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Senator Scott Wagner

 

I would like to begin this email with an important matter – last week Governor Wolf disclosed that he has been diagnosed with prostate cancer – Governor Wolf reported that his cancer was detected in the early stages and that he would be under-going treatments – although Governor Wolf and I do not agree on many issues – I want to take this opportunity to wish Governor Wolf a full and speedy recovery.

Yesterday the PA Senate Appropriations Committee held budget hearings for the Department of Corrections, Department of Transportation (Penn-DOT) and the Department of Labor & Industry – this email will detail the findings and observations of the hearings.

If you are interested in watching the next two weeks of hearings live, be sure to check out the schedule and tune in at www.pasenategop.com.


The first hearing held was for the Department of Corrections – for the 2016-17 budget year the Department is looking for a $200 Million Dollar increase in funding.

Within the $200 Million Dollar request - $73 Million Dollars will be used for Pension obligations.

Most troubling is to learn that overtime at Corrections facilities is out of control.

A review of last year’s over time records reveal the following:

-7 Employees made more than $100,000 in overtime alone.

-130 employees made more than $50,000 in overtime alone.

-Nearly 1000 employees made more than $25,000 in overtime alone.

-More than 3700 employees made more than $10,000 in overtime alone.

The total of all of the categories listed above is $69.2 Million Dollars for overtime alone – factor in benefits of $1.00 to $1.00 of actual pay and the total cost of the overtime is almost $140 Million Dollars.

Factor the request in funding of $200 Million Dollars - $73 Million for Pensions - $140 Million for overtime with benefits that equals $213 Million Dollars.

It is important to note that personnel earning large amounts of money working overtime fully understand that by driving their full annual earnings as high as possible will result in a greater payout for their pension when they retire – annual pension payouts are based on a percentage of earnings at the time that the person retires.

The overtime cost is particularly troublesome because the Department of Corrections has increased it’s staffing by more than 400 positions over the last year.

During the hearing we challenged the Secretary of Corrections by asking what can be done to control the Correction Department's spending on overtime.

The Department continues to hire more staff and overtime costs continue to skyrocket.

It is important to point out that inmate population has decreased over the last four years

– total employees within the Department of Corrections as of the 2014-15 year was at 17,259 – of the total number at least 14,000 employees are unionized – it is my opinion is that the Department of Corrections has become so large that it has become unmanageable and must be reined in quickly.

The second hearing held yesterday was for the Department of Transportation (Penn-DOT).

A major finding reveals that the Pennsylvania State Police receive funding through Gasoline and Diesel Fuel taxes collected by Penn-DOT.

If you recall in November of 2013 the legislature increased the gasoline and diesel taxes to fund more road and bridge construction projects.

History reveals that in 2001 a change was made to fund the State Police out of fuel taxes – a cap was to be put in place – the cap was never put in place and in the 2001-02 year funding to the State Police from fuel taxes was $351.8 Million Dollars – for the 2016-17 year it is projected to be $813.9 Million Dollars.

The funding the State Police will receive from Penn-DOT in 2016-17 over the 2015-16 year is a 7.2% increase.

Below is a chart that shows funding from Penn-DOT to the State Police.

Using the current funding scenario where PA motor fuel taxes fund the State Police - 11.7 cents on every gallon of motor vehicle fuel goes toward State Police funding.

Another large challenge Pennsylvania faces is that cars and trucks continue to get greater fuel efficiency - meaning more miles per gallon as the EPA mandates that car and truck manufacturers increase fuel efficiency.

As electric cars and vehicles powered by natural gas become more popular they do not pay fuel taxes - which means less tax revenue to fix roads and bridges.

In addition, as our population continues to age, people in their 70's and up are driving less - many millennials that grew up in Pennsylvania that live in large cities are choosing not to own a car - many people are also using Uber instead of owning car - this again also means less motor fuel taxes generated.

It is important to point out that Pennsylvania has one of the lowest passenger vehicle registration fees in the nation - I continue to be very aware of the thousands of trucks that enter Pennsylvania every day from Maryland on I-83, travel to I-81 and other routes through PA without purchasing diesel fuel in our state because fuel taxes in surrounding states are anywhere from 20 to 30 cents less than PA.

A large over the road truck can hold up to 200 gallons or more of diesel fuel - if they re-fuel in MD or NY the savings in fuel taxes over PA could be $40 to $60 per re-fuel.

The Pennsylvania State Police serve a critical function and it is important that we find a way to fund them without using liquid fuel taxes.

Fuel taxes were increased to rebuild Pennsylvania’s roads and bridges – the budgeted amount of over $800 Million Dollars should be going to road and bridge construction, not funding the State Police.

Pennsylvania has the highest fuel taxes in the nation – click below for a chart of nationwide gasoline taxes - http://www.api.org/~/media/Files/Statistics/Gasoline-Tax-Map.pdf

Click here to view diesel taxes –
http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/~/media/A375B82CC4184656A093C6168A1DD08E.pdf

The third and final hearing for yesterday was for the Department of Labor and Industry (L&I).

The number of employees with L&I as of 2014-15 was 5,902 – the Department is looking for an increase from the General Fund of 8.2%.

The Department of Labor & Industry is also a critical department of the Commonwealth of Pennsylvania and it provides critical functions such as elevator inspections, fuel tank inspections, and provides workers compensation insurance through the SWITF Fund (State Workers Insurance Trust Fund).

As I sat through all of the budget hearings last week and so far this week my brain remains focused on the following thought...

It was reported last week during the hearing for the Treasury Department that the rate of inflation as reported by the Philadelphia and Pittsburgh CPI indexes was a negative number (0.02%) for the 2015 year - so if inflation is negative and revenue coming into the state is growing at approximately 3% per year (mainly through Personal Income Taxes and PA Sales Tax) and each agency in Pennsylvania is looking for funding increases greater than 3% - additional money over and above 3% must come from somewhere – Governor Wolf has a solution for the somewhere answer – increase Taxes on Pennsylvanians.

It is very clear that state employee benefit costs coupled with the current pension crisis are now approaching $1.00 for every $1.00 of pay - if this trend was taking place in the private sector business world it would mean CODE RED to do something - Pennsylvania is about to get buried in the dust.

I have a solution – we must get Pennsylvania State Government spending under control and go on a diet – it will require many tough decisions and will require making changes and getting away from the status quo.

Governor Wolf – PA House and Senate members have their work cut out – it is time to act – every day we delay - the pain will increase for Pennsylvanians.

Raising taxes is not the answer - taking action on spending is the answer.


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