Posts Tagged pension

Leave Us Alone


It was a simple, yet revealing summary of the problems plaguing Pennsylvania’s businesses.  “Please stop trying to ‘fix’ it,” the business owner begged. “Leave us alone.”  That plaintive plea came as three new studies show our state’s economy is sagging under the weight of new regulations, higher taxes, and unsustainable government spending.

Recovery from the Great Recession of 2008-2009 has been one of the slowest in history.  But, some states have bounced back faster and farther than others.  Pennsylvania is not one of those states.  The Fall 2016 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research found half of the business owners/chief executive officers surveyed saying the state’s business climate has gotten worse over the past six months, and only five percent reporting improving business conditions.

Like other states the people who actually run businesses reported a dramatic deterioration in economic conditions in Pennsylvania during the Great Recession. Optimism returned briefly during the Corbett Administration, but tanked less than three months into Governor Tom Wolf’s tenure.

Governor Wolf began his administration pushing for historic increases in both state spending and in taxes.  The Republican-controlled legislature successfully derailed that effort last year, but then caved into $1.4 billion in higher spending this year – earning the disapproval of 86% of the owners/CEOs.  All of this creates a climate of uncertainty leaving one owner to comment: “We expect another shoe to drop making it difficult to operate in Pennsylvania.”

The biggest shoe that hasn’t dropped is who will pay to bail out Pennsylvania’s massively underfunded public pension system.  Business owners fear a significant portion of that burden will fall upon them.  And the problem is, to use a currently popular word, huge.

The American Legislative Exchange Council (ALEC) recently released a study of state pension systems entitled Unaccountable and Unaffordable.  It pegged Pennsylvania’s unfunded pension liability at nearly $212 billion dollars.  The commonwealth has amassed the 44th largest unfunded pension liability among the fifty states.

Compounding the problem is Pennsylvania has little room in which to maneuver in finding new revenue streams (taxes) to fund the public pension system.  The Tax Foundation’s State Business and Tax Climate Index found we have the 24th highest state tax burden in the nation.  We already have the most damaging taxes on the books: the Personal Net Income tax, Corporate Net Income tax, and a broad-based state sales tax.  Already suffering from a poor tax climate, any move to expand, increase or create new taxes would further erode our competitiveness.

These factors weigh heavily on the minds of business owners/CEO as they consider locating or expanding in Pennsylvania.  Forty percent said Governor Wolf’s proposed tax hikes have caused them to not expand their businesses.  That factor was second only to the explosion of new federal regulations in impeding business growth.

Why should non-business owners care about all of this?  Business relocation into Pennsylvania and the expansion of existing businesses will result in the creation of new jobs.  Penn’s Woods has lagged the national average in job creation in large measure due to state taxes and regulations.  The 2016 Keystone Business Climate Survey found 21% of the responding businesses reduced their employee compliment over the past six months while only 11% added employees.

Thus Pennsylvania continues on a downward spiral.  And there is little optimism among those on the front lines of business activity in the state for improvement at any point in the near future.  Uncertainty is Kryptonite to business development.  At the state level uncertainty abounds.  Governor Wolf continues to press for increased spending and higher taxes at a time when the commonwealth already faces a structural budget deficit.  The recent record of legislative Republicans has shaken confidence in their ability to either deal with cost drivers like the pension crisis or to successfully oppose future tax hikes.

The bottom line is Pennsylvania’s business climate will not improve, and significant job creation resume, until and unless state government gets spending under control, addresses the looming pension crisis, cuts onerous regulations and provides some measure of tax relief to businesses ready to expand but which are being held back by the heavy hand of government.

(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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Governor Wolf PERCs Up


After just one year in office it is clear Pennsylvania Governor Tom Wolf is the most spendthrift governor in the nation.  After all, his proposed and still unresolved 2015-16 state budget called for a tax hike greater than that of all other 49 states combined.  It was a bit startling to see this ultra-big government advocate actually announce he was going to shutter a state agency.

You might think fiscal conservatives would applaud his move to close the Public Employees Retirement Commission (PERC) an obscure state agency that most Pennsylvanians don’t know even exists.  But, any time a politician acts out of character it is a good idea to dig deeper into his or her motives.  Such is the case with Governor Wolf’s proposed elimination of PERC.

According to its website, the Public Employees Retirement Commission is responsible for “monitoring public retirement plans in Pennsylvania, studying the retirement needs of public employees … develop objectives and recommend legislation to the Pennsylvania legislature.”  PERC further administers various mandated reporting on the health of public employee pensions and funnels state funding to municipal pension systems throughout the state.

This trip takes us through the tall weeds of Pennsylvania’s arcane and convoluted public employee pension system, but the bottom line is PERC is responsible for monitoring the health of municipal pension systems and in the process of performing that duty raises a red flag when such plans are headed into financial trouble.  As such it performs an important watchdog function especially at a time when a significant number of municipal pension systems, especially in cities, are under fiscal stress.

In addition to providing independent oversight of municipal pension systems, PERC is required to administer the process of distributing some $250 million annually to municipalities.  According to a news release from State Representatives Stephen Bloom, Seth Grove and Keith Greiner, that amounts to 20% of the contributions that are made annually to municipal pension funds.  The representatives, Republicans all, voiced concern that without those funds many municipalities would be forced to raise property taxes.

Concern over the potential demise of PERC has produced something rare in Harrisburg, bi-partisan agreement.  State Auditor General Eugene DePasquale, a Democrat, said: “If people think there’s a (municipal) pension problem now, wait until municipalities don’t get their (Act 205) payments.”   That DePasquale, who has been one of the more rational voices on fiscal matters would sound such a warning speaks to the seriousness of the issue.

To complicate matters further Governor Wolf plans to shut down PERC without seeking legislative approval.  Using the “pen and phone” approach popularized by President Obama, the governor says the agency is simply going to cease to exist.  Republican lawmakers are crying foul pointing out the governor has no authority to close an agency authorized by an act of the General Assembly.  So not only does Governor Wolf’s plan to sunset PERC put public pension plans at risk and likely trigger municipal tax increases, but it creates a constitutional crisis as well.

Pension reform has been a major component of the ongoing budget battle between Governor Wolf and the Republican-controlled legislature.  Senate Majority Leader Jake Corman, among others, has vowed not to consider any of the governor’s proposed broad-based tax hikes until the state’s pension crisis is resolved.  Why then would Wolf want to complicate matters by tossing PERC under the bus?

Perhaps because Governor Wolf simply refuses to admit there actually is a pension crisis. In his view, pension systems across Penn’s Woods are just fine – all they need is more money.  As a captive of big labor the governor is committed to blocking any and all attempts at pension reform instead favoring throwing billions more in taxpayer dollars into systems at all levels that are simply no longer viable.

While many municipal pension funds, especially those administered by townships, are financially secure, state employee funds and those in larger cities must either be reformed or taxpayers will see historic tax increases.  That Governor Wolf would open a new front in the pension battle by moving to shutter PERC shows not only is he not serious about pension reform, but he will do everything in his power to prevent it from happening.

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

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

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Harrisburg, We Have a Spending Problem


Pennsylvania state government has a structural budget deficit of $1.2 billion dollars.  This somewhat mystical figure is agreed upon by just about everyone.  Given this rare point of agreement, why then is the ongoing budget impasse focused on spending increases rather than spending cuts?

When the working families of Penn’s Woods sit down to pay their monthly bills and income is less than expenses then the family cuts back on spending.  That is because ordinary people can’t just walk into the boss’s office and say “I don’t have enough money to pay my bills so you will pay me more next month.”  And certainly, faced with a deficit, working families – and even most businesses – don’t go out and spend more.

But, that is exactly what Governor Wolf is proposing.  He wants a $4.7 billion increase in state taxes.  If you accept that there is a $1.2 billion structural deficit, then he also wants to increase spending by $3.5 billion.  It is an unrealistic proposal and the reason why the state budget impasse has dragged on for five months.

The governor, however, has won on this front: Republican counter-proposals have focused not on spending cuts, but on increasing spending by less.  Given everyone has bought into the structural deficit number the goal should be to reduce spending to bring actual income and expenditures into balance.  That is what happens in the real world.

Government, however, does not live in the real world.  At no point has a budget been put forward that would even slow the growth of state government let alone cut spending.  The battle has been all about how much bigger state government will become, not about living within our means.

Driving this irrational approach to budgeting is spending on K-12 public education.  The biggest lie since “if you like your health insurance you can keep your health insurance” is that Governor Tom Corbett took a meat axe to education spending.  A cabal of Democratic politicians, labor unions and their media apologists perpetrated that lie during last year’s gubernatorial campaign even though actual spend numbers prove state tax dollars spent on public education increased to record levels under the former governor.

Governor Wolf has never shifted out of campaign mode, and in an effort to repay the unions who financially backed his campaign has made historic increases in education spending a key demand.  Education is a motherhood and apple pie issue.  After all, who doesn’t want our children to have the best education possible?  We all do.  The rub is little of the increases in spending actually benefit children, going instead to pay for bloated administrative bureaucracies and skyrocketing pension expenses.

To their credit, legislative Republicans are insisting on structural reforms to the state’s pension system before agreeing to any spending increase.  But, they have accepted without as much as a whimper the governor’s premise that spending must go up.  Wolf is already crowing that he has gotten Republicans to agree to a “historic” (meaning massively large) increase in state spending on education.

Yet even today, as the budget that should have been done before Independence Day fireworks remains unresolved as we shop for Thanksgiving dinner, not one single party to the budget debate has put on the table any serious menu of potential spending cuts.  Even the GOP’s on-time, no tax hike budget which the governor vetoed included significant spending hikes.  No effort was made to cut spending to match projected income.

There is an old saying in sports that you can’t win by simply playing defense.  That is what has happened as the budget game goes into triple overtime.  At no point has there been an offense designed to cut spending, just defense over spending increases.  So the taxpayers of Pennsylvania have already lost the game, the only hope now is that the final score is not too lopsided.

(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: Pension Crisis


Radio Program Schedule for the week of July 19, 2014 – July 25, 2014

This week on Lincoln Radio Journal:

  • Eric Boehm has news headlines from www.paindependent.com
  • David Taylor hosts a Capitol Watch roundtable discussion on what happens next with public sector pension reform with Kevin Shivers of the PA Chapter of the National Federation of Independent Business and with State Representative Steve Bloom (R-Cumberland)
  • Lowman Henry has a Town Hall Commentary on the immigration crisis

This week on American Radio Journal:

  • Lowman Henry talks with Jason Fichtner from the Mercatus Center at George Mason University about the failure of the home mortgage interest deduction to spur middle class home ownership
  • Andy Roth of the Club for Growth has the Real Story on conservative wins in run-off races in Alabama and North Carolina
  • Eric Boehm and Benjamin Yount have a Watchdog Radio Report on the impact of illegal immigration on non-border states
  • Col. Frank Ryan, USMC (Ret.) has an American Radio Journal commentary on trickle-up poverty

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: Pension Reform, State Budget


Radio Program Schedule for the week of June 28, 2014 – July 4, 2014

This week on American Radio Journal:

  • Lowman Henry talks with George O’Connor of Chime Media about the threat of Chinese economic warfare
  • Andy Roth of the Club for Growth has the Real Story behind the Thad Cochran win in the Mississippi U.S. Senate race
  • Eric Boehm and Benjamin Yount have a Watchdog Radio Report on this week’s Supreme Court rulings
  • Jennifer Stefano has an American Radio Journal commentary on Eric Cantor’s future

This week on Lincoln Radio Journal:

  • Eric Boehm has news headlines from www.paindependent.com
  • Lowman Henry has a Newsmaker interview with Nathan Benefield of the Commonwealth Foundation on the latest effort at state pension reform
  • Eric Montarti gets a budget week overview from Dr. Jake Haulk on the Allegheny Institute Report
  • Anna McCauslin has a Lincoln Radio Journal commentary on Paycheck Protection moving through the state House

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 American Radio Journal: Political Extortion


Radio Program Schedule for the week of November 2, 2013 – November 8, 2013

This week on American Radio Journal:

  • Lowman Henry talks with Peter Schweizer author of the new book Extortion: How politicians extract your money, buy votes and line their own pockets
  • Andy Roth of the Club for Growth has the Real Story behind the rejection by the U.S. Senate of President Obama’s nominee to head the Federal Housing Finance Agency
  • Eric Boehm and Katie Watson have a Watchdog Radio Report on governor races in New Jersey and Virginia
  • Dr. Paul Kengor from the Center for Vision & Values at Grove City College has an American Radio Journal commentary on bonding over baseball

This week on Lincoln Radio Journal:

  • Eric Boehm and Benjamin Yount have news headlines from www.paindependent.com
  • Lowman Henry talks about the role of the Pennsylvania Superior Court with court nominee Vic Stabile
  • Joe Geiger of the First Nonprofit Foundation has Tracy Cutler of the Lancaster Community Foundation in the Community Benefit Spotlight
  • Jennifer Stefano has a Stefano Speaks! commentary on who will pay for Pennsylvania’s pension crisis

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: Pension Reform


Radio Program Schedule for the week of May 11, 2013 – May 17, 2013

This week on American Radio Journal:

  • Lowman Henry talks with Phil Kerpen of American Commitment about the impact of a possible carbon tax
  • Andy Roth of the Club for Growth has the Real Story behind the Mark Sanford comeback in South Carolina
  • Benjamin Yount takes a Watchdog look at the compensation practices of Goodwill
  • Colin Hanna of Let Freedom Ring, USA seeks your opinion on immigration reform on his American Radio Journal commentary

This week on Lincoln Radio Journal:

  • Eric Boehm and Melissa Daniels have news headlines from www.paindependent.com
  • David Taylor of the PA Manufacturers Association hosts a Capitol Watch look at Governor Tom Corbett’s plans to reform Pennsylvania’s public pension system with Kevin Shivers from the PA Chapter of the National Federation of Independent Business and Matthew Brouillette of the Commonwealth Foundation
  • Lowman Henry has a Town Hall Commentary on gas, booze and feral swine

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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