Counting All Pennsylvania State Employees

A state lawmaker sent along a Patriot New article, in which Gov. Rendell cites the relatively low number of Pennsylvania state employees compared to other states, to find out where the numbers came from:

[Rendell]: I found it amusing when Governor Sanford was going through his problems, that he apologized to 65,000 state employees in South Carolina, a state half our size, and they have 65,000 employees and we have 77,000.

It is true that Pennsylvania ranks low among state in term of state and local government employees per capita - 478 per 10,000 residents, vs. U.S. average of 546 - but not so low as Rendell makes it out to be, as he is not using an apples-to-apples comparison.

The "77,000 employees" Rendell refers to is the current filled positions in the Pennsylvania state complement - but only positions under the Governor's control. According to the Census Bureau data on government employment, which has a nifty chart maker, Pennsylvania had 192,000 state employees as of 2007 (160,000 in full-time equivalent).  This is well more than twice South Carolina's total of 87,000.

Rendell's figure excludes the legislative and judicial branches, independent state agencies and authorities (like the Turnpike Commission), and employees in higher education institutions (85,000 according to the Census - I'm not sure if that includes the state-related schools like Penn State, or only the State System and Community Colleges).

Problem of PA Prison Population and Price

Last week Bill Cosby declared that it only costs taxpayers $4,000 a year to educate a child, but $33,000 a year to incarcerate someone (this statement is inaccurate, unless referring to Pennsylvania higher education subsidies per college student). Cosby also says that public education is more likely to keep children out of prison. However, the number of inmates in Pennsylvania prisons has increased by 40 percent in nine years,
according to a Tribune-Review story despite increased "investment" in education.

So while we are spending more on education Pennsylvania taxpayers are also upping the ante for state prisons - spending $1.66 billion dollars. Every additional dollar that is being spent on incarceration does not reduce recidivism rates and or stem the growth in incarceration.

There are however, alternatives to ever increasing expenditures on prison. Texas experimented with a number of reforms to reduce prison spending while protecting public safety. Alternatives to prison include probation, drug courts, and electronic monitoring. In fact, a Florida study found offenders were 89 to 95 percent less likely to be revoked to prison if they were monitored.

Cost of Government Represents 61% of U.S. Income - Higher for Pennsylvania

Americans for Tax Reform has a new report on the Cost of Government, finding that Aug. 12 - day 224 of 2009 - is how long it takes Americans to pay for the cost of Government.  They have an easy to find website at CostofGovernmentDay.com.


This is calculated by federal spending, state and local government spending, and the cost of complying government regulations; dividing by national income (or for state specific results state income); and then coverting to a percentage of the year.

Amazingly, Cost of Government day is 26 days later than last year.  Much of this increase is due to the massive increase in federal spending - driven by bailouts and the "stimulus" - which takes 111 days worth of national income (21 more than last year).  There were also increases in the cost of state and local government spending and regulatory burden (as a percentage of income).

If you didn't have time to plan a party, you are in luck, because Pennsylvania's "Cost of Government Day" isn't until August 14.  Of course, you are also not so lucky, because Pennsylvania has a higher burden than most of the rest of the country, ranking 40th in cost of government.  Unfortunately, Gov. Rendell thinks that the cost of Pennsylvania government is too low.

The Cost of Government Report also includes informative sections on government employees, interstate migration, TARP, the stimulus, Cap & Trade, and more.

States Have Only Themselves to Blame for Fiscal Mess

Steve Chapman writes on Reason.com that there's nothing surprising about the crises in state budgets though it apparently caught many governors and legislators by surprise. States dramatically increased spending during good economic times, expecting they would last forever, and failed to prepare for a economic downturn--even though history indicates there will be recessions every few years:

The crisis in state budgets is not an accident, and it wasn't unforeseeable. For years, most states have spent like there's no tomorrow, and now tomorrow is here. They bring to mind the lament of Mickey Mantle, who said, "If I knew I was going to live this long, I'd have taken better care of myself."

If they had known the revenue flood wasn't a permanent fact of life, governors and legislators might have prepared for drought. Instead, like overstretched homeowners, they took on obligations they could meet only in the best-case scenario—which is not what has come to pass.

Over the last decade, state budgets have expanded rapidly. We have had good times and bad times, including a recession in 2001, but according to the National Association of State Budget Officers, this will be the first year since 1983 that total state outlays have not increased.

The days of wine and roses have been affordable due to a cascade of tax revenue. In state after state, the government's take has ballooned. Overall, the average person's state tax burden has risen by 42 percent since 1999—nearly 50 percent beyond what the state would have needed just to keep spending constant, with allowances for inflation.

If Only Congress Passed an "Economics for Dummies" Program

It always amuses me to see "cash for clunkers" ads on TV these days. This government subsidized program, like hundreds of others, has been a tremendous failure.

The transportation Secretary, Ray LaHood said on Sunday that unless the Senate approves $2 billion in additional funding, the Obama administration could be forced as early as Tuesday to halt the "cash for clunkers" program that has become one of the most visible and fast-acting of the government's economic-stimulus programs. This legislation is a prime example of economics going completely senile in the hands of the state. This program would be the same as everyone burning a sofa and dining room set and refurnishing their homestead every couple of years.

In effect, the government has opened up a Pandora's box of problems. Firstly, taxpayer money is being used inefficiently. Second, this stimulus money is nothing short of a bailout for large companies with a lot of leverage. Ford Motor Co. expects to post its first year-over-year monthly increase since 2007, in part because of the bounce from the program. Third, this program has shot up demand in such a way that dealers have not been able to meet supply, forcing companies to cut rebates that were promised. Fourth, only individuals with cars that have low gas mileage (read: SUV, Hummer drivers) are the ones getting this rebate.

No wonder Nathan Benefield is still upset that his car wasn’t eligible, especially now that many of the SUVs that are traded in as “clunkers” and are destroyed are better than his new car.

Federal Spending by the Numbers

The Heritage Foundation has a new report on federal spending. The short document includes lots of good tables and charts showing the effects of Bush-Obama spending increases.

Do Voters Want Higher Taxes?

On his blog with the Times Herald, state Senator Daylin Leach makes a couple of absurd claims.

First he suggests that residents are more concerned about potholes than high taxes, and while he may get an email about higher taxes, he will get a "very insistent personal visit" if there is a pothole in the street. Given there are likely hundreds of potholes in his district, and each one affects perhaps a thousand local residents, he must get tens of thousands of visitors concerned about potholes each week.

Second, he suggest that individuals are willing to pay higher taxes. He cites a recent Quinnipiac poll of Pennsylvanians - but selectively, citing only one question that supports his position (and not those giving the legislature a 27% approval rating or primarily blaming Gov. Rendell for the budget impasse). Here are the tax questions:

To balance the state budget next year, if you had to choose, which would you prefer - raising taxes to keep state services at their current level or cutting state services to keep taxes at their current level?
Raise Taxes: 35%
Cut Services: 55%

To balance the state budget, if you had to choose, would you prefer raising - the state sales tax or the state income tax?
Sales Tax: 62%
Income Tax: 24%

Governor Rendell has proposed temporarily raising the state income tax from 3.07 to 3.57 percent. Do you support or oppose this proposal?
Support: 33%
Oppose: 63%

Would you be willing or unwilling to pay more in state taxes to avoid state employees from losing their jobs?
Willing: 44%
Unwilling: 51%

Would you be willing or unwilling to pay more in state taxes to avoid cuts in state spending on such things as healthcare and public schools?
Willing: 53%
Unwilling: 43%

Leach thinks the last question is most reflective of taxpayers true views, because it "identifies services." So even though there is overwhelming opposition to Gov. Rendell's proposed PIT increase, and residents would prefer cuts in services and even layoffs to state workers, Leach thinks they still want higher taxes to avoid cuts to public schools and health care.

Here is the problem with Leach's reasoning - public schools and health care aren't getting cuts. Medical Assistance is getting an increase in the state budget, even with federal stimulus funding that increases the federal funding of the program. Public schools will get an 12% increase in spending under the Senate budget. So the hypothetical question isn't really based on the debate in Harrisburg.

Would voters support a tax increase if they knew that it was to increase education spending above the 12% increase they would otherwise receive? What if they knew school districts had $2.4 billion in reserve balances they weren't spending? What if they knew the true spending by public schools was $13,000 per-pupil, when most voters estimate it closer to $2,000? What if they knew that most of the proposed tax increase wasn't going to education?

Leach then tries to tie in other services he thinks voters like, and would support a tax increase for. But what if the questions asked about tax hikes to fund WAMs? Or for per diems for lawmakers? Or for public relations? Or for gifts for legislators? Or for Hollywood studios? Or for corporate welfare?

Of course, if these people want to pay more, they can. Anyone who wants to pay more can send their checks to the Pennsylvania Treasurers office, or their local school. They don't need to compel their neighbors to contribute as well.

Best Budget Practices For Legislators

Scott Pattison, the executive director of National Association of Budget Officers, in an interview with the Mercatus Center brought to light the most important question he feels legislators need to answer. How do you smooth a volatile revenue stream?

The answer, he says, is to think about the long term. To do that state officials need to curb spending in the boom years and save up for the future when economy might go through a rough period. This can only be possible if there are certain policies in place. However, this is very difficult, politically. In fact, there is not one state that has been good at saving in the past for unforeseen expenditures in the future.

In other rules, lawmakers need a set of guardrails to help them practice fiscal restraint.

PA Auditor General Offers Ways to Balance Budget - Without Tax Hike

Add one more Democrat to the list of those who don't think we should raise the state income tax - Auditor General Jack Wagner has release a series of ideas for balancing the Pennsylvania state budget without hiking taxes.  His proposals aren't as good as ours, and don't cut much of the wasteful spending we identified, but he does offer some good ideas:

• Cut down on Medicaid fraud: $320 million
• Crack down on tax evaders (one tool for doing this might be appointing them to the cabinet): $160 million
  
• Eliminate or reduce tax credits for special interests: $100 million
• Offer early retirement incentive for state employees: $50 million

Wagner will be talking with Matt Brouillette today at 3 pm on the Bob Durgin Show - on WHP 580 Harrisburg or live online.

Pennsylvania Lawmakers Still Using Tax Dollars to Buy Votes

Mark Levy of the AP has a hard hitting story of Pennsylvania lawmakers use of WAMs - i.e. "Walking Around Money" made available to us at the discretion of legislative leaders.  Levy finds, not suprisingly, that $110 million in WAMs were doled out in such a way as to benefit the districts of legislative leaders.

But the AP analysis found that tiny Greene County, 56th out of 67 Pennsylvania counties in population and home of last year's House Democratic leader, Bill DeWeese, was slated to receive more than $3 million, or about $82 per person. That made Greene County No. 1 in grant dollars per person and No. 6 in total dollars.

No. 2 in dollars per person was Carbon County - home of House Speaker Keith McCall, who was the Democratic whip last year - with an average of $50 per person in requests. Carbon County, 40th in population, also was expected to receive about $3 million - making it No. 7 in overall dollars.

On the Republican side, House GOP grant requests helped put Jefferson and Delaware counties - respectively the homes of Minority Leader Sam Smith and Mario Civera, the ranking Republican on the Appropriations Committee - in line for more money than most counties with similar populations.

In the Senate, Democrats requested outsized portions for the home counties of last year's ranking Democrat on the Appropriations Committee, Gerald LaValle of Beaver County, and his successor, Jay Costa of Allegheny County. Similar patterns were not as evident in the grants requested by the Senate GOP.

For those unfamiliar with WAMs and the WAM process, Levy provides an excellent summary, for those who can stomach learning how sausage is made:

Pennsylvania's budget does not specify the money that is set aside for legislators' special projects. It also does not link grants to individual legislators, or groups of legislators, who sought the money.

Pennsylvania's legislative grants - known colloquially as "WAMs," for walking-around money - have existed in one form or another for a couple of decades, built around the concept of providing the Legislature with a pot of money to spend as it sees fit.

Once the total amount available for the grants in the budget is hammered out behind closed doors, legislative leaders sift through requests from their caucus members and submit selected ones, along with their own, to the governor's office. Executive branch agencies match the requests to applications filed by the intended recipients for more than a dozen programs that are flush with money for the grants. ...

Former Sen. Vincent Fumo of Philadelphia is awaiting sentencing for his February conviction on 137 corruption counts, including the misuse of money from a nonprofit that he founded and partially financed with the grants. Former Rep. Michael Veon of Beaver County has been charged with committing similar crimes.

It is for these reasons - corruption, the process by which WAMs are doled out, and the waste of taxpayer funding, that we believe WAMs should be eliminated from the state budget. We have attempted to identify line items within the state budget that could be classified as WAMs.

It also adds fuel to the growing movement that Pennsylvania needs greater spending transparency.

Another $1.3 Billion In Cuts for Governor Rendell

At the cabinet meeting yesterday (which the Commonwealth Foundation was escorted out of by security, being told it was a "closed meeting", while media and staff for the PA House Democrats were allowed to attend), Gov. Rendell announced another $500 million in "cuts" from his proposed budget. Of course these cuts were offset by a nearly equivalent amount in spending increases.

But Rendell has missed, by our count, $1.3 billion in easy cuts from the General Fund budget. These are programs aren't merely inefficient, but thing that government should not be involved in at all.

Here is our list of line items Rendell should eliminate. For more ideas on reducing spending, see our report, Government on a Diet.

Voters Want More School Funding - Until They Get the Facts

For followers of the Rendell "Tax You More Bus Tour" and the debate on education funding, I would recommend checking out this analysis from Education Next: 

The authors analyze polling, which indicates public support for increasing public education spending and teacher salaries. But they also find that those surveyed believe, on average, that public schools spend $2,000 per-pupil, rather than over $10,000, and underestimate teacher salaries by about 30% (or $14,000).

When told of the actual levels of education spending, support for increases declines.

Public Schools' Edifice Complex

John Micek and I (@NathanBenefield) had a little discussion via Twitter over the cost of public school buildings. John wonders what is wrong with having nice school buildings - such as one with an huge skylit atrium - which is hard to answer unless you discuss the costs of those buildings to taxpayers, and how much is taken out of the classroom to satisfy the edifice complex of school administrators.

If John had read yesterday's Fact Check, he would note that construction and debt is by far the fastest growing expenditure for school districts. We have updated those numbers - construction and debt spending grew 137% from 1996-97 to 2007-08, compared with 66% growth in instructional spending.



Had he paid close attention to our report, Edifice Complex: Where Has All the Money Gone, he would have noted the more disturbing trend that school districts which receive more funding per-pupil spend a higher share of their funds on buildings, and less on instructional costs. What we wrote then was:

It is hard to blame school boards and school superintendents for focusing on buildings and grounds. After all, it is easier (and more costly) to put up new walls or stadia than to improve teaching or stop bullying. Better buildings and grounds make school superintendents feel useful. Getting such projects approved may earn one a reputation as a "can-do" leader suitable to run a larger or more prestigious school district. New buildings may even serve as symbols of the local public schools. Local Home and School Associations, and even supposedly hard-headed business leaders, may succumb to a kind of "palace envy" when neighboring school districts sport fancy buildings. Yet bricks and mortar cannot teach children—teachers and instructional materials do.

John may wish to rebut me and claim that fantastic schools do improve learning. I welcome that. But I would note that what prompted this discussion was claims during Gov. Rendell's "Tax You More Bus Tour" that - with a mere 11.7% increase in support to school districts - that students would not have book or pencils sharpeners, not that they couldn't connect their musical keyboards to computers, as they are in Kennard-Dale High School.

I think that debating school funding with those facts sheds a very different light on things.

And just to emphasize the point, here are some Edifice Complex stories:

• Taj Majal Schools
  
• Education Spending: Grass vs. Artificial Turf Football Fields
• Construction Woes
• The Liberace Complex?
• School Officials Raise Salaries Again
• School boards fall prey to Edifice Complex
• Edifice Complex Video
• Edifice Complex at Work
• Edifice Complex at Central Dauphin?
  

Fact Check: K-12 Education Support Increase Under SB 850

While the Rendell administration is burning your tax dollars funding a bus tour across Pennsylvania to ask for more education spending (and the higher taxes needed to pay for it), the Commonwealth Foundation will be checking the facts.

Here are some things to note about education subsidies under the budget passed by the Pennsylvania Senate

• Under Senate Bill 850, Pennsylvania school districts will receive an average 11.7% increase in Basic and Special Education funding over 2008-09 levels through federal and state sources.
• State Basic and Special Education funding = $6.2 billion
• 2009-10 federal stimulus funds directly to school districts = $720 million
  

• This increase in funding support across the state will range from 3.1% to 32.8% per school district under the new budget.

More Info:

Budget Facts 2009: State Education Spending (click here for a printable version)

Are Higher Taxes a "Centrist" Position?

Sharon Ward of the Pennsylvania Budget and Policy Center (PBPC) writes to the Tribune Review complaining about being a labeled "liberal" or "far left".  To be fair to Ward, the Commonwealth Foundation also dislikes being labeled "conservative" or "far right", which we frequently are by most media (if not the Tribune Review); we prefer "free-market".  Dropping labels entirely and allow discussion of the merits of the arguments are just fine with us, because our principles would prevail every time.

But Ward errs in trying to convince Trib readers that her organization's view on tax and spending policy are "centrist".  The PBPC argues that Pennsylvania taxes are too low.  Yet only 1% of PA voters agree with that.  Ward would also find herself among the mere 5% of Pennsylvanians who think state spending isn't high enough.  And Ward's organization vigorously fights against state spending limits, a proposition 2/3rds of voters support.

Or consider Rasmussen's new polling definition - defining the "mainstream" view, held by a majority of Americans, as one which mistrusts the judgment of elected officials, views government as a special interest, and believes big business loves big government. The "political class" holds the opposite views.  Which sounds more like and organization which lobbies for increased government spending to grow the economy?

And let's not forget Ward's comments that a $823 million increase in state spending should be viewed as a "cut".  The PBPC may not like how they are categorized, but to suggest their views are "centrist" is laughable.

PA House Democrat Pushing for Higher Taxes

Pennsylvania House Appropriations Chair Dwight Evans is again trumpeting the calls for a higher state income taxes in the Tribune Review.

Despite billions in federal dollars flowing into PA with the stimulus, a Senate budget that increases spending 36% under Gov. Rendell, and universal acceptance that higher taxes undermine the economy, Evans continues to push the idea our state government needs more to spend.

Even Evans' defense that other Governors increased taxes during recessions (a defense that doesn't work for six-year olds claiming everyone else is doing it), ignores some simple facts that the article notes. 

• Pennsylvania's Personal Income Tax has never been this high before a tax increase (and our state and local tax burden is already at the highest leven in Pennsylvania history).  
• After both the Thornburgh and Casey PIT increase, the tax rate was reduced after the immediate crunch (in fact, in Thornburgh's case, the rate was lower after 18 months than it had been before).  Only Rendell has failed to lower the PIT after increasing it.
• Rendell would be the first PA governor to need to raise taxes twice during his term, thanks to a spending binge.
  

Video: "Driving" Federal Debt

Here is a great video explaining the growth in federal debt in an easy to understand metaphor - i.e. how fast presidents are driving.

George W. Bush "drove" faster than any president, in inflation adjusted terms, at the equivalent of 64 miles per hour.  Obama's budget prediction would "drive" the debt the equivalent of 174 miles per hours.  Which needless to say, is really, really fast.

PA School Districts to Get 12% Increase in Support

Despite all the whining about budget cuts from the Rendell Administration (even though Rendell demanded there be "no whining"), Pennsylvania school districts are set to get substantially more support, when state aid - being held constant when including the state budget stabilization money from the federal stimulus - is added to the stimulus money going directly to school districts.

According to the table put together by House Republicans from PDE data, school districts will get an average 11.7% increase, with a range of 3.1% to 32.8%, under SB 850 versus last year's state aid.

Will an 11.7% increase "threaten to undermine the progress we have made in public education," as spendthrifts claim?

PA School District Aid Under SB 850

Publish at Scribd or explore others: Other Research budget pennsylvania

What Are They Drinking in DC?

Ok, this is getting pathetic.

I was going to ridicule Obama's proposal to cut $17 billion from the federal budget, just as I ridiculed his previous proposal to cut $100 million (is he just throwing out numbers without a concept of money, like Dr. Evil in the Austin Powers movies?) - noting that cutting $17 billion from a $3.5 trillion budget is like saying I can't afford a $15,000 car, so I'll buy it one for $14,928.

But instead, I will focus on the hissy-fit some members of Congress are making even over such puny cuts. (HT Club for Growth).  Probably the most absurd example is this:

And  Rep. Maurice D. Hinchey (D-N.Y.) vowed to force the White House to accept delivery of a new presidential helicopter Obama says he doesn't need and doesn't want.

Specter on Curing Cancer

The Wall Street Journal takes Sen. Arlen Specter to task for claiming Jack Kemp would still be alive if only taxpayers spent more on cancer research.  Not only for the obvious insensitivity of the comment, but for getting the facts wrong.  

Between 1994 and 2006, when Republicans controlled Congress or the White House or both, NIH biomedical R&D spending more than doubled in real terms, jumping to $25 billion in 2003 from about $10 billion in the early 1990s. During the Bush years, it fell slightly after that, though holding relatively constant as a share of discretionary spending. 

Criticizing the modest budget reduction to $23 billion in 2007 (in constant dollars) is thus a little like condemning K2 for not being Mount Everest. Still, Mr. Specter is right to note his consonance with the "Democrats' approach," which equates federal funding alone with medical innovation. NIH projects are valuable, but they are far from the only or even main reason that the U.S. is the world leader in new and better treatments for killers like cancer.

Most of the advances in biotechnology and pharmacogenomics that are revolutionizing the diagnosis and treatment of disease are occurring in America. One reason is a research environment that is less centralized, more competitive, tolerant of risk and richer in cash -- public, yes, but especially private. Between the 1990s and mid-2000s, more than four times as much medical venture capital was invested in the U.S. than in the European Union.

 This was the same theme of my commentary from 2007 - directed at Governor Rendell - that Higher Taxes Won't Cure Cancer.  The basic idea was that taking money out of the private sector, that could be used for cancer research or other causes,  and giving it to government to dole out is unwise.

Politicians like Rendell and Specter think that they are best suited to decide how to spend other people's money, nothing will happen.  We believe that individuals and private sector actors - using their expertise and spending their own money - will invest more wisely that those making decisions based on politics.  And for the record, our position is the mainstream position - Rendell and Specter are the "extremists".