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Governor Wolf's 2019-2020 Budget: A First Take

Third and State - February 23, 2019 - 12:29am

Governor Wolf’s 2019-2020 budget proposal reflects the unique political moment in which it is presented. Pennsylvania is a state poised between two visions of government in Pennsylvania. The governor’s budget points to the future being born. But the budget is constrained by another vision that is not dying as quickly as we would like.

 

The governor’s budget, like the budgets of his successful first administration, points the way to our future—a future in which Pennsylvanians act together to create inclusive prosperity that allows everyone, no matter their race, class, gender or where they live in the state to live a life of dignity, prosperity, and opportunity. However, until the General Assembly reflects the changing priorities of Pennsylvanians, which includes support for proposals that generate new revenues from the very rich and corporations, the state budget will not invest sufficiently in education at all levels, health care, infrastructure, and protecting our environment.

 

In the areas of wages, education, workplace development, and corporate tax reform, the governor’s budget takes important steps for Pennsylvanians and points the way to the future most Pennsylvanians want.

 

By proposing a significant increase in the minimum wage, his budget points the way to a future in which wages and benefits, and thus living standards, rise for all, driving our economy forward as people gain the means to purchase the goods and services that enable them to live increasingly comfortable lives.

  • The governor proposes to immediately increase the minimum wage to $12, with 50-cent increments to $15 by 2025, and cost of living increases thereafter, which would benefit over 2.2 million Pennsylvania workers. It will lift tens of thousands of people out of poverty and inject billions of dollars in new consumer spending into local economies throughout the state. And it will reduce state spending for Medicaid and other safety net benefits. Combined with new personal income and sales tax revenues this will contribute an estimated $36 million to the state budget in 2019-2020 and $120 million in 2020-2021, even after accounting for increased wages for child care and direct care workers. The governor also proposes to end the tipped minimum wage which is responsible for both higher rates of poverty and sexual harassment in the service industry. And he proposes to put more state effort into enforcing the minimum wage by reducing wage theft.

By including new funding for K-12, pre-K, higher education, and workforce training, the governor’s budget points us towards a future in which we invest much more in education at all levels and in workforce training, making Pennsylvania’s workers and the businesses who hire them the most productive in the world.

  • K-12 Education: After adding $1 billion in funding for K-12 schools in his first term, the governor calls for increases of $200 million in Basic Education and $50 million in Special Education funding. At a time when it is becoming hard to find qualified teachers, the governor proposes to raise the minimum starting salary for Pennsylvania teachers from $18,500 to $45,000. He also plans to extend schooling for many young Pennsylvanians by both lowering the compulsory age of school attendance from 8 to 6 and raising the drop-out age from 17 to 18.
  • Pre-K: After increases in pre-K funding by $115 million over the last four years, the governor proposes another $50 million investment next year. This will enable an additional 5,550 children to enroll in high-quality early learning programs and put the state more firmly on the path to free, universal pre-K education.
  • Higher Education: Governor Wolf includes a $7 million increase in funding (1.5%) for the 14 colleges in the Pennsylvania System of Higher Education (PASSHE) after a slightly larger increase last year. The budget also includes $8 million in community college tuition assistance.
  • Workforce Training: By executive order, the governor has created a workforce command center under the Statewide Workforce Education and Accountability Program (SWEAP) which will coordinate the variety of programs that provide workforce training to enable employees and potential employees to develop the skills that Pennsylvania’s employers seek. He also proposes to build on his major initiative in workforce development and training last year with an additional $4 million to double the investment in the PA Manufacturing to Career Training Grant Program and $6 million in additional funding of adult career and technical education training programs. The budget also includes $12 million for the Employer Skills Fund, a public-private partnership that will provide grants to businesses to develop innovative solutions to raise skill levels.

By presenting an innovative plan to use debt repaid by a new shale tax to fund infrastructure, the governor’s budget points us toward a future in which the state invests in the infrastructure that both protects us and supports thriving communities and expanding businesses.

  • The governor proposes a shale tax, that is, a severance on natural gas drilling and calls for using the revenues generated by the tax to pay back $4.5 billion in bonds that would be sold over the next few years. The proceeds from the bond sales will be used to fund major infrastructure improvements such as broadband expansion, flood prevention, and urban blight remediation that would set the stage for new investment in our cities and towns, including public transit. (We would add a few items to the list of investments that should be supported with these funds, including investments in commercial corridor improvements in our cities and towns and the development of community colleges in under-served areas of the state.)

And by calling for corporate tax reform that finally closes the Delaware loophole, his budget points to a future in which everyone—including the rich and multi-national corporations—pay their fair share of taxes, which generates the revenues we need for these public investments.

These are all important steps forward. But, while Governor Wolf’s budget points to a future in which the state government does far more than it does today to build a growing economy based on a rising standard of living for all Pennsylvanians, the aspirations evident in the governor’s proposals are constrained by the need to put forward budget proposals that can win the support of legislators who have a very different view of the role of government. Thus, in many areas the budget proposed by the governor is austere. We have advanced spending proposals for education, higher education, health care, environmental protection, and transportation infrastructure that are far bolder than those found in the proposed budget. And we have called for them to be paid for by a Fair Share tax that would cut taxes on working people and the middle class and raise them on the richest Pennsylvanians.

At a time when Pennsylvania government remains divided between two starkly different visions of the role of government, Governor Wolf has proposed a budget that moves as far as possible towards our vision of government while also making the first task of government, actually enacting a budget and the revenues to pay for it, possible. We urge the Republicans who lead the House and Senate to also recognize the practical and moral necessities of governing and enact this budget.

 

 

Federal Shutdown, Waiver Proposals Threaten SNAP, Put Residents at Risk

Third and State - January 8, 2019 - 2:22pm

The following is a guest blog post written by Sheila Christopher, Executive Director of Hunger-Free Pennsylvania.

Two recent developments in the federal government could spell disaster for thousands Pennsylvanians who receive monthly food benefits.

If President Trump keeps the government shut down through February, as he recently suggested, monthly food benefits could stop. The Supplemental Nutrition Assistance Program, or SNAP, is run by the U.S. Department of Agriculture, one of the federal agencies that shut down in late December as part of President Trump’s plan to force the American government to fund a wall along the Mexican border.

The USDA reported that it only has enough leftover money to pay for January’s benefits, and its reserve funds do not cover the total projected cost for February. A report from the Center on Budget and Policy Priorities found that 42 million Americans received SNAP benefits in 2017, 44 percent of whom were part of working families.

Other food programs, such as the Food Distribution Program on Indian Reservations and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) are also in serious danger of losing funding. Staffing for federal food and nutrition services has been cut by 95 percent since the shutdown began.

Starvation hasn’t been a public health problem since the food stamp program was expanded in the 1960s and 1970s, but, according to reports, if this shutdown continues for months or even a year as President Trump said on Friday, that problem could return.

Even if the shutdown standoff somehow before the remaining funding is used up, SNAP recipients are still in danger of losing benefits from the federal government.

A proposal by the Trump Administration would force states like Pennsylvania to stop waiving work requirements for able-bodied adults.  This could impact nearly 100,000 commonwealth residents, according to reports.

Federal rules allow able-bodied adults without work to continue collecting benefits if they live in an area where work is scarce. In late December, the USDA announced plans to tighten these requirements. Only people living in areas with unemployment rates above 7 percent would be exempt from these restrictions.

In October, Forest County’s unemployment rate was 6.4 percent, and 19 additional Pennsylvania counties --- Cambria, Carbon, Clarion, Clearfield, Clinton, Fayette, Greene, Huntingdon, Indiana, Lawrence, Luzerne, Monroe, Northumberland, Philadelphia, Pike, Potter, Schuylkill, Somerset and Tioga --- had unemployment rates between 5 and 6 percent.

Even though a number were dangerously close, none of Pennsylvania’s 67 counties met the 7 percent threshold, meaning the entire state of Pennsylvania would be affected by these restrictions, and that could affect 95,788 Pennsylvanians, according to the Department of Human Services. 

Because of the government shutdown, it is unclear when these restrictions could go into effect. If the shutdown ends and the SNAP program funding resumes, recipients could end up losing benefits regardless because of these requirements.

Governor Tom Wolf has worked to uphold the current work requirement waivers.

A state DHS spokesperson recently commented on the restrictions: “Reducing a person’s access to food does not get them a job—it can only make that more difficult.  Many of these people experience barriers to work such as a lack of family-supporting jobs in their community, transportation access, insufficient education or job training, mental illness and substance use disorders, among others.”

Proponents of work requirements claims programs like SNAP keep Pennsylvanians from working. And that cutting off food assistance to people who aren’t working enough to fully support a family will save taxpayer money. They’re wrong on both accounts.

One in seven Pennsylvanians currently use SNAP, which keeps food on the table for thousands of low-wage and part-time workers who can’t find steady employment, veterans, people who are homeless, and people struggling with addictions, in addition to children, seniors, and people with disabilities. The average monthly SNAP benefit totals just $120 per person, or just $1.34 per meal.

Study after study finds that when people have access to help that puts food on the table and provides health care, they are better able to work and have higher earnings, which is better for our entire commonwealth. No one should go hungry, especially when we have the resources to keep that from happening.

New Year's Day Minimum Wage Hikes Raise Pay for Millions of US Workers But Not in PA; New Legislature Must Change That

Third and State - December 31, 2018 - 12:10pm

As of today, this first day of 2019, 20 U.S. states will raise their minimum wages, lifting pay for 5.3 million workers across the country and 614,000 in four of Pennsylvania's neighboring states. The increases in our neighbors include a $0.25 per hour adjustment for inflation in Ohio and New Jersey, a $0.50 per hour increase in Delaware, and a $0.70 to $2.00 per hour increase in New York State—the biggest increase in New York City.

Pennsylvania workers aren't among those able to toast in the New Year knowing that some of the benefits of a growing economy will be shared with them in 2019. As KRC labor economist Mark Price detailed a year ago, the failure to raise the Pennsylvania minimum wage will mean that Pennsylvania workers in food services and other lower-wage sectors will continue to lag behind their counterparts in neighboring states—especially in rural counties where low-paying service industries are a large part of the local economy.

Pennsylvania's new legislature needs to change this picture. Given the broad bipartisan voter support for a higher state minimum wage and given that an increase would especially benefit workers in rural counties, conservative lawmakers from those areas should be leading the fight for a higher minimum wage.

Rural lawmakers should also be fighting to eliminate the tipped minimum wage because local restaurants are a large part of their economies. Workers at these rural restaurants often struggle to make ends meet, even while they endure sexual harassment from bosses and customers just to earn a meager living.

House Bill 1 and Senate Bill 1 in the new Pennsylvania legislature should be strong proposals to lift the Pennsylvania minimum wage. These bills should also:
  • eliminate the tipped minimum wage,
  • index the minimum wage to the median wage for full-time hourly workers,
  • eliminate state legislative pre-emption that blocks higher wage cities and counties from raising local minimum wages in line with their higher cost of living, and
  • strengthen enforcement against wage theft so that Pennsylvania workers actually get the pay to which minimum wage, overtime, and other laws entitle them.

ANALYSIS: One Year Later, the Tax Cut and [Con] Jobs Act

Third and State - December 20, 2018 - 2:31pm

December 17th marked the one-year anniversary of President Trump’s “Tax Cut and Jobs Act.” While we knew the impact of this legislation would mean more money shifting upwards into the hands of the already wealthy and large corporations, we have new data, thanks to the Americans for Tax Fairness, corroborating that reality.

And surprise! Contrary to the lies the Trump White House and backing Republicans sold the American people prior to the passage of this legislation, the money has not gone to workers or the middle class.

President Trump said the average American would receive a $4,000 pay raise as a result of this legislation. One year out, only 4.4% of workers received a bonus or wage hike, with only 413 out of 5.9 million employers passing the tax cuts down to their employees. See on the pie chart below the slice of blue representing the 413 companies that passed the tax cut down to workers? Neither do I. The fact of the matter is hardly any of the tax cuts were passed down.

The Economic Policy Institute showed that cash bonuses gave workers only a 2 cent increase in hourly compensation, adjusted for inflation. Corporations are getting 11 times as much in tax cuts as they are giving away in bonuses or wage hikes.

Not only that, job cuts have also occurred. Nearly 225,000 private sector job cuts have been announced at 338 companies since the law went into effect, and this estimate is low since some companies did not quantify their job cuts (like Amazon and Wells Fargo).

So, what are companies doing with the money? Money from the tax cut is actually going to stock buybacks, which puts money back into the hands of the wealthy. In fact, corporations across the US spent 128 times as much on buying back stock than they spent on workers’ bonuses and wage increases—$906 billion has been spent on stock buybacks since the law was passed while only $7.1 billion has been spent on wage hikes/bonuses.

 

This legislation has not boosted wages for the average American—it has, in fact, put more money into the hands of corporations and the already rich, worsening income inequality and widening the racial wealth gap. This tax cut will also increase the deficit by about $1.9 trillion in the next ten years, meaning less funding for health care, housing, infrastructure, and other vital services people rely on. Moving forward, we should change the name of the legislation from what it pretended to be: Tax Cut and Jobs Act to what it actually is: Tax Cut and [Con] Jobs Act.

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