a near impossibility, yet neither budget crunch can be resolved until the spending side of the equation is addressed.

Republicans often point to social welfare as an area where spending can be cut, Democrats are adamantly opposed.  Corporate welfare is a different story. Here there is bi-partisan agreement.  Establishment Republicans love government hand-outs to big corporations. Despite lip service to the contrary, Democrats do too.

But, there is growing opposition among the GOP’s conservative base to continuing corporate welfare programs.  After all, how can you morally justify cutting social welfare when voting to give taxpayer dollars to wealthy corporations?  In order to address the systemic deficits present in both the federal and state budgets cuts in all such programs are needed.

At the federal level conservatives have been successful in closing down the Export-Import Bank.  This happened largely because the bank was up for reauthorization, meaning all congress had to do was nothing to put it out of business.  Congress is good at doing nothing, so the Export-Import Bank was allowed to expire.  But, supporters of the bank – which gives large, risky taxpayer-backed loans to big corporations – are working hard behind the scenes to resuscitate it, meaning the battle is far from over.

Here in Penn’s Woods the vehicle for corporate welfare is a little-known entity called the Redevelopment Assistance Capital Program (RACP).  Like most government programs it started small, with $400 million in borrowing authority in 1986.  By 2010, the last year for which complete information is available, borrowing authority had ballooned to $4 billion.

Unlike the Export-Import bank which merely finances risky loans, RACP is a grant program.  Meaning state government borrows money and then gives it to select businesses.  That is correct: state government borrows money, gives it away, and then repays the loans plus interest with tax dollars.  Worse, small businesses need not apply.  The grant program is only available for projects exceeding $1 million.

There is a set of criteria for a business to obtain a RACP grant, but since the final list of recipients must be approved by the legislature the politically well-connected have an advantage. There is no escaping the fact the entire effort amounts to little more than government picking winners and losers.

A new study by the Mercatus Center at George Mason University finds the program is itself a loser.  The study found: “The RACP is an inefficient and market-distorting program that mostly transfers economic activities from counties receiving less in RACP grants to counties receiving more of the grants.”  Another concern: the study found “RACP is likely to decrease economic growth in the long run since the market is ultimately skewed away from efficient investment and toward politically favored industries.”

The program is not even popular in the business community.  A recentKeystone Business Climate Survey conducted by the Lincoln Institute found 52% want the program eliminated entirely; another 40% think the amount spent on it should be reduced.  Over the years, the survey has consistently found business owners/CEOs would rather have across-the-board business tax cuts than such targeted grant programs.

Clearly programs like the Export-Import Bank and the RACP are nothing more than government welfare for politically connected companies.  The end result, at best, is government directing rather than expanding economic activity.  As budget-makers look for ways to bring government spending under control, reducing welfare – both corporate and social – must be part of the equation.

(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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PA Business Leaders Reject Wolf Tax Plans


The Governor of Pennsylvania decided to use his perceived electoral mandate to take on one of the biggest issues that has confronted and confounded the commonwealth for decades: property tax reform.  So he advanced a plan that would raise sales and personal income taxes in exchange for a cut in property taxes.

Sound familiar?  The year was 1989 and the Governor was Robert P. Casey whose tax reform plan was put on a statewide ballot referendum and was soundly defeated by voters.  Fast forward to 2015 and Governor Tom Wolf has placed on the table a property tax reform plan that strongly resembles the doomed Casey proposal. Except the Wolf plan doesn’t even include the dollar for dollar reductions required of the Casey effort.

As despised as property taxes are, and polling consistently finds the levy to be the most disliked, finding an acceptable alternative remains elusive.  The Wolf plan appears to have little support in the General Assembly; in fact House Republicans have passed their own proposal.  But it too fails to totally eliminate school property taxes leaving the door open for millage rates to simply increase again over time.

An indication of how unpopular the Wolf tax reform plan is can be found in the recent Keystone Business Climate Survey of business owners and chief executive officers conducted by the Lincoln Institute of Public Opinion Research.  Nearly 70% of the business leaders said the Wolf property tax shift would result in only a temporary drop in property taxes which would then go back up.  Another 14% predicted his plan would actually lead to property tax increases; only 15% expect to see property taxes decline under the Wolf proposal.

Not only does the poll demonstrate disapproval of the Wolf property tax plan, but the survey found the biggest six month decline in business climate optimism since the onset of the Great Recession in 2008.  In fact, in the 20 year history of the poll only during that recession and in the aftermath of the 2001 terrorist attacks has business climate optimism dropped so far so fast.

Last September, for the first time since George W. Bush was re-elected in 2004, more business leaders said the state’s economic climate had improved that felt it had gotten worse.  The indicator rose into positive territory by just 1%, but it capped a steady move in a positive direction.  All of that has changed.  The number of owners/CEOs saying business conditions have improved over the past six months has fallen to just 13%, while the number saying business conditions have gotten worse has nearly doubled since last Fall.

The only variable to change during that six month period was the election of Governor Tom Wolf.  Governor Tom Corbett left office with a 52% job approval rating.  Governor Tom Wolf’s first job approval test yielded just 15% approval with 69% of the state’s business leaders saying they disapprove of the job he is doing.

Driving the dour mood among the people who actually run businesses – big and small – is a general disapproval of Governor Wolf’s budget proposals.  A total of 78% disapprove of his proposed budget.  Overall 80% say the governor’s proposed state budget will harm the state’s business climate.  As a side note, Pennsylvania’s high tax rates and stringent regulatory policies are viewed by the owners/CEOs as the biggest impediments to conducting business in the commonwealth.  They now fear that situation is about to get even worse so the state’s job creators are bracing themselves for higher taxes.

Overall the survey results represent a sound and complete repudiation of Governor Tom Wolf’s first proposed state budget along with the major revisions and tax hikes contained within the proposal.  Like Governor Casey before him, his ambitious tax reform plans are deeply unpopular and may be destined for the same fate.

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

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

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PA Dems Flounder on Shoals of Corruption


There are two ways to remove a Band-Aid; in one sharp motion getting the pain over quickly, or pulling it off slowly allowing the pain to linger.  Democrats in Pennsylvania appear to subscribe to both approaches when it comes to dealing with the misdeeds of their statewide elected officials.

 

Former State Treasurer Rob McCord abruptly resigned from office in late January revealing he was going to plead guilty to charges that he attempted to extort campaign funds from companies interested in doing business with the state.  The crimes occurred while McCord was battling now-Governor Tom Wolf for the Democratic gubernatorial nomination last spring.

 

The McCord denouement came swiftly.  In a town that leaks like a sieve, there was surprisingly little advance rumor of the charges; news of which McCord broke himself.  The former treasurer spared the commonwealth the usual drama which surrounds such things by accepting responsibility for his actions and promptly leaving office.  He has now disappeared from the headlines.

 

And then there is the case of Kathleen Kane.  The term “embattled” is appended to virtually every news article written about the attorney general who is currently under investigation by the Montgomery County District Attorney for allegedly leaking secret grand jury information.  Charges have been recommended by that grand jury and the Pennsylvania Supreme Court recently ruled the process legal and correct.

 

Suffice it to say General Kane is in hot water.  As if that were not enough, news broke that she scuttled an investigation into a northeastern Pennsylvania casino probe.  And, the Philadelphia District Attorney Seth Williams has successfully prosecuted another investigation Kane dropped involving several Philadelphia legislators who allegedly took bribes.  This, along with a revolving door among her top staffers has produced an agency in crisis and an attorney general in political peril.

 

Unlike McCord, Kane is fighting back.  She has hired big guns associated with her political patrons, Bill and Hillary Clinton, refuses to resign and plans to fight any criminal charges which may be filed against her.

This could not be worse news for Pennsylvania Democrats.  The party can ill afford going into a major election year with the state’s highest elected law enforcement official under a cloud, or possibly under indictment.  Add in the McCord misfire, along with the Philadelphia legislator scandal, and what you have is the image of a political party steeped in corruption.

Already the steady stream of negative headlines is having an effect.  In just the last couple of weeks Democrats lost a special election for a legislative seat in Philadelphia, something that hasn’t happened in decades.  A Quinnipiac University poll shows Republican U.S. Senator Pat Toomey leading likely Democratic challenger Joe Sestak by double digits.  The poll even found U.S. Senator Rand Paul leading presumptive Democratic Presidential nominee Hillary Clinton by one point.  And, the poll was taken before Senator Paul’s official announcement of candidacy which likely will give him a further bounce.

Clearly the scandals surrounding Pennsylvania Democrats could have national implications.  Pat Toomey has been listed as one of the most vulnerable Republican senators up for re-election next year, if only because of the large Democratic voter registration lead in Pennsylvania.  But, to date, he has overcome that edge.  And, there is absolutely no plausible mathematical formula for Democrats to win the White House in 2016 without carrying Pennsylvania.

It remains to be seen whether or not Republicans will be able to take advantage of the culture of corruption surrounding state Democrats.  But one thing is for sure, the slow removal of the Kane Band-Aide ensures the issue will remain alive for the foreseeable future.

(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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Official Represson


Richard Nixon was often accused of creating an imperial presidency and of using the levers of power to repress and punish those who disagreed with him.  Nixon’s “enemies list” became a national sensation and official actions against those on the list either directly or indirectly prompted his resignation to avoid certain impeachment. But the disgraced president’s use of repressive tactics pale in comparison to those employed by the current crop of Democratic office holders at both the state and the national levels.

President Obama and his administration have led the way.  His Justice Department has wire tapped the phones of the Associated Press, investigated a Fox News journalist and engaged in systemic harassment of conservative groups by the Internal Revenue Service.  Unchastened by media and public backlash from these mini-scandals, the administration has ratcheted up the stakes by proposing a wide range of new IRS regulations designed to silence public policy advocacy organizations.

Here in Penn’s Woods two statewide elected officials have taken a page from the Obama playbook.  Unable to defend their positions, they have chosen instead to try and silence the opposition.  Attorney General Kathleen Kane is waging war against a free press, and State Treasurer Rob McCord has taken to suing a private citizen who legally sought information McCord’s office does not wish to disclose.

Attorney General Kane took office barely over a year ago as a media and voter darling. Her star has fallen rapidly.  An investigation into why it took former Attorney General-now-Governor Tom Corbett so long to indict convicted child molester Jerry Sandusky has, well, taken a long time.  It shows no sign of ending soon.  Pandering to her Left-wing base, Kane refused to defend Pennsylvania’s defense of marriage laws, embroiling her in a controversy over whether or not the state’s highest elected law enforcement official could pick and choose which laws she will uphold.

Then the Philadelphia Inquirer dropped a political nuclear bomb revealing the attorney general scuttled an investigation into four Democratic state representatives allegedly caught on tape accepting bribe money from an informant.  Kane claimed the investigation was sloppy and racially motivated; a rationale that sank faster than the Titanic when Philadelphia District Attorney Seth Williams, a highly respected prosecutor who happens to be African-American penned an op-ed that was highly critical of the attorney general.

Shortly after the Inquirer’s expose was published Attorney General Kane sought a meeting with the newspaper only to show up with a prominent libel attorney at her side.  Her action was an unmistakable message to every newsroom in the state: criticize me and you face expensive legal action. It amounted to nothing less than a frontal assault on the media’s first amendment rights.

State Treasurer Rob McCord’s playing of the official repression card has resulted in little media coverage, but similarly sends a chilling message to those who challenge an elected official.  In this case the repression is aimed at an individual activist rather than the news media, although it offers considerable insight as to his view of open records requests.

In January of this year, Pennsylvanians for Union Reform, headed by activist Simon Campbell, filed a public records request invoking a 1929 state law asking the state treasurer for the names, salaries, and other employment related information of all state employees in Pennsylvania. The law cited by Campbell in asking for the information states in part: “The information received by the Auditor General, the State Treasurer and the Secretary of the Budget under this section, shall be public information.”  Not only did Treasurer McCord refuse his request, but he has sued Campbell in court to stop him from even asking for information and in the process is asking the courts to declare all state laws governing public access to documents be declared invalid except the state’s Open Records Law.

While the Open Records Law strengthened the ability of citizens and the news media to gain access to government records, it contains some notable loopholes which the legislature is currently working to close.  By demanding the courts restrict Campbell’s right to even ask for such records, McCord’s actions have a chilling effect on government transparency.

Aside from the core issues involved in each of these cases such acts of official repression should be of great concern to every citizen.  Our representative republic can only function for the benefit of “we the people” when government at all levels is open and transparent, when the freedom of the press is preserved, and the flow of information is easily accessible and readily available.

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