- Associated Press - Wednesday, March 4, 2015

Editorials from around Pennsylvania

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SERIOUS MONEY

Gov. Wolf’s $30 billion, everything-and-the-kitchen-cabinets spending plan landed heavily Tuesday in a legislature that abhors anything smacking of ambition. But Pennsylvanians should be relieved that their new governor wants to dramatically alter the state’s finances. Given that the commonwealth is limping toward the next fiscal year with a $2 billion deficit and job growth nearing a rounding error, the “fundamentally new” approach Gov. Wolf called for is certainly in order.

The Democrat’s plan marks a necessary departure from four years of reductionist government under his predecessor, Tom Corbett, whose policies fared as poorly with the electorate as they did with credit-rating agencies. Wolf’s budget would begin to repair the cuts of the Corbett era, most importantly in basic education.

Moreover, Wolf valiantly proposes to shift education costs from regressive, local property taxes - and, in Philadelphia, the growth-killing wage tax - to statewide levies on natural gas and income, which could harness more of the state’s wealth for its most crucial and neglected service. The governor’s budget rightly aims to boost K-12 spending by half a billion dollars, increase the state’s share of the burden to 50 percent, and reduce average property taxes by half.

That alone would be a remarkable achievement for one budget, but Wolf’s plan is ambitious to a fault. It would increase spending by a staggering 16 percent and raise more than $4 billion in new revenues, expanding or creating taxes not only on income and gas extraction, but also on sales, cigarettes, cigars and smokeless tobacco, and financial institutions. It would include the largest income-tax increase in 25 years and the first statewide sales-tax hike in nearly 50 years.

Of course, given that a Republican legislature must approve the budget, Wolf’s plan amounts to a negotiating position. It will behoove him to have proposed some expendable tax hikes, which he certainly has.

His priority should be a natural-gas tax in line with those of other major energy-producing states; as Wolf noted, the state deserves “to be fairly compensated for the use of our resources.” And while the state income tax is relatively low and preferable to property taxes, the governor should not abandon his campaign promise to reduce the burden on low and middle incomes before raising the rate.

It should help his case that besides property-tax cuts, he promises to finish phasing out taxes on net corporate wealth - which provoked a uniquely bipartisan round of applause Tuesday- and to halve the high tax on corporate income while closing a loophole that allows many to evade it.

To get more of what he wants, Wolf should give more on pension reform, having offered an unconvincing plan to borrow more billions to shore up the system. The former cabinet manufacturer threatens to compound that mistake, and undermine his business credentials, by paying off the debt with “profit increases” from the state’s liquor monopoly, an anachronism that many Republicans rightly want to sell off.

That said, it was disappointing that the head of the conservative Commonwealth Foundation declared that Wolf’s budget “won’t be taken seriously by the Republican legislature.” The governor has presented a substantial plan to reverse the state’s retreat from its responsibilities. Along with his call for cross-party comity, it deserves to be taken seriously.

-The Philadelphia Inquirer

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WOLF’S CALL: HIS UNREALISTIC BUDGET WILL UNDERMINE COOPERATION

Gov. Tom Wolf started his first budget address with an appeal to bipartisanship but then launched a campaign for such a dramatic revamping of state taxes that he invited the label of tax-and-spend Democrat.

That’s unfortunate, because Pennsylvania’s financial predicament - a $2 billion deficit - means leaders on both sides of the political aisle might have been ready to give consideration to meaningful changes that would help fill that hole.

Instead, Mr. Wolf swung for the fences and his budget proposal was a miss. Under any circumstance, it would be ambitious for a Democratic governor to seek a 23 percent increase in the state’s personal income tax rate, a 10 percent increase in the sales tax and the introduction of an extraction tax on Marcellus Shale drillers all at once. To make that pitch to a Legislature firmly controlled by the opposing Republican Party was utter folly.

The voters who elected Mr. Wolf had tired of the state’s funding cuts to education and its fiscal failures under Tom Corbett, but those same citizens elected a House and Senate that are leery of tax increases and in favor of meaningful reform of public employee pensions. That should have tempered Mr. Wolf’s first approach to the 2015-16 budget.

The tax-hike proposals drowned out some of the reasonable features of Mr. Wolf’s budget - requiring state universities to freeze tuition if they want more state aid, closing the “Delaware loophole” that lets some companies elude Pennsylvania taxes, raising the tax on cigarettes and creating a tax credit for manufacturers. Republicans already agree with him that the capital stock and franchise tax should be phased out and they likely would favor his plan to halve the corporate net income tax from 9.9 percent to 4.9 percent.

Given the need to raise more revenue, he might have found some members receptive to a pitch for a reasonable 5 percent extraction tax on natural gas drilling, even if lawmakers would decide not to go along with the additional 4.7 cents tax per thousand feet extracted that the governor also proposed.

The most notable cut is the governor’s proposal to lighten the property tax burden that funds education. He said his plan means the average homeowner would pay 50 percent, or $1,000 a year, less, and that many senior citizens would see their property tax bill erased. As welcome as all that might be, the flip side is significant hikes in income and sales taxes. That’s not a bargain this Legislature is likely to strike.

Mr. Wolf’s proposed increases and cuts are so closely intertwined that they suggest a “take it or leave it” stance that is self-defeating for the new governor. A more realistic approach could have led to meaningful negotiations and compromise.

- Pittsburgh Post-Gazette.

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UNLESS FORCED, GOVERNMENT WON’T GIVE BACK

Sometimes, it is the idea that sounds almost reasonable that can turn out to be the most dangerous.

And so, Pennsylvania has new Gov. Tom Wolf’s first budget idea.

There is enormous potential in Wolf’s budget, but that potential can turn positive or negative, and its turning will be dependent on many entities that are outside of the governor’s - or even the Legislature’s - control. And that worries us greatly.

Wolf floated the idea of a 5 percent extraction tax on natural-gas drilling in Pennsylvania. We knew it was coming. We have supported the idea of a reasonable extraction tax, in line with other gas-producing states, since the Rendell administration. We spoke little of it in the past four years, because with Gov. Tom Corbett in office, we figured the idea was a nonstarter.

We still support the idea as a means of addressing Pennsylvania’s constitutional protection of its natural resources for the benefit of all residents. Yes, there are fees and royalties paid to the landowners and to the communities where the drilling occurs, but the resource - like water - is one that should benefit all Pennsylvanians.

The plan to raise the personal income tax and the state sales tax is, likewise, something we’ve heard before. And we’ve supported the ideas within a very narrow definition. That definition fell within the bounds of H.B. 76, the Property Tax Elimination Act, which has been discussed for some years but, like so much legislation in the state, can’t gain purchase in the Legislature.

Wolf also talked about property taxes. Specifically, he claimed that the taxes noted above, extraction, income and sales, could be combined to allow property taxes to decrease by $1,000 for an average family.

This is where the grave danger comes into play. We have supported the Property Tax Elimination Act because of the word “elimination.” This was not legislation discussing an average decrease. This was not a matter of allowing all the mechanisms for collecting the tax to remain in place. The proposal was about elimination - except for a couple very specific circumstances, such as construction, and for finite time frames.

Wolf’s number no doubt has some reasoning behind it, but it has no real-world testing. His plans will require school districts and other municipalities to play along, to reduce tax rates on homeowners to meet the governor’s expectations.

Without a specific mandate eliminating these taxes, we do not expect it to happen on a large scale. What we fear is that smaller governments will keep all of their taxing mechanisms in place. They will collect the new revenue streams from the state and bank on existing streams to provide rainy-day protection should the political winds change again. At best, perhaps they wouldn’t routinely raise property taxes year after year.

That scenario would be a disaster. And it’s the one we predict. Let’s get back to H.B. 76, and then we can talk.

- Lebanon Daily News

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NO MORE DELAYS IN ADDRESSING PENSION CRISIS

We all have regrets, and surely it’s part and parcel of the human condition to have those moments where you wish you had easy access to a time machine and you could head back into the past and fix something that turned out, with plenty of hindsight, to be not such a good idea.

Many taxpayers and school administrators in Pennsylvania - and no doubt some lawmakers, too - would aim that time machine straight back to 2000. It was at that juncture, following almost a decade of uninterrupted economic growth and robust employment, that the Legislature decided to increase substantially the pension benefits for state employees and public school teachers in the commonwealth. After such an extended period of expansion, fueled by new technology and increased productivity, it looked like the blue skies would continue to stretch on and on as far as the eye could see.

But the storm clouds appeared soon enough. The tech bubble burst, the 9/11 attacks happened and the economy experienced a brief recession.

That was only a foretaste of the devastation that loomed in 2007 and 2008, however, when the housing bubble exploded with the force of a nuclear weapon and laid the economy to waste. Seven years later, we are just now starting to fully recover.

Sure, a decade-and-a-half ago, when the teacher retirement system was funded at a plump 123 percent, increasing benefits retroactively without a corresponding employee contribution and lowering the vesting threshold might have seemed like an excellent idea - it would attract talented employees and, no doubt, allow legislators to reap benefits at election time from grateful recipients of the largesse.

Now, it has precipitated a crisis for the pension system in Pennsylvania. And solutions are bound to be painful.

The impact it has had on school districts in Washington and Greene counties was outlined comprehensively in the Sunday edition of this newspaper. Reporter Francesca Sacco talked with administrators and school board members who are faced with having to cut programs and increase taxes in order to keep feeding the pension maw.

Classes and whole academic areas are having to be sliced, in such areas as home economics, industrial arts, art and music, foreclosing opportunities and limiting the vistas of our students.

The purchase of new technology that would help prepare students for the job market they will eventually be entering is being put off, along with the purchase of new textbooks and supplies. At the same time, school boards are raising millage rates to keep up with pension obligations.

Don Bennett, the business manager in Chartiers-Houston School District, characterized the situation bleakly: “Unless something is changed (the increases) will have devastating effects on us for years to come. We tried to stretch it out as long as we could, hoping something would change at the state level, but nothing did.”

The Pension Reform Act of 2010 promises some relief down the road, with benefits for new employees being reduced by 20 percent and the retirement age being increased to 65.

But that won’t help in the near term.

It might ultimately be up to the employees of school systems to accept adjustments and reductions in their pension benefits, in order to stave off additional job cuts or the elimination of programs. Additional contributions to health care costs might also be in order.

A proposal made repeatedly by veteran state Rep. Pete Daley of California that would limit teachers to a tenure of 30 years, and thus limit pension payouts for school districts and the state, also deserves serious attention.

After decades of service, no one wants to see teachers, or any other public school employees, forced into a state of penury upon their retirement.

But the way their pensions are arranged right now, they are weakening the educational options of our young people, some of whom will one day stand in front of classrooms themselves. As Steve Robinson of the Pennsylvania School Boards Association noted, the time for waiting is done. The time for action is now.

- The (Washington) Observer-Reporter

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PENN STATE FINE IN SANDUSKY MATTER RIGHTLY WILL BE USED TO HELP CHILD SEXUAL ABUSE VICTIMS

Nothing ever could erase the pain suffered by Sandusky’s victims. But out of the horrific tragedy that was the Sandusky case, some good has come.

Pennsylvania has 23 new child protection laws intended to fix some of the lapses that allowed Sandusky to abuse vulnerable children for years.

And soon, in accordance with the Endowment Act, grants will be available to multidisciplinary teams that investigate child sexual abuse, victim service organizations, child sexual abuse prevention programs and children’s advocacy centers.

For the Lancaster County Children’s Alliance, this money will be very welcome.

A children’s advocacy center under the fiscal umbrella of Lancaster General Health, the alliance brings together a multidisciplinary team to investigate, treat and prosecute cases of child sexual abuse. It works with 26 law enforcement jurisdictions and one state police barrack, Troop J, in Lancaster County.

Last year for the first time, children’s advocacy centers were a line item in the state budget, in the amount of $2 million.

At the county’s Children’s Alliance, professionals conduct forensic interviews with victims so the children aren’t traumatized by repeated questioning.

A law enforcement officer and caseworker from Lancaster County Children & Youth Social Service Agency watch interviews on closed-circuit television from a separate conference room. Forensic medical exams also are conducted at the alliance office.

The alliance is reimbursed for forensic interviews only when they are conducted with medical exams.

Program supervisor Kari Stanley says the reimbursement is capped at $1,000, a fraction of the actual cost, and comes from the Pennsylvania Commission on Crime and Delinquency.

That state commission also has offered one-time grants - from the state’s now-defunct Drug Abuse Resistance Education fund - to children’s advocacy centers, including Lancaster County’s.

Otherwise, the alliance - which served 581 children last year - mostly relies on its support from LGH, on grants and on fundraisers such as its annual 5K run/walk.

So this Endowment Act funding, Stanley says, “will be an amazing opportunity for us.”

Kristen Houser, vice president of communications for the Pennsylvania Coalition Against Rape, says the 50 rape crisis centers across the commonwealth serve 30,000 Pennsylvanians each year.

Roughly one-third of those served are children. Another third are adult survivors of child sexual abuse.

The rape crisis centers get a mix of state funding - just under $8 million - and federal and private grants, but it’s never enough, so they’ll likely apply for Endowment Act grants. The demand for services is unceasing.

Houser says the state’s rape crisis centers would like to spend more on prevention education, which would decrease the need for their services, but they can’t stint individuals who need those services.

They shouldn’t have to stint on either prevention education or services.

The Endowment Act money will help.

But we shouldn’t have needed a tragedy on the scale of the Sandusky abuse case to get us to adequately address child sexual abuse in Pennsylvania.

-LNP

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WHAT ELSE DO YOU HAVE?

State Rep. Kevin Schreiber deserves credit addressing an issue his colleagues in the Legislature haven’t been willing to touch: providing help to municipalities that host a disproportionate share of tax-exempt properties.

The York City Democrat recently unveiled a plan based on a 20-year-old David Rusk study that called for a 1 mill county tax increase. The revenue then would be redistributed to all 72 municipalities based on their percentage of tax-exempt properties.

There are 20 local municipalities that have a higher rate of tax-exempt properties than the county average of 9 percent - but financially struggling York City would be the big winner under the proposal.

Nearly 40 percent of the city’s property tax base - valued at some $600 million - is made up of institutions like churches and charitable organizations that are exempt from paying taxes, yet use government services.

Based property values provided by the county’s tax assessment office, the county-wide tax would generate $27.3 million, with $5.5 million a year going to York City alone.

Good for you, Rep. Schreiber.

Now what else do you have?

As much as we appreciate his efforts to help municipalities dealing with this very real problem, we’re not surprised this particular solution landed with a thud at the feet of the York County Commissioners.

They are the elected officials who would actually have to raise taxes 22 percent - or $100,000 for every $100,000 of a home’s value - for everyone to help a few.

“Any county commissioner who would do that wouldn’t be a county commissioner for too long,” said President Commissioner Steve Chronister.

His colleagues, Commissioners Chris Reilly and Doug Hoke, agreed.

“We have our own issues keeping up on our budgets,” he said. “If we would do that (impose the 1 mill increase), we would put our taxing base in a desperate situation.”

None of the commissioners disputed the problem - and they thanked Schreiber for trying to deal with it - but they all said it’s up to the Legislature to deal with this issue facing cities, towns and boroughs across the state.

Reforming property taxes, public pensions and the school funding formula are obvious places to start, they said.

And we agree.

It’s time for Pennsylvania’s other 252 lawmakers to get work on fixing the tax-exempt quandary.

- York Dispatch

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