Labor Secretary Defends PA Jobs Climate

Through three weeks of state budget hearings Senate Democratic Appropriations Chairman Vincent Hughes (D-Philadelphia) has repeatedly pointed out the fact that – for the first time in years – Pennsylvania’s unemployment rate is now worse than the national average.  So he took issue with Labor & Industry Secretary Julia Hearthway’s positive assessment of the state’s economy.  “How can you sit here and say – we were 8th in job creation, now we’re 34th in new job creation – that we’re going in the right direction?”

Hearthway was ready with her response.  On the job creation issue she notes that 42-states lost more jobs than Pennsylvania did during the recession, so some of them are now posting sharper increases simply because they have more ground to make up. 

As for the state’s persistently high unemployment rate, Hearthway cautioned that we can’t look at any of these figures in a vacuum.  “When you grow your labor force… you’re unemployment’s going to show higher,” she explained. 

Hearthway boasts of a state labor force that now stands at 6.56-million, breaking records in each of the past four months.  “That means individuals who have dropped out [of the labor force], not looking, are now looking again… it’s usually the first indicator of your economy coming back strong.” 

The latest numbers, for December 2012, show a 7.9% statewide unemployment rate.  A new jobs report may shed some more light on the situation.  It’s due out on Friday.

Budget Hearings Kickoff with Medicaid Debate

The Governor’s Office and Senate Democrats aren’t on the same page when it comes to expanding Medicaid under the federal Affordable Care Act.  Based on the exchanges that played out on the opening day of state budget hearings, they may not even be reading from the same book. 

When pressed for answers as to why the administration isn’t planning to expand the Medicaid program, Budget Secretary Charles Zogby told the Senate Appropriations Committee that it would cost the state an extra $200-million dollars next year and more than $4-billion dollars within the next decade. 

“I don’t know where that money comes from,” Zogby said while noting that not enough attention is being paid to the cost side of the Medicaid equation. 

Senate Minority Appropriations Chair Vincent Hughes (D-Philadelphia) noted a “huge gulf” between the analysis of the administration and the analysis of legislative Democrats. “Our analysis indicates that the implementation of Obamacare saves $200-million because the feds are now paying for state dollars on the General Assistance population, saves about $140-million in state payments for county health services, and saves about $100-million in uncompensated care costs.” 

Hughes pressed Budget Secretary Zogby for a public vetting of the numbers the administration has been crunching.

State Senator Larry Farnese (D-Philadelphia) later found irony in Zogby’s complaints about how unresponsive the Obama administration has been to the governor’s Medicaid questions, while the Corbett administration has not responded to Senate Democrats’ request to see their fiscal analysis.

The House and Senate Appropriations committees will continue to hold budget hearings through March 7th.

Will PA Take Medicaid Expansion Option?

Governor Tom Corbett has already decided against a state-based insurance exchange under the Affordable Care Act, but he’s still mulling whether to take an option to expand Medicaid.  The federal health care law expanded Medicaid to cover people up to 138% of the federal poverty line, but the courts have since made in optional for the states.

The federal government would pick up the vast majority of the tab, and state Senate Democratic Appropriations Chair Vincent Hughes (D-Philadelphia) is urging the governor to opt-in.  “That is a $4-billion dollar windfall for the people of Pennsylvania.  That’s $4-billion dollars of new investment in our health care network across the Commonwealth,” Hughes tells reporters.

Supporters say it will ensure health care coverage for hundreds of thousands of Pennsylvanians, save on uncompensated care costs and stimulate the economy.  Critics say it will financially burden the Commonwealth, and question how the federal government can truly fund its share of such a massive Medicaid expansion when it’s $16-trillion dollars in debt. 

In a statement, Governor Tom Corbett said he will continue to seek guidance from the US Department of Health and Human Services on the costs, impacts and flexibility involved in the state’s options.


General Assistance Cash Grants to End Next Month

This will be the last month of state-issued checks for more than 60,000 needy and disabled residents who’ve been beneficiaries of General Assistance cash grants from the Department of Public Welfare.

The roughly $150-million dollar program has been on the chopping block since Governor Tom Corbett’s initial budget plan was unveiled in February.  Late in the budget process a deal was reached to allow for one additional month of checks to be issued, so as to ease the transition, but the program will soon be eliminated.

“Some of them will end up on the streets, some of them will end up in emergency rooms, some of them will end up in jail,” says Housing Alliance of Pennsylvania Executive Director Liz Hersh, who fears many of these vulnerable citizens will be left with nothing.

Vincent Hughes

State Sen. Vincent Hughes

Senate Minority Appropriations Chair Vincent Hughes (D-Phila.) has a district office right around the corner from a welfare office.  “Everyone’s in a panic,” he says of the knowledge that their lifeline is being cut.

But Governor Tom Corbett says his administration is working to connect people losing these state-funded cash benefits to other programs.  “From discussions with staff, we believe that some people probably are not exercising access to some areas that they might have access to,” Corbett explained to reporters during recent budget negotiations.

Budget Bill Clears Committee, Awaits Senate Vote

The $27.65-billion dollar state spending plan cleared the Appropriations Committee with a unanimous vote late Tuesday morning.  It would spend about a half-billion dollars more next year that what Governor Tom Corbett proposed in February.

Senate Appropriations Chairman Jake Corman (R-Center) cites a recent Independent Fiscal Office report in telling the committee that the budget bill reflects the revenues of today. 

“This has restorations to basic education, particularly in the area of early childhood education, with Pre-K Counts and Head Start restorations,” Corman explained.  “This also sees significant restorations to higher education, back to level funding from last year.” 

He says that the state-owned and state-related universities have agreed to hold tuition hikes at or below the rate of inflation if their funding is restored. 

Senate Democrats want to see even more of the proposed cuts restored, but backed the bill to move the process forward.  “Now that the dollars have come in we have a document in front of us that better represents the dollars that are available,” says minority Appropriations Chair Vincent Hughes (D-Philadelphia). 

The Corbett administration is encouraged by the recent trend in state revenue reports, but isn’t ready to commit to spending more money until they see exactly how much revenue will be available.  “We think it will be a little better than what our original projections were,” Corbett spokesman Kevin Harley told us by telephone.  “We’re hopeful that will continue to be the case in May and June.” 

The Senate budget bill is likely to be the document from which high-level budget negotiations can begin in earnest.

State Capitol Facing North Office Building

Appropriations Hearings to Start on Monday

Four weeks of budget hearings commence on Monday when the state Senate Appropriations Committee sits down with the Governor’s Budget Office, Independent Fiscal Office and State Treasury for three separate hearings in their North Office Building hearing room. 

The $27.14-billion dollar no-tax increase budget has been generating plenty of buzz around the state capitol complex, and plenty of rhetoric too.  “If you are on the low rung of the economic ladder in Pennsylvania, this governor has his foot on your neck,” exclaimed Senate Democratic Appropriations Chair Vincent Hughes, who’s sure to scrutinize the public welfare spending plan. 

Between mandatory increases in welfare spending and aggressive cost-containment measures, the Department of Public Welfare budget received a net $30-million dollar cut in proposed budget.  “We need to make sure we take care of the neediest of citizens and reform is necessary to do that,” says Commonwealth Foundation President & CEO Matthew Brouillette, a supporter of the Corbett budget. 

The Department of Public Welfare will get its first budget hearing before the Senate on February 28th.  The House DPW Appropriations hearing is scheduled for March 7th

Governor Tom Corbett continues to make appearances throughout the state to plug his budget plan.  “This is a very difficult time, I understand that,” Corbett said during Thursday’s stop at a Lancaster County manufacturing facility.  “But we have to start living within our means so that companies and the people can start saving and growing, and getting new jobs.” 

National Federation of Independent Business state director Kevin Shivers tells us the small business community is buoyed by the stability that the Corbett administration brings to the state budget process.  “It’s an important message that government is no longer going to spend at a prolific rate and then hand the tax bill to small employers and other taxpayers in the state.”