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Week in Review: PA May revenue below estimates

By   /   June 1, 2012  /   No Comments

By PA Independent Staff

HARRISBURG — Pennsylvania state government ends May with revenue collections are still below year-to-date estimates, but other business proceeds as usual.

General Assembly leaders say they’re making headway on the 2012-13 budget, looking to keep spending under the $27.6 billion ceiling set by the state Senate’s proposed budget bill. Next week, they’ll take modified plans to the governor’s office for further negotiations.

Beyond the budget, officials are working toward pension reform and adding transparency to state spending. But not all believe the state is headed in the right direction when it comes to looking out for middle-income earners.

May revenue in under estimate

State revenue collection for May is below estimate, keeping year-to-date estimates down by 1.3 percent.

May collections totaled $1.9 billion, which is $43.8 million, or 2.3 percent, below estimate, according to the state Department of Revenue. Year-to-date figures total $24.9 billion, which is $332.9 million, or 1.3 percent, below estimate.

House Appropriations Committee Chairman Rep. William Adolph, R-Delaware, said the figures show the House has been responsible in its approach to hold back on spending, despite projections.

He said he would be surprised if the state Independent Fiscal Office doesn’t change its projections based on the information.

“You can’t spend what you don’t have and that’s very simple, everybody understands that … and if you keep that philosophy you can’t get yourself in trouble economically,” Adolph said.

Coinciding with the recent news of an increase in the nationwide unemployment rate to 8.2 percent, Adolph said the solution to increased revenue lies, in part, with job creation in the private sector to boost income tax collection.

PA pension reform for future employees not enough

The week began with an announcement from GOP Senate leaders that they plan to introduce legislation that would switch public pensions to a defined contribution system.

The proposed Public Employees’ Retirement System would kick in for employees hired on or after Dec. 1, 2012. The reform would transfer public employees from a defined benefit plan to a defined contribution plan. The former determines fixed employer contribution rates based on years of service. The latter is a 401(k)-style plan requiring larger employee payroll contributions.

But lawmakers acknowledge that this is just a small step toward fixing the pension crisis, part of which includes impending spikes in annual payments. The state’s pension contributions are scheduled to hit $1.6 billion in next year’s budget and as much as $10 billion by 2035.

“This bill is not a total solution but an important part of the solution, one that is achievable, one that’s easy for people to understand, and one that, in my view, is long overdue,” Pileggi said. “We need to start the process that new employees participate in the same kind of pension system the private sector has completely moved to.”

Bill to clarify Act 47 arbitration moving through Senate

Next week, the Senate is likely to take up Senate Bill 1321 that would amend Act 47 to change what municipalities can pay unions while considered fiscally distressed.

The bill is a response to a state Supreme Court ruling in City of Scranton v. Fire Fighters Local Union 60, saying Act 47 recovery plans did not apply to determining arbitration awards given under Act 111 for police and fire unions, despite the fact the city, in its distressed financial state, would have no ability to pay the full award.

“The Supreme Court essentially said that plan was no longer a limitation on settlements of the arbitration process,” said Senate Majority Leader Dominic Pileggi, R-Delaware. “It effectively gutted the Act 47 statute. What this legislation attempts to do is to reinstate the Act 47 process as a limiting factor on arbitration awards.”

But, some say, there’s more changes to be made to Act 47 to help the 21 municipalities it covers. State Rep. Chris Ross, R-Chester, who introduced a corresponding measure in the House, said additional hearings on Act 47 may be held in that chamber.

“The long-term issues really go on for a period of time, and it took a number years for everybody to get into this fix, and it’s going to take a little time for us to reverse this ship,” Ross said.

Out-of-state food stamp recipients stamped out by PA

The state Department of Public Welfare removed more than 600 people from the food stamp rolls this week after determining they were accessing benefits from other states fraudulently.

A review of out-of-state welfare recipients turned up 653 people who were using the department’s Electronic Benefits Transfer system to collect benefits through the Supplemental Nutritional Assistance Program, otherwise known as food stamps.

The state estimates it will save $927,000 over the next six months by removing the fraudulent recipients.

“This is a victory for all Pennsylvanians who legitimately use and need our social safety net and for the hardworking taxpayers who pay the bills,” Gary Alexander, secretary of the department, said in a statement.

Corbett attack ad hits the airwaves

The gubernatorial election is two years away, but Gov. Tom Corbett’s record at protecting middle-income earners is taking a hit from a former House Democratic Campaign Committee consultant via television ads set to air statewide.

Corbett’s allies are wary of the source, and they say Corbett’s record at boosting the economy and lowering the unemployment rate suggests otherwise.

“I don’t think it should be a surprise to anyone that the media consultant for convicted felons Bill DeWeese and Mike Veon is running political ads against Gov. Corbett,” said the governor’s Director of Communications Kevin Harley.

But to Bud Jackson, creator of the ad from the American Working Families Action Fund, calling out his past record is attacking the messenger, instead of addressing the issues.

“Our purpose isn’t really to influence elections, our purpose is to alert citizens about the impact that he governor is having now on their lives, and who he’s hurting — the middle class,” Jackson said.

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