Tuesday, February 28, 2006

Carole Rubley: Spendell's Partner in Thievery

Carole Rubley: Spendell's Partner in Thievery

The revelation for many in this Commonwealth Foundation report, is the amount of debt being carried by the Pennsylvania taxpayers. How many Pennsylvanians know that they are paying a billion a year in interest? It's bad enough that our taxes our so high, but to stick our kids with this Visa bill is obscene.

It's easy to blame the Governor, but he couldn't do it without his partners in the legislature. With Republicans who can spend like Carole Rubley, who needs Democrats? Wouldn't it be nice is Rubley voted against a bloated budget for a change?

As if Rendell doesn't have enough borrowing plans, Carole Rubley was more than happy to come up with her own plans for our children's earnings Growing Greedier II.

The habits of our politicians are a direct attack on our children and grandchildren who will inherit this legacy of debt unless we act now to stop it.


The Rendell Budget: Would Your Family Spend Like This?
Nathan A. Benefield

The Commonwealth of Pennsylvania had a good tax year - that is, in government collection terms. General Fund revenues will exceed expectations this year by a projected $353 million. But instead of returning that money from where it came - the taxpayers - Governor Rendell wants to spend more money while promising "no new taxes" and an "affordable" budget.

"No new taxes" and "affordable" may sound like good news to taxpayers; however, the governor's budget is far from affordable or fiscally prudent. In fact, if any Pennsylvania family spent its money like this, it would find itself in dire financial straits very quickly.

Imagine that the Commonwealth of Pennsylvania is just a big family - the CoPA family. The CoPAs expect to earn $25,225 next year, yet they plan to spend $25,425 - $200 more than they will take in. How can the CoPAs spend more than they earn? Well, the CoPAs currently have $204 in their savings account, and they intend to spend all but $4 of it next year.

Sound financially wise? Of course it doesn't, yet this is exactly how Governor Rendell wants the Commonwealth of Pennsylvania to budget its money. His proposed 2006-07 General Fund budget would spend $25.425 billion, yet state government will collect only $25.225 billion next year - $200 million less. While there will be a projected $204 million in surplus revenues at the end of June this year (i.e., "savings" that aren't even in the bank yet), Governor Rendell plans to spend almost all of it.

Let's look at the CoPAs again for a moment. Like most families, the CoPAs are in debt - to the tune of $7,200 to be exact, or more than 28% of their expected annual income. But instead of reducing what they owe, the CoPAs plan to pull out the credit card once again and plunge deeper and deeper into debt.

Governor Rendell is managing Pennsylvania's finances the exact same way. His 2006-07 General Fund budget proposes issuing another $1.1 billion in general obligation bonds, raising our total outstanding debt to $7.9 billion. Payment on interest for these bonds will be $853 million in 2006-07 and is expected to exceed $1.2 billion by 2010-2011 - when the total debt reaches $9.9 billion. But the borrowing doesn't stop there. Governor Rendell anticipates borrowing more than we pay off each of the next four years - just as we have done for the past six.

This is hardly a sustainable lifestyle. So what does Mr. CoPA do when he's pushed traditional modes of borrowing to their limits? He finds other, more creative ways to satisfy his spending habits. Instead of charging the "maxed out" family credit cards, he asks two of his buddies from the local bar for $250 dollars each, and he promises to pay them back with interest.

This is the governor's proposed "Jonas Salk Legacy Fund." The $250 million in bonds that would be issued next year to build laboratories and buy equipment for scientists is not a line item in the budget, but will nonetheless have to be repaid by future generations in addition to our state's official debt via the formal budget.

The Commonwealth Financing Authority (CFA) similarly hides debt for state government. The CFA is authorized to issue $250 million in bonds each year, but is considered "independent," since its debt is not "tied to the credit of the state." However, the CFA bonds are paid from the General Fund through the Department of Community and Economic Development, which has an "agreement" with the CFA to provide enough money to pay their debt. The debt owed by the CFA is not listed in the General Fund budget, although the escalating debt payments will also be paid by future generations of taxpayers.

Finally, let us imagine that Mr. CoPA receives a promotion and a healthy raise at work. When a family's income grows, financially prudent households pay off debt or invest their money wisely. But families like the CoPAS don't, and Mr. CoPA decides instead to buy a second home and a new car. Instead of reducing his debt, he actually adds to it with his expected windfall.

The Commonwealth of Pennsylvania has made a habit of doing the same. During the economic boom of the 1990s, when state tax revenues were higher than expected, Pennsylvania General Fund spending increased by 55 percent - 30 percent higher than the combined rates of inflation and population growth. When the 2001 recession hit, rather than reducing spending, the state raised taxes, increasing both the current and the future debt of Pennsylvania's real families.

Now, in 2006, when the economy is generating higher than expected tax revenues, a fiscally wise "head of household" would refund those surplus taxes, reduce the "family" debt, or save more money for a "rainy day." Unfortunately for Pennsylvanians, Governor Rendell's budget proposal will spend the savings, borrow more money, add more off-budget debt, and put both the CoPA family and our real families' finances on increasingly shaky ground.


Nathan A. Benefield is a policy analyst with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, non-profit public policy research and educational institute located at the foot of the Capitol in Harrisburg.

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

Commonwealth Foundation | 225 State Street, Ste. 302 | Harrisburg | PA | 17101

Friday, February 24, 2006

Minimum Wage Hike hurts Pennsylvania’s Poor

For Immediate Release from the Libertarian Party of Pennsylvania:
Date: 02/24/2006

For more information contact:
Doug Leard (Media Relations) or David Jahn (Chair) at 1-800-R-RIGHTS

Minimum Wage Hike hurts Pennsylvania’s Poor

Study forecasts 10,000 more unemployed Pennsylvanians

A recent study concludes that proposed legislation to increase the minimum wage would “result in a loss of 10,000 jobs and impose a $350 million hit on the Pennsylvania economy.”

In the study, Dr. David Macpherson, an economist at Florida State University determined that the minimum wage increase would cost employers over $262.7 million. In addition, the increase would cost $86.7 million in lost income for the 10,000 employees who will loose their jobs when their employers can no longer afford their wages.

Libertarian Party of Pennsylvania State Chair, David Jahn, stated “as this study indicates, a minimum wage increase hurts the poor by destroying jobs and providing workers with less employment options.”

MacPherson’s study also reveals that most minimum wage earners are not poor. Over half – 56.2% are under 24 and 45.9% still live with their parents. 65% are part time employees. Only 10% are the sole earners with children.

The study found that the average family income of minimum wage employees in Pennsylvania is just over $49,000 and that 80% of the benefits of the wage hike will go to families that aren’t poor.

Current bills before the state legislature propose to raise the minimum wage by January 1st 2007 to $7.15 per hour and then tie the wage to annual cost of living adjustments.

“The bureaucrats in Harrisburg continue to drive stake after stake into the heart of Pennsylvania’s economy,” stated Libertarian Party of Pennsylvania Media Relations Chair, Doug Leard. “Despite ample evidence that minimum wage increases hurt the economy and the poor, Harrisburg politicians pursue them as election-year talking points. After the fiasco of their pay raise, you would think the bureaucrats would understand that the days of politics as usual in Pennsylvania are over.”

The Libertarian Party is the third largest political party in the United States with over 600 officials serving in office throughout the nation. Please visit www.LP.org or www.LPPA.org for more information on the Libertarian Party.

Libertarian Party of Pennsylvania
3863 Union Deposit Road #223
Harrisburg, PA 17109

Wednesday, February 22, 2006

Free Association: What To Do About the Ports

"The only good solution is to privatize the ports. This would not mean transferring them to well-connected corporate cronies, but rather, as Brad Spangler suggests, ceding control to the people who work and use the ports and who are not tainted by the corporate state. I'd prefer real profit-oriented ports with owners who risk their own capital to bureaucratic ports with politicized managers.

The other thing to do is to liquidate the empire in order to drastically reduce the odds that someone will want to do our society grave harm."

Free Association: What To Do About the Ports

Monday, February 13, 2006

The Pennsylvania Constitution does not need a makeover

Be careful what you wish for

By Dimitri Vassilaros
Sunday, February 12, 2006

The Pennsylvania Constitution does not need a makeover. The commonwealth does need new politicians -- governor, legislators and judges. A constitutional convention -- called for in the name of good government -- could be a catastrophe. Do Pennsylvanians really want to risk losing control of the convention to the same morally bankrupt politicians who were responsible for the pay-raise/pay-repeal fiasco?

There is a much better reason why the state's citizens should not be seduced by the temptation.

"What change in language would matter if the language is already clear?" said Bruce Ledewitz, a law professor at Duquesne University and an expert on the Pennsylvania charter. Mr. Ledewitz is co- director of the law school's state Constitution Web site (paconstitution.duq.edu/). It is a must-read for anyone who wants to learn about the text, history and meaning of the near-forgotten document.

The only thing wrong with the state Constitution is that so few Pennsylvanians know much about it. If they did, they would discover a magnificent document that, if adhered to by the politicians in Harrisburg, would be the definition of good government.

One of the arguments for a constitutional convention is that it would be a simple way to reduce the size of the 253-person Legislature, plus their bloated staffs.

"The irony is the Legislature's size was increased on purpose to prevent corruption," Ledewitz said about a series of good-government constitutional reforms in 1874. The thought was to have so many representatives that bribing a critical mass of them would be almost impossible.

My, my, how times have changed.

If Pennsylvanians want fair taxation -- the government not playing favorites with this special-interest group or that -- it's already codified in the Constitution.

"I say to my students that our whole tax system is in radical violation of the state Constitution," Ledewitz said. Article 8, Section 1, mandates that all taxes shall be uniform on the same class of subjects.

When Tom Murphy was mayor of Pittsburgh, he went to the Legislature on behalf of a financial services company that had threatened to leave the city, Ledewitz said. The state created an exemption to the Pittsburgh Business Privilege Tax for companies in the securities industry. "That is an obvious and complete violation of the uniformity clause," Ledewitz said.

The mischievous machinations that led to last summer's pay-jacking were another radical violation of the Constitution. Several actually.

The bill dealt with more than one subject. It was not considered for three days by each chamber of the General Assembly. And it authorized an unconstitutional pay raise -- labeled as an "unvouchered expense" - - for the legislators. To name a few of the violations.

Ledewitz can name more. Many, many more.

The more Pennsylvanians learn about their contract with the government, the more they will realize that no fix is needed for something that is not broken.

Saturday, February 11, 2006

Local Tax Enabling Act is Invalid!

From: "Ken V. Krawchuk"
Date: Thu Feb 9, 2006 5:07 pm
Subject: Wage Taxes and the Pennsylvania Constitution


Speaking of wage taxes, did you know that the local, non-property taxes
in Pennsylvania (from little taxes like the nuisance $5 occupational
privilege taxes, to big taxes like the treasured 1% earned income tax that
school boards love to levy) are all based on Act 511 of 1965, colloquially
known as the Local Tax Enabling Act?

Did you also know that Article 3, Section 10 of the Pennsylvania
Constitution says, "All bills for raising of revenue shall originate in
the House of Representatives...", the identical wording as in the
Constitution for the United States of America?

And did you know that if you go to a law library and look at the
annotation near the very top of Act 511, it said "SB 425", as in "Senate
Bill 425"?

Unless the House has decided to refer to one of their bills as a "Senate
Bill", obviously the Local Tax Enabling Act did not originate in the
House. Legally speaking, it's "void ab initio" (meaning "bad from the
start") and not a valid law.

Our friends in the Supreme Court have upheld this unarguable violation of
our Constitution, saying (paraphrasing) that no one complained soon
enough. Got that? So if they passed a law against freedom of religion,
for example, and no one notices right away, it's law? Cut me a break!

This is only another piece of proof that there is not an ounce of
integrity left in Harrisburg, not in the legislature, the courts, or the
executive branch. The culture of corruption has permeated their every
action for decades. They may just have well printed our Constitution on
toilet paper and distributed the rolls to every bathroom throughout the
Commonwealth as a constant reminder. Pay raises and repeals, nuisance
taxes, red light cameras, etc. are only the symptoms. The disease is
their lack of integrity, and PaCleanSweep is the cure.

We can disagree over gay marriage, gambling, levels of school funding,
term limits, legislature size, etc., but one thing we should never lose
sight of is our integrity. The Constitution is our job description, love
it or hate it, and if our oaths of office mean anything, then our duty is
clear: We follow the constitution.

In his Farewell Address, George Washington warned about the very issue
Pennsylvania faces today: "If the Constitution be wrong in any particular,
let it be corrected by amendment in the way that the constitution
designates. But let there be no change through usurpation; for though
this in one instance may be the instrument of good, it is the customary
weapon by which free governments are destroyed."


- Ken

Ken Krawchuk
Libertarian for Pennsylvania Governor (1998, 2002)
Past Chair, Libertarian Party of Pennsylvania (2002-04)

Krawchuk '02
c/o PO Box 260
Cheltenham, Penna. USPO 19012

(215) 881-9696 (voice)
(215) Krawchuk (fax)

Tuesday, February 07, 2006

Unholy alliance: politicians and judges

Does anyone really doubt that the Pennsylvania legislature and judiciary collude regularly to expand their power and stifle dissent?

Group alleges legislature, court colluded

By Mario F. Cattabiani and Angela Couloumbis
Inquirer Staff Writers

HARRISBURG - Pennsylvania's leading watchdog group alleged in a lawsuit yesterday that the highest ranks of the legislature traded millions in state aid to the courts for favorable decisions dating to 1999 - and possibly culminating last summer in generous pay raises for more than 1,000 judges.

A state Supreme Court spokesman called the accusations "preposterous."

The allegations were laid out in a revised federal court challenge in Harrisburg to last summer's legislative pay raise, in which Common Cause of Pennsylvania contends that there has been political "back scratching" between top House and Senate members and the state Supreme Court for years.

At the heart of the new allegations is the contention that, seven years ago, legislative leaders negotiated with the high court to fund the state's judiciary, fearing that if they did not, the justices would rule against them on two suits involving constitutional challenges.

Given that history, Common Cause alleges it is more than likely that last summer's unpopular pay raises were the result of a similar deal between Chief Justice Ralph Cappy and legislative leaders.

"What we are telling the court is that this may not be a unique instance, that this may have been going on at various levels for quite a few years," said Barry Kauffman, executive director of Common Cause. "We are asking the [federal] court to get to the bottom of it. If it is going on, it needs to be stopped and the federal courts need to put the hammer down."

Speaking on behalf of Cappy, Tom Darr, deputy court administrator of Pennsylvania, said: "It is regrettable that an organization like Common Cause, which has always stood for the principles of good government, would file such a frivolous lawsuit."

He added: "A preliminary reading shows the allegations to be preposterous, baseless and reckless and the relief sought ridiculous."

The suit provides as evidence conversations held behind closed doors between Republican members of the House in June 1999.

During that internal caucus meeting, then-Majority Leader John M. Perzel (R., Phila.), now speaker of the House, allegedly told colleagues that they were moving ahead with the court funding because "we cannot afford to have the courts rule against us" on the two suits. One suit involved workers compensation, the other an increase in the state tax on gasoline for highway-improvement projects.

Perzel's comments came after members of the caucus complained that the legislature should not give in to "blackmail" by the court, the suit contends.

Former Rep. Ed Krebs, who was at the meeting, attested to the allegation in an affidavit filed with the amended suit. In it, he also alleges that then-Speaker Matt Ryan told fellow Republicans that another member, J. Scot Chadwick, had acted as a negotiator with the Supreme Court on the matter.

In an interview yesterday from his Lebanon County home, Krebs said, "To me, it meant that if we didn't give them the money for the courts, we would lose the cases. It was a quid pro quo."

Krebs retired from the House in 2002 after serving 12 years.

Chadwick, a former Republican representative from Bradford County, told the Associated Press that he did consult with court officials over the 1999 legislation, but that the meeting was informational, not a quid pro quo negotiation.

"I think that would be very wrong," he said. "I am an attorney by training and that would raise a red flag with me immediately."

The high court wound up ruling in favor of the legislature in both cases.

That wasn't the only instance of possible collusion, according to the suit.

Last summer, the suit alleges, Cappy lobbied the legislature hard to implement the pay raise, which increased legislative salaries as well as those for judges and other state officials. It was rescinded in November by a contrite legislature that had been whipped in public-opinion polls.

The state Supreme Court has agreed to hear a challenge to both the pay raise and the legislature's move to overturn it. Cappy has recused himself from hearing the case.

That lawsuit quotes an August e-mail about the pay raise that was allegedly written by Republican Senate employee Suzanne O'Berry to Matthew Brouillette, head of the Commonwealth Foundation, a conservative think tank.

"I watched the formulation of all this up close with my 'special connections' to certain offices, and it was much more unsavory than a lot know," O'Berry wrote, according to the suit. "... I will say that family dining debate has become much more exciting."

O'Berry is married to Mike Long, a top aide to Senate President Pro Tempore Robert C. Jubelirer (R., Blair). Jubelirer is among the defendants named in Common Cause's suit.

O'Berry told the Associated Press that she does not recall the e-mail and had no other immediate comment.

Just last week, Perzel asked Cappy and the court for guidance in crafting a lobbying disclosure bill that would withstand legal scrutiny.

Attempts to reach Perzel and Jubelirer were unsuccessful yesterday.

The Common Cause lawsuit asks the federal court to declare unconstitutional private conversations between judges and members of the executive or legislative branches about legislation that might come before them.

Joining in the lawsuit with Common Cause are the League of Women Voters of Pennsylvania and state Rep. Greg Vitali (D., Delaware) among others. The defendants include top legislative leaders of both parties in the House and Senate, as well as Gov. Rendell and state Treasurer Robert P. Casey Jr.