PolicyBlog has moved!

Thank you for visiting, PolicyBlog has a new address.

Our new location is http://www.commonwealthfoundation.org/policyblog

Please adjust your bookmarks. Archived posts will remain here for now.

Thanks




Showing posts sorted by relevance for query prevailing wage. Sort by date Show all posts
Showing posts sorted by relevance for query prevailing wage. Sort by date Show all posts

Tuesday, June 16, 2009

State Agency Forces Private Sector to Pay Prevailing Wage

Due to a standing order by the Pennsylvania State System of Higher Education (PASSHE), all public universities are required to pay prevailing wage rates on construction projects funded by private organizations. Pennsylvania’s prevailing wage law only applies to public construction projects, but the PASSHE felt, “the foundations can help ensure that the workers earn a living wage and that the construction jobs go to local residents.” – unless, of course, those residents are black.

The Department of Labor and Industry and the Prevailing Wage Appeals Board both ruled against Indiana University of Pennsylvania (IUP) when they attempted to pay workers the federal prevailing wage rates for residential construction (Pennsylvania has no residential prevailing wage rates). Organized labor filed a complaint that federal rates should not be used since the project did not receive federal funding.

However, the project also did not receive any state funding, being funded instead by the university's nonprofit foundation, yet IUP must now pay the more expensive commercial state prevailing wage rates to construct residential buildings. In Indiana County, Pennsylvania’s prevailing wage law increases the cost for publicly funded construction projects (and apparently some privately funded projects) by approximately 11 percent.

Tuesday, July 21, 2009

Coalition of Groups Call for Suspension of Pennsylvania Prevailing Wage Law

The Commonwealth Foundation joined a coalition of organizations - including business groups, boroughs, and school boards - calling for reforming Pennsylvania's prevailing wage law. Specific proposals include:

  1. Sun setting or eliminating “prevailing wages” from school construction, road and highway work, and all other taxpayer-funded programs;
  2. Giving each municipality the option to pay the “prevailing wage” or the occupational “market based” wage for their area;
  3. Updating the “prevailing wage” threshold (which has not been raised since 1961) to an amount equivalent to today’s dollars; and
  4. Establishing the use of the occupational wage rate gathered by the Pennsylvania Department of Labor and Industry as the clear and uniform statutory definition of the prevailing pay rate.
Pennsylvania's prevailing wage law cost state and local governments an estimated $9 billion in additional construction costs each year, driving up property taxes. For the full letter, see below:

Prevailing Wage Letter

Thursday, June 04, 2009

Action Alert on Pennsylvania’s Prevailing Wage Law

The Manufacturer & Business Association sent an action alert yesterday on Sen. Brubaker’s proposal to place a three-year moratorium on Pennsylvania’s prevailing wage requirement (SB 695). Click here for their link to send an email or written letter to Governor Rendell and your state legislators.

The Commonwealth Foundation recently held a Policies & Principles Luncheon with Sen. Brubaker and representatives from various interest groups on the state’s prevailing wage law and SB 695. I have also outlined the costs of Pennsylvania prevailing wage law here and here.

Pennsylvania’s prevailing wage law is outdated, uncompetitive, and racist. Furthermore, through a recent Right to Know Law request from the Department of Labor and Industry, in 2007, total estimated costs reported for prevailing wage project requests totaled over $59 billion. Assuming 10 percent would’ve been covered under the Federal Davis-Bacon Act, Pennsylvania’s prevailing wage law added nearly $9 billion to requested construction projects receiving state money in 2007.

Friday, April 10, 2009

Repealing Prevailing Wage Would Save Schools and Taxpayers Money

Sen. Mike Brubaker this week introduced S.B. 695, proposing a three-year moratorium on the application of Pennsylvania’s prevailing wage law to school construction projects. The Pennsylvania School Board Association (PSBA) recommended this policy solution earlier this year to reduce the heavy burden the law places on schools. According to Brubaker, “This moratorium would ultimately allow local governments and school districts to address urgent construction needs at the lowest cost to the public.”

The state’s current prevailing wage law mandates all public construction projects to pay workers the rates that “prevail” in each region. However, the Department of Labor simply sets prevailing wage rates equal to union rates, despite the fact that only 20 percent of Pennsylvania construction workers are members of unions. These wages are, on average, 37 percent higher than the average market wages in the state.


Using estimates from the PSBA, exempting school construction would have saved $375 million from 2002-2006 or $75.2 million per year. Assuming construction spending increased at the same rate as overall spending, repealing the prevailing wage law altogether would save taxpayers $1.34 billion each year on public construction projects. Repealing this law would erase approximately half of the state’s budget deficit.


Click here for a related article on union prevailing wage manipulation.

Friday, April 24, 2009

The Cost of Pennsylvania's Prevailing Wage Law

Apparently my recent commentary on Philadelphia’s prevailing wages has stirred the city’s union waters, so I am posting the data analysis to support the article’s statement:

…the labor costs for public sector construction jobs in Pennsylvania average 37 percent higher than what the private sector pays for the same work and 44 percent higher in Philadelphia. Given the average cost of labor, this adds a little over 20 percent to the cost of every taxpayer-funded construction project.
I analyzed prevailing wage data for 268 projects in calendar year 2007. One project from each quarter was chosen from each of Pennsylvania’s 67 counties to account for any difference in wages by region over the course of the year. Four worker classifications were selected due to their presence in each project’s prevailing wage report and their lack of class types: bricklayer, carpenter, electrician, and plumber. The prevailing wages (obtained from the PA Department of Labor and Industry) were then compared to the 2007 average hourly wage for each profession in the respective county.



Focusing on Philadelphia, I compared the average wages from four prevailing wage projects in 2007 to the average market wages for the same year, as depicted in the table below.


The 20% additional project cost was calculated using the average cost of labor as derived from a survey of union contractors (45% of total project cost).

Thursday, April 23, 2009

PA's Prevailing Wage Law - Abused and Misused

A federal court today issued an injunction against the Pennsylvania Department of Labor and Industry (L&I) in its effort to "debar" the firm Worth & Company from bidding on public construction contracts.  L&I is alleging that Worth & Company paid workers less that the state prevailing wage law required, on projects completed over six years ago. Worth believes that the state is targeting non-union firms for harassment, citing the fact that nearly every firm L&I goes after is a non-union firm.  Brad Vasoli has more, including the fact that Worth & Company - who L&I is claiming is unfair to its workers - won a "Best Places to Work in PA" award from the state six years in a row, an award based partly on employee voting.

Commonwealth Foundation intern Christopher Dodds has an editorial in the Philadelphia Inquirer on Pennsylvania's prevailing wage law.  He notes the racist origins of these laws, and how well they are working, at least to meet that goal - the prevailing wage law insures fewer minorities are working in construction projects in Philadelphia.

Monday, May 21, 2007

PSBA Property Tax Reform Blueprint

The PSBA unveiled its Blueprint for Comprehensive Local Tax Reform, which has some good ideas, some misguided notions, and some bad ideas.

The Good:
1. Create a state funding formula which creates a funding level per-student.

We support this notion, probably to a more radical extreme than the schools boards. Money should follow the child, not flow to districts based on politics. A formula such as Weighted Student Funding - where per-pupil funding (with higher levels for special needs and low-income students) follows the child to whichever public school they choose to attend - would meet such a formula.

2. Repeal Prevailing Wage laws

Prevailing wage laws drive up the cost of school construction by 10 to 20%. We support the PSBA's effort to repeal prevailing wage laws for school construction (we would in fact, extend the repeal to all levels of government).

3. Relief from and repeal of costly, unfunded mandates.

We support giving local schools and parents greater control over the delivery of education. We think that the number of mandates should be reduced, but we also think more school districts should use apply for the Mandate Waiver Program than simply shift blame to the state for their own spending decisions.

The Misguided:
1. Give school districts greater authority to assess a variety of different taxes.

While tax competition between districts is a good idea - find the right mix and the least bad form of taxes - without school choice or voter referendum (see below), this gives too much power to school boards.

2. Increase state funding of public schools to 50%, but don't replace local funding.

The PSBA argues that the state share of school spending has declined over time - but this is only because state spending, while escalating dramatically, has not grown nearly at the exorbitant rate of property taxes. The PSBA does not explain how this 50% ratio will be ensured - if school districts choose to increase spending, is the state required to match it?

The Bad:
1. Provide additional reimbursement rates for charter (and cyber charter) students & implement moratorium on new charters schools.

Charter schools get funding from districts for each child they enroll - equal to the per-pupil spending on instructional and educational services (excluding debt, construction, transportation, etc) of the district. In other words, the district keeps a portion of their per-pupil revenue (about 30%) for students they no longer educate. Additionally, the state reimburses district for charter school students (about 27% of the of cost). Thus districts keep about 50% of their per-pupil costs of children charter schools educate.

If local districts will retain power to authorize (see misguided #1 and #2) taxes for 50% of public schools, then public school students - charters and cyber schools are also public schools - deserve equal funding as district students. We need more competition in public education, not less, and this PSBA recommendation is simply calling for greater monopoly power.

2. No referendum on future tax increases

The PSBA opposes letting voters have any say over future tax increases (see Misguided #1). We think referendum on all tax increases are necessary, will work, and will force districts and the state to get serious about mandate reform (Good #3).

3. No School Choice

School Choice gives parents greater control over the education of their children, promotes health competition among schools, and saves taxpayers money. The Commonwealth Foundation unveiled a plan last year which would provide school choice to thousands of families and reduce property taxes by several times the amount of relief under Act 1, with shifting to another tax.

Wednesday, June 20, 2007

Rohrer proposes to limit prevailing wage

Rep. Sam Rohrer has introduced legislation to eliminate prevailing wage limitations on road and bridge construction.

Click here for more on the cost of prevailing wage laws for transportation projects and for school districts

Tuesday, February 26, 2008

Broad Based Coalition Supports Davis-Bacon Reform

News release from the Alliance for Worker Freedom on coalition of organizations (including the Commonwealth Foundation) supporting Davis-Bacon reform:

According to James Sherk of the Heritage Foundation, “In almost every case, the prevailing wages do not resemble the actual market wages. Davis-Bacon wages vary from 38 percent below market wages for electricians in Tampa Bay to 73 percent above market wages for plumbers in San Francisco.” This outdated, Depression-era wage subsidy system is forcing the burden on taxpayers in one city and altering market wages in another – reform or repeal, not status quo, are the only options.

Rather than broadening the scope of the Davis-Bacon Act and prevailing wage laws, as seen in the recent energy legislation, we are asking you to consider the preceding evidence and reform or repeal the Davis-Bacon Act. We are urging you to pass legislation that requires the Department of Labor to calculate prevailing wages using data from the Bureau of Labor Statistics, which utilizes proper statistical techniques. By using larger geographical areas, rather than civil divisions, the BLS data generates valid random samples that will reflect a true market wage.
Click here for briefing packet with more info.

Friday, October 27, 2006

Overspending on Roads

Rep. Curt Schroder has uncovered wasteful, pork-barrel spending on roads. The Rendell Administration’ recent reclassified certain highway maintenance projects as "construction projects." As construction projects, they are subject to prevailing wage laws, increasing the costs by 15 to 30% (see examples).

Early this year, Rendell attempted help his union buddies by unilaterally applying the prevailing wage rate on all maintenance projects, until he got caught with his hand in the cookie jar.

This is why we have a crisis, not in transportation funding, but in transportation spending.

Friday, August 14, 2009

Tolling I-80 is a Recipe for Disaster

With a renewed interest in tolling Interstate 80, I find it necessary to reiterate several points of concern surrounding Act 44 and its implications on Pennsylvania’s economic future:

• Act 44, as it currently stands, is in violation of federal law requiring that tolls on federal highways be used exclusively on the highway itself. The tolls collected from I-80 would be used for other transportation projects, including funding mass transit in Philadelphia and Pittsburgh.

• In a November 2006 report, the Transportation Funding and Reform Commission recommended that no additional funding should be provided for highways, bridges and transit unless a series of parallel actions are taken to reform funding structure and a number of transportation business practices.” Act 44 is designed to generate additional funds without putting the required reforms in place.

• The notion that transportation is underfunded is merely a myth. PA’s spending on transportation has increased 121% from 1995-2009, more than triple the rate of inflation. Even before Act 44, highway spending had increased 90% in 2007 alone, facilitating one of the highest gasoline tax rates in the country.

• Pennsylvania’s prevailing wage law requires all public projects to pay state mandated wage rates, increasing the cost to taxpayers by as much as 30%. In fact, by not allowing the market to determine wage rates, taxpayers pay an additional $9 billion dollars annually to pay these union wages. By continuing this policy, true transportation reform remains unattainable.

• Finally, Act 44 would place tolling I-80 in the hands of the notoriously corrupt and inefficient Pennsylvania Turnpike Commission. It is no coincidence that State Sen. Vince Fumo, who was convicted on 137 counts of conspiracy and fraud, frequently used the PTC to spend “other people’s money”. Giving the PTC another sweetheart deal is simply a recipe for disaster.

Letting private companies competitively bid on the rights to manage tolling is a safe and cost-efficient solution.

Thursday, April 30, 2009

Amendment to Protect Taxpayers from Unfunded Mandates

Rep. Mike Peifer proposed a constitutional amendment to ban state legislation that imposes unfunded mandates on local governments. Since Governor Rendell has been lax at cutting wasteful spending despite shrinking state revenue, the state legislature has been all-too-willing to pass the burden of payment to local governments through unfunded mandates.

Peifer’s proposed amendment (HB 1377) will prohibit any unfunded state mandate that places a financial burden on local government and other political subdivisions. This bill will also have the desirable effect of eliminating the need for local governments to pay prevailing wages on public construction projects. The Pennsylvania School Board Association has been pressing for similar legislation for years.


In the case of schools, annual savings will amount to approximately $75.2 million, accounting for the cost of Pennsylvania’s prevailing wage law.

Sunday, March 26, 2006

PSBA takes issue with my referendum commentary

Equal time was given to Tim Allwein of the PA School Boards Association to offer a rebutal to my commentary in last Sunday's Patriot-News. Fair game.

It should first be noted, as Mr. Allwein points out, we and the PSBA jointly support a number of changes that would relieve school districts of various fiscal mandates (pension costs, prevailing wage cost, union strikes, etc.). Where we differ, of course, is whether we should allow taxpayers a say in school property tax increases. We say, YES, and PSBA says, NO.

Allwein also wants to blame the state for things that school boards can't control. There's truth to the fact that pension costs are set by the state, however, collective bargaining agreements are not. They are ENTIRELY a function of the school boards, and every time a board agrees to provide full healthcare coverage WITHOUT cost-sharing by employees, or agrees to salaries that are #1 in the nation (when adjusted for the cost of living), there are clearly many things that school boards can do to rein in labor costs (which account for approximately 80% of school costs).

Our point is that taxpayer referendum can HELP school boards bring these other costly items (pensions, prevailing wages, strikes) into line and put real pressure on Harrisburg to start repealing the mandates that are driving up taxpayer costs. School boards should not be afraid or opposed to giving taxpayers a voice at the ballot box. In fact, as Southeast Delco School Board member Byron Mundy points out, referendum will only help them do a better job.

Tuesday, May 22, 2007

Cost control is true tax reform

A very strong Press Enterprise editorial on real school tax reform - i.e. controlling costs:

  • Enact a Taxpayer Protection Act that would limit increases in state spending to the rate of inflation.
  • Take away the right of the teachers unions to threaten communities with strikes.
  • Repeal the Compulsory Union Act of 1988, the law that gave unions in Pennsylvania the power to compel dues or fee payments from employees as a condition of employment.
  • Exempt school districts from Pennsylvania's "prevailing wage" law, which requires that contractors on government-funded projects be paid artificially inflated, above-market union wages.

Friday, November 30, 2007

No single solution to transportation crisis

Robert Latham takes us (along with the Turnpike Commission) to task in an Patriot News op-ed.

Among the charges lobbed our way is that we are pushing a Turnpike lease "contending it would fund all of the state's bridge and highway needs" and that "The Commonwealth Foundation, like a dog with an old shoe, is retouting the Turnpike lease idea, despite its rejection by the General Assembly last summer."

He adds: "Contrary to what the foundation suggests, leasing the Turnpike would not negate the need to toll I-80, because keeping that road toll-free would greatly reduce the value of a Turnpike lease."

He also implies (in a brief aside) that the Chicago Skyway lease as a bad deal because Mayor

Richard Daley used entirely for non-transportation purposes. Recently, the Engineering News Record reported that Chicago's transit authority is facing an $8 billion deficit. Are asset leases a long-term solution or a short-term budget gimmick?
I will address these in reverse order:

1) Is Latham suggesting that the the Chicago Transit Authority's deficit would not exits if the Chicago Skyway had not been leased? Absurd. The CTA is another example (like SEPTA and PAT) of an inefficient urban mass transit system. Nor can Mayor Daley and the Chicago City Council's decision to use the lease money for non-transit purposes be used to criticize the arguments for a lease of the PA Turnpike.

We have suggested that a Turnpike lease be used solely for roads and bridges - and put into a constitutionally protected fund.

2) Unlike some of those agreeing with us about the problems with Act 44, we do not oppose I-80 tolling in and of itself. We have, however, argued that a Turnpike lease alone would generate more money, perhaps twice as much, than Act 44 (with higher Turnpike Tolls and I-80 tolls). A Turnpike lease and I-80 tolling could generate perhaps four times Act 44. If I-80 tolling is deemed necessary, it should also be competitively bid - not given as a sweetheart deal to the Turnpike Commission. I-80 tolling - done our way - would also allow us to lower the gas tax (not raise it), as we should, if a road paid for by the gas tax is transition to a toll road.

3) A Turnpike lease was not "rejected by the legislature," but never considered. To date, so far as I'm aware, no legislation has been introduced that would lease the Turnpike (save for Rep. Geist's HB 555, which would allow it, but only with consent of the Turnpike Commission). We have advised lawmakers to take the initiative, and in doing so can set the parameters which will guide a Turnpike lease - rather than give Governor Rendell full discretion in crafting a deal.

4) A Turnpike lease could generate $1.2 to $1.6 billion annually, according to Morgan Stanley's report, and perhaps as high as $3 billion. A Turnpike lease and competitively bidding for a tolled I-80 could perhaps double that revenue. This far exceeds the $965 million identified need for roads and bridges (Note: we oppose using cross-state toll roads to subsidize mass transit, and decry the diversion of almost half of Act 44 revenue into transit, particularly when it fails to adequately fund road an bridge needs).

But we have not, as Mr. Latham suggests, focused solely on leasing the Turnpike.
Mr. Latham's bottom line,"imperfect as it may be, Act 44 at least gets us halfway there," seem to echo Governor Rendell's mantra of "I don't care how, but get me more money." Unfortunately, Act 44 provides far less revenue - and eschews cost saving reforms - than the alternative solutions offer.

Saturday, July 05, 2008

What can we cut?

An anonymous poster to GrassrootsPA defends the recently enacted state budget against criticism from the Commonwealth Foundation, along with that in other comments.

The budget does not, in fact, set the stage for tax increases. WAMS are less than 1.5% of the budget. Borrowing hardly kicks the can down the road. Not fixing bridges kicks the can down the road. Welfare cash grants are less than 1% of the budget. Which of the following would you like to cut? Basic Ed funding? Medical Assistance (for the very poor and aged)? Correctional Institutions? County Child Welfare? Special Education? Mental Retardation Services? Long-Term Care (for the aged)? Together these programs represent nearly 50% of the budget. You may answer, "well cut the state workers". They already did.

For starters, the poster only notes the 50% of the state budget he thinks everyone would support. But wait, doesn't that leave 50% of the budget on programs that aren't so non-controversial? In other words, the budget could be cut in half and still preserve those program.

If only I had co-authored a study detailing waste and proposing cuts in the budget—oh wait I did. Government on a Diet finds over $4 billion in wasteful spending in state government, including $1.2 billion from the General Fund—and that doesn't even tackle the programs the poster highlights. But that is not to say we shouldn't reduce spending on those programs.

Indeed, in Edifice Complex, we detailed the dramatic growth in education spending—most dramatically for new construction—without producing academic gains. How can we save funding? How about through school choice, as charter schools, cyber schools, private schools (even we supported by tax credits like the EITC), home schooling, et. al. are far more cost effective than public schools and save taxpayers at the state and local level billions, as our policy brief The Dollars and Sense of School Choice and our website SchoolChoiceSaves.org detail.

We have also highlighted the dramatic and unsustainable growth in Medicaid (Medical Assistance), and offered suggestions for reforming that program which would not only save money, but provide better health care for recipients. Furthermore, there is plenty of bloat in correction institutions, and we testified to the efficiency and savings of competitively contracting prison operations—including specific services (health care, cafeterias), prison construction, and even total prison operations.

But what about bridges? Surely that is a proper function of government. Yet the borrowing for bridge repair is on top of past debt and current borrowing for pork projects—like soccer stadiums and ill-fated cargo airports. There are also cost savings measured needed in transportation funding, even the Governor's funding commission recommended that. How about repealing prevailing wage laws for bridge construction and repair, as I testified to. That is estimated to reduce the cost by 20%—enough to repair a lot of those bridges without new spending or borrowing. We should also be directing funding to repairing existing infrastructure, rather than directing it to politically selected projects, like roads named after lawmakers. Pennsylvania can also save money through competitively contracting mass transit operations. Lastly, we need to look to the private sector, not the taxpayer, for financing. Public private partnerships on new facilities, HOT lanes, and the like—along with leasing the Pennsylvania Turnpike—are mechanisms for improving our infrastructure while not increasing taxes or debt.

Finally, as for "cutting the workers", we should reduce the 3,000 or so legislative staffers as we move from a professional to a citizen legislature—particularly those staffers involved strictly in public relations for their bosses, such as posting anonymously on GrassrootsPA.

As Jefferson said, "The natural progress of things is for liberty to yield and government to gain ground." Reversing direction and dramatically reforming the way the state government does business is a hard task. Spending more money to keep going along the same path is easy. Unfortunately, lawmakers consistently choose the easy path.

Thursday, August 02, 2007

Why do lawmakers fear competitive bidding?

Chambersburg Public Opinion on the attitudes of some lawmakers towards a Turnpike lease, now that the idea may be revisited.

It seems that many lawmakers need to visit CommonwealthFoundation.org more often.

Take Mark Keller, who "questioned why the state doesn't believe it can profit from such a major asset if private firms can. "

Quick answer: Patronage, corruption, nepotism, politics, prevailing wage laws, and a lack of any incentive to be cost efficient.

Rob Kauffman also needs to brush up on the truth about a Turnpike lease.

Kauffman questioned how well a private firm would maintain the 537-mile road system and whether tolls would skyrocket more than the 25 percent increase set for 2009.
Our report, The Emerging Paradigm, should have answered both questions: a Turnpike lease agreement would limit toll increases, and would specify the level of maintenance--though we think a private firm would do better, because of market incentives. We also discuss some options such as revenue sharing of future tolls.

For a shorter read, and more limited to just discussion of the Turnpike, check out Reason's FAQ on Leasing State Toll Roads and their Response to Critics of a PA Turnpike Lease

Kauffman and others should also check out The Indiana Toll Road-One Year Later.

I would also note that Morgan Stanley's preliminary report suggested that a Turnpike lease would generate twice as much revenue and lower tolls than the enacted plan; and they admitted they overestimate toll increase and underestimate the potential revenue from competitive bidding.

Even if Kauffman and others are right and the Turnpike Commission's plan is the best deal the state could possibly get, we still should open it up for competitive bidding. Maybe no one will offer more revenue to the state or lower tolls, and we stick with the Turnpike Commission. But why wouldn't we want to see what other offers are out there?

Wednesday, November 26, 2008

PA Congressional Delegation Ratings on Worker Freedom

The Alliance for Worker Freedom has their new scorecard on the 2nd session of the 110th Congress.  Key votes include a number of expansion of Davis-Bacon prevailing wage laws (which drive up the cost of construction, contracted services, and the like).  Below are the scores of the Pennsylvania delegation.

Casey 0%
Specter 25%

Pitts 100%
Peterson, J. 78%
Shuster 67%
Dent 44%
Platts 44%
Murphy, T. 33%
English 22%
Gerlach 22%
Altmire 0%
Brady, R. 0%
Carney 0%
Doyle 0%
Fattah 0%
Holden 0%
Kanjorski 0%
Murphy, P. 0%
Murtha 0%
Schwartz 0%
Sestak 0%

In related news, Sen. Specter (who is considered to be a pivotal vote) now says he is undecided (HT GrassrootsPA) on the "card check legislation", which would effectively eliminate the secret ballot in union certification votes.

Friday, July 31, 2009

How States Can "Race to the Top" on Education Performance

The Wall Street Journal has an excellent editorial on education funding and performance, as well as the unions' take on the "race to the top" initiative:

All of this is on top of the education spending boom during the Bush years to pay for the 2001 No Child Left Behind law. Democrats liked to claim that law was “underfunded,” but the reality is that inflation-adjusted Education Department elementary and secondary spending under President Bush grew to $37.9 billion from $28.3 billion, or 34%. NCLB-specific funding rose by more than 40% between 2001 and 2008.

It’s also worth noting that the U.S. has been trying without much success to spend its way to education excellence for decades. Between 1970 and 2004, per-pupil outlays more than doubled in real terms, and the federal portion of that spending nearly tripled. Yet reading scores on national standardized tests have remained relatively flat. Black and Hispanic students are doing better, but they continue to lag far behind white students in both test scores and graduation rates.  ...

Charter schools and voucher programs regularly produce better educational outcomes with less money. But as long as most education spending goes to support the status quo, Race to the Top will be mostly a case of political show and tell.

This is the same issue we are facing at the state level, where Gov. Rendell, Pennsylvania House Democrats, and the PSEA insist that the $28.2 billion available to school districts (including $2.4 billion they have been given but haven't spent) isn't enough, but $600 million more will solve all their problems. All the while, Rendell and his allies continue to back the status quo in education to carry the teachers' union agenda, while opposing greater school choice or removing costly mandate like prevailing wage laws, as we discuss in a recent commentary "Who's For the Children?"

Friday, July 03, 2009

10 Ways to Balance the Budget Without Tax Hikes

Contrary to the Governor's rhetoric, there are a plethora of reforms and spending cuts that can balance the budget without firing our police, evicting our elderly, or dumbing down our kids. Below we offer our ten ways to balance the state budget, this year and the years to come, without raising taxes.

  1. Eliminate corporate welfare. The Governor's latest General Fund budget contains over $410 million in corporate welfare.

  2. Eliminate, privatize, or implement user fees for "private goods" - such as museums, parks, and the arts. The Governor's budget spends almost $500 million to maintain non-core functions of state government.

  3. Control self-service government programs expenses like legislative leadership accounts used to fund illegal bonuses. A number of state programs and expenditures work to benefit of government official and the detriment of citizens. Rendell's revised General Fund budget about $200 million on self-benefiting expenses.

  4. Reform Medicaid by giving individuals more control over their health care spending.

  5. Limit the increase in basic and special education funding to 11.7%. This increase would give school districts their highest level of funding in Pennsylvania history. Over the past 25 years, per-pupil spending has increased 364% (inflation of 141%) while achievement has stagnated.

  6. Repeal prevailing wage laws for government construction contracts. This unnecessary regulation inflates costs by 10-30% and increased the cost for state and local government by almost $9 billion in 2007.

  7. Reform government pensions by moving from a defined benefit to a more predictable defined contribution plan.

  8. Reduce advertising budgets for the state lottery ($32 million), tourism ($26 million) and the film tax credit ($576,000, which at $75 million, we should eliminate). Do we really need a groundhog on TV (and facebook) convincing us to gamble, or a psychedelic website to remind us that Feb. 2 is Groundhog Day?

  9. Increase state spending transparency and accountability. Creating an online spending database, like HB 1460 would create savings, as demonstrated in other states, and will discourage the misuse of tax dollars in programs like WAMs.

  10. Privatize state-run businesses, such as the state liquor stores. Competitively contracting out all Liquor Control Board operations could produce a one time influx of $1.7 billion, increase future revenues through corporate and property taxes, and provide better service to consumers.

Over 80 state lawmakers agree with us, saying YES WE CAN balance the budget without raising taxes. Find out what your legislator thinks.

The rest of our suggested spending cuts, totaling $5 billion, are detailed in Government on a Diet: Spending Tips 2009.