Third and State

State House Majority Leader Dave Reed told Patriot-News/Pennlive.com Editorial Page Editor John Micek last week that the next few weeks will be critical in the ongoing state budget negotiations. Leader Reed said there is bipartisan support for more funding for education and a lot of interest in property tax relief. But there isn’t agreement yet on how these should be achieved. "We want to fix the structural deficit. We know you need recurring revenue to do so. But we don't think we need a personal income tax or sales tax [increase] for anything other than property tax [reduction],” he said.

While we’d to love to be convinced otherwise, we at PBPC think the representative’s numbers don’t add up. If we’re right, the legislative majority’s rejection of revenue increases means no significant boost in education funding and a continuing or worsening structural deficit.

In addition, while we appreciate a commitment to more education funding and fixing the structural deficit, we’re nervous that the favored revenue source might be a fire sale on the state’s profitable wine and spirits stores and/or booking all the purported savings from long-term pension changes in the first one to three years. Those moves could actually make the long-term structural deficit worse which would, in turn, doom prospects for sustained progress towards adequate and equitable school funding.

House Majority Leader Dave Reed                                      Pennlive.com/Jan Murphy

Meanwhile, Moody’s revised its outlook on Pennsylvania’s general obligation debt from “stable” to “negative,” citing what was then a 107-day budget impasse (now a 117-day impasse). See KRC Executive Director Stephen Herzenberg’s comments to 90.5 WITF on the downgrade. Last week PBPC released Way No. 16 that the Budget Matters: Career & Technical Education. And PBPC Interim Research Director Mark Price wrote a blog post on what Pennsylvania’s budget experience means for other states for the Economic Policy Institute’s Working Economics Blog.

Putting students first … KRC and PBPC signed a letter sent to Gov. Wolf and the legislature last week, from the Campaign for Fair Education Funding, urging them to promptly reach a budget agreement that enacts the funding formula adopted by the state Basic Education Commission. The formula would invest significant new dollars in Pennsylvania’s public schools. PBPC is a member of the campaign.

To $15 and beyond – lifting wages in health care and the broader service sector. Steve Herzenberg testified last Thursday before a Pittsburgh wage review committee on the need to lift health care wages. The committee, established by the Pittsburgh City Council, was inspired by the example of the New York fast food wage board, which used a little-known statutory provision of New York’s minimum wage law to mandate an increase in fast food wages to $15 per hour across the state. While the Pittsburgh committee does not have power to mandate wage increases, it can advance the public case for them.

As Steve explained in his testimony, lifting health care wages would deliver multiple benefits, enabling more families to support themselves, setting a higher standard for other service industries, and slashing turnover while improving health care quality. KRC economists have long argued that lifting wages in “non-mobile” service industries (which have to stay near their customers) is THE answer to inequality – because most low-wage jobs are in such service industries! Whether you lift those wages through (a) area-wide unions, (b) industry-specific wage standards set by wage boards, (c) a much higher minimum wage, or (d) some mix of all three, that is how we can magically make the income distribution much more like that of the 1970s. So hats off to Pittsburgh City Council!

Laboring industriously for labor and industry … Check out what KRC labor economist Mark Price had to say in the Pittsburgh Tribune-Review about Pennsylvania’s September job numbers and the budget impasse. On Friday, Mark was a presenter at the Labor and Industry Workshop at the Pennsylvania State Conference 81^st Annual Convention of the NAACP in Washington, Pa.

Last week was National Save for Retirement Week … But beware all the hype about how great 401(k)-style plan accounts are for public workers. Steve Herzenberg has written extensively on the subject as Pennsylvania grapples with its own pension crisis. This is a good time to review his Top 10 Facts on SB 1, which would remove future state and school employees from Pennsylvania’s existing defined benefit pension plans and establish for them individual 401(k)-style, defined contribution savings accounts and a supplementary “cash balance” account.

Looking at economic policies that raise wages … The latest bite-sized installment of The State of Working Pennsylvania 2015 landed on the Third and State blog last Thursday. It’s Part One of two parts on what economic policies will raise wages.

Doggedly working … And for a short time on Friday PBPC transformed into the Pennsylvania Beagle and Policy Center when Steve’s dog, and our mascot, Ellie “Policy Wonk” Mae paid us a brief visit just to make sure we were still hard at work on a sunny Friday afternoon. Fortunately, she isn’t a “ruff” taskmaster.

Ellie Mae checking to see if PBPC staff are keeping food in their desks