Third and State This Week: The State Budget, Voter ID and CEO Pay

This week, the state budget dominated with the introduction of the House Republican budget. We also weighed in on the cost of a voter ID law and the rules for CEO pay.


  • On the state budget, Chris Lilienthal shared a Patriot-News feature that asked the Pennsylvania Budget and Policy Center what a good budget would look like. Chris also wrote an initial take on the House Republican budget plan unveiled on Tuesday and later in the week highlighted the center's full analysis of that plan.
  • Sharon Ward blogged about another recent Pennsylvania Budget and Policy Center report on what it would cost to implement a voter ID law in Pennsylvania.
  • Finally, on income inequality, Mark Price wrote about a change in the rules of measuring CEO pay at Wal-Mart that ensures CEO compensation keeps growing.

More blog posts next week. Keep us bookmarked and join the conversation!

A Detailed Look at the House GOP Budget Plan

As promised earlier this week, we have a full analysis of the Pennsylvania House Republicans' 2011-12 budget proposal now available at the Pennsylvania Budget and Policy Center's web site.

The budget plan, which was introduced on Tuesday, sets spending at $27.3 billion, the initial spend number proposed by Governor Tom Corbett, and leaves untouched a $506 million accumulated revenue surplus.

Voter ID Law Costly to Taxpayers

The Pennsylvania House of Representatives is considering legislation that would require every citizen to present photo identification as a condition for voting in primary and general elections.

Many recently enacted voter ID laws have been subject to legal challenges, and states considering such laws are being proactive about including safeguards that eliminate impediments to a citizen's constitutional right to vote. But it doesn't come without cost.

In a recent policy brief, the Pennsylvania Budget and Policy Center applied the experiences of other states with voter ID laws to estimate the cost of implementing such a law in the Commonwealth. In order to meet the requirements set forth in the legislation and avoid potential litigation, PBPC estimates the first-year costs for a voter identification program of approximately $11 million.

A Quick Take on House GOP Budget Plan

Pennsylvania House Republican leaders unveiled a state budget plan today that cuts $470 million in health and human services for vulnerable Pennsylvanians, while leaving in tact hundreds of millions of dollars in cuts to schools, full-day kindergarten, Penn State and other colleges.

The plan would restore some of the deep cuts to education proposed in Governor Corbett's budget blueprint — $387 million to the 18 state-supported colleges and universities and $210 million to public schools.

How Would You Balance the State Budget?

The Patriot-News asked us at the Pennsylvania Budget and Policy Center to offer our thoughts on alternatives to Governor Tom Corbett's proposed state budget. You can read our take at the Patriot's web site.

In a nutshell, we called for a no-increase state budget for 2011-12 — with spending at $28.1 billion, the same as in 2010-11 but less than the enacted budget for 2008-09. Such a plan will require belt-tightening but would allow us to avoid deep cuts to public schools and universities.

Rules For CEO Pay: Fail by Your Own Standard, Change the Standard

Posted in:

Gretchen Morgenson of The New York Times reports that the executive compensation committee of Wal-Mart has dropped same-store sales from its metric for assesing the performance of Wal-Mart CEO Michael Duke. Morgenson writes:

Why? The change was “intended to align our performance share goals more closely with our evolving business strategy, which emphasizes productive growth, leverage and returns,” Wal-Mart said.

The timing was certainly curious. The switch came amid a sustained decline in Wal-Mart’s same-store sales, which have been falling for nearly two years. The company’s total sales, however, rose 3.4 percent in the latest fiscal year.

Shifting the goal posts meant more money for Mr. Duke in the latest fiscal year than he would have received under the old arrangement. His compensation totaled $18.7 million, more than $16 million of which was performance-based.

Changing the rules of the game to make sure that CEO compensation keeps growing is why CEO pay has balloned relative to compensation in the rest of the economy.

Third and State This Week: Big Budget Rally, Mexican Trade Deficit & Marcellus Shale Taxes

This week, we weighed in on a debate over the tax payments of drillers in Pennsylvania. We also blogged about the state's revenue surplus, a big rally at the State Capitol and the Pennsylvania jobs toll of a trade deficit with Mexico.


  • On the Marcellus Shale, Sharon Ward responds to a Pennsylvania Department of Revenue analysis of the tax contributions of the oil and gas industry. Michael Wood writes about comments made by Revenue Secretary Dan Meuser in The Pittsburgh Post-Gazette on the issue of whether gas drillers are structuring their businesses as pass-through entities to cut their state tax bills.
  • On state budget and taxes, Chris Lilienthal shares a short video from this week's Rally for a Responsible Budget which brought more than 5,000 Pennsylvanians to the State Capitol. Michael Wood writes that better-than-expected revenue collections in April have pushed Pennsylvania's General Fund revenue surplus to over $500 million.
  • Finally, on trade issues and jobs, Stephen Herzenberg blogs about the findings of a new Economic Policy Institute report on the U.S. trade deficit with Mexico. In Pennsylvania, that deficit has cost us more than 26,000 jobs since 1994.

More blog posts next week. Keep us bookmarked and join the conversation!

Drillers Likely Morphing Into Pass-Through Entities to Cut Taxes, Revenue Secretary Says

Posted in:

Interesting tidbit from a Tuesday Pittsburgh Post-Gazette interview with Revenue Secretary Dan Meuser.

The article highlighted an analysis from the Department of Revenue on the state taxes being paid by oil and gas drillers and related companies. Toward the end of the story, Post-Gazette reporter Laura Olson writes:

The department's figures show 275 companies paying corporate taxes in 2006, a number that dropped to 178 last year and to 97 so far this year. [Secretary Meuser] attributed the general decline to fluctuation as mergers occur, noting that this year's number is expected to rise slightly.

But the secretary also said some companies, in light of the state's 9.99 percent corporate tax rate, were probably morphing from corporations to become pass-through entities taxed at the lower 3.07 percent [personal income tax] rate. He said that was speculation and that the department didn't have definitive data on those transitions.

"Consolidation clearly is the primary reason" for fewer drilling companies paying corporate taxes, he said. "But the other is also occurring. That's exactly why the governor wants to lower the corporate rate."

This is a point we've been making all along. At last count, more than 80% of permitted wells in the Marcellus Shale are owned by companies that are operating as limited liability companies (LLCs) or limited partnerships (LPs). Individuals who own a share in these entities pay the personal income tax rate on profits, avoiding the corporate net income tax. This lowers the company's effective tax rate.

Mexican Trade Deficit Costs Pa. 26,000 Jobs Since 1994

Our friends at the Economic Policy Institute have a new report tracking the number of lost or displaced jobs as a result of the United State's trade deficit with Mexico.

In 1993, before the North American Free Trade Agreement (NAFTA) took effect, the U.S. had a $1.6 billion trade surplus with Mexico, which supported 29,400 U.S. jobs. Since then, imports from Mexico have grown much faster than U.S. exports, resulting in large trade deficits that have displaced 682,900 jobs nationwide since 1994. The trade deficit with Mexico currently totals $97.2 billion.

For Pennsylvania, this trade deficit has cost us more than 26,000 jobs since 1994. That puts us in eighth place among the 50 states in the raw number of jobs displaced and 20th as a share of total employment.

Crowd of Thousands Rally for a Responsible State Budget

A crowd of thousands rallied on the steps of the Pennsylvania Capitol Tuesday to call on lawmakers and the Governor to enact a responsible state budget — one that closes tax loopholes and ends special tax breaks before making deep cuts to schools, colleges, prekindergarten, health care and services for victims of abuse.

Syndicate content