As Tom Corbett prepared to give his fourth budget address Tuesday, five Democratic candidates competed to do the most memorable job of arguing why it should be his last.
At a morning gubernatorial candidates forum at WHYY in Philadelphia, the Democratic hopefuls argued nearly in unison that Corbett’s fiscal austerity policies were “stale” and “discredited,” and had “driven the state’s economy into the ditch.”
“There is a perpetual myth out there that the way you compete and win business is you do two things: you roll back taxes and you roll back regulations,” said candidate Kathleen McGinty, former head of the Department of Environmental Protection under Gov. Rendell. “If there was ever a compelling example as to how that is exactly not right, let’s look at Governor Corbett’s record with respect to shale gas.”
Economic issues were the focus of the forum, which was co-sponsored by the Philadelphia Business Journal and WHYY/NewsWorks.
Candidates McGinty, John Hanger, Jo Ellen Litz, U.S. Rep. Allyson Schwartz and Tom Wolf agreed more often than not on questions posed by moderators Dave Davies of WHYY and Craig Ey of the Business Journal. (Candidate Max Myers declined to attend, and State Treasurer Rob McCord had to withdraw because he had to be in Harrisburg for the budget address.)
The candidates were content mostly to train their fire on the incumbent’s fiscal policies and performance, while saying hardly a single critical word about anyone else on the stage at WHYY.
The five offered near consensus on most points of economic and jobs policy. Among their areas of agreement:
A severance or extraction tax on natural gas. All five agreed drillers should pay some form of that tax, with most of the estimated $600 million in annual proceeds devoted to restoring cuts in state education aid. Most candidates said the tax should be on 5 percent of revenues, matching the rate in West Virginia, while Litz, a Lebanon County commissioner, said it should be 6 percent.
Raising the minimum wage. Hanger, Wolf and Schwartz favor raising it immediately to $10.10 an hour, as proposed by President Obama. McGinty would start out lower, at $9, but move it up automatically with inflation.
Preserving the State Store system. All candidates sang a variation of the theme “modernize, not privatize.” Schwartz, a five-term congresswoman representing parts of Philadelphia and Montgomery County, noted, “I do think it’s crazy that you can’t buy a six-pack of beer in Pennsylvania easily… You shouldn’t have to go into a bar or tavern to do that.” Hanger, like McGinty a former DEP chief, said the initial revenue from privatization “would be a short-term sugar rush with a long-term hangover,” given what the State Stores contribute annually to state revenues.
Reluctant willingness to expand gambling by legalizing keno or on-line games. Most agreed with Hanger that, in what he called “the real world” of budget deficits and public needs, such ideas need to be considered. Wolf cautioned that keno could cut into the state lottery’s profits, and decried the talk of expanded gaming as a “sideshow” distracting from the need for more thorough tax reform. Litz was the only candidate to offer a clear “no” to any expansion of gambling.
Closing the “Delaware loophole,” a quirk of state policy that allows Pennsylvania corporations to avoid most or all taxation by attributing income to a Delaware subsidiary. Several candidates noted that an estimated 70 percent of Pennsylvania corporations pay no corporate income tax. Hanger had the sharpest comment on the loophole: “Frankly, some organized business interests like the 9.9 percent tax rate to remain on the books .., because they can use it to say, ‘Pennsylvania has a terrible tax climate,’ when it fact it doesn’t have a terrible tax climate. So it serves all kinds of cynical Harrisburg games — both the 9.9 percent and the failure to close the loophole.”
All candidates agreed that governors sometimes need to offer targeted tax breaks and other inducements to get businesses to locate in the state, but Wolf, a York County business owner and former state revenue secretary, expressed the most skepticism. He said those tactics work only “on the margins,” and lead to favoritism and inside deals. He said that a governor should focus job growth efforts on fundamentals such as education and workforce training. He also said that Pennsylvania’s governor should believe that the state can compete well for manufacturing investment based on its record of “higher quality.”
Schwartz said the governor should zero in on the state’s research universities, encouraging them to convert the ideas bubbling on their campuses into patents and jobs based in the state. She also said states should insist that, in return for state assistance, businesses should make reliable commitments to treat workers fairly and offer “pay equity for women.”
McGinty stressed the goal of creating jobs in the clean energy sector, and blasted Corbett for not supporting clean energy businesses that had been nurtured on her watch during the Rendell administration.
McGinty also began a chorus of denunciation of spending on cyber charter schools, saying the state could save $350 million by scrapping them. The others, except for Litz, concurred. Schwartz returned several times to advocating “universal pre-K” for Pennsylvania children.
Hanger offered the most distinctive proposal, legalizing marijuana and taxing its sale.
While saying he would study whether the drug could best be sold through the existing State Store system or private stores, he estimated legalization would bring in $500 million in revenue, create decent-paying jobs and end discriminatory enforcement that arrests young minority males “at five times the rate” of whites.
The other candidates did not offer views on that idea.
In response to questions, Wolf said he would release to the press documents from his family building supply business, to prove his claim that he shares 20 percent to 30 percent of profits annually with employees.
McGinty, who was heckled by one audience member as a “gas company spokeswoman,” responded to a question about large campaign checks she’s received from energy company officials by touting her enforcement record as DEP secretary. “There’s no special interest that tells Katie McGinty what to do,” she said.
Schwartz scoffed at a question asking whether Corbett wanted her to be the Democratic nominee because she would be easiest to beat, saying Corbett fears her because her motto is to “defy expectations and prove them wrong.”
Katie Colaneri contributed reporting to this story.