Senator Scott Hutchinson (R-Venango) voted “no” in July on legislation to increase taxes and hike state spending by five percent over the previous year, peeling away the political pretense from an otherwise obvious truth.
“The rate of government spending is unsustainable,” Hutchinson said. “Although state income tax collections and state sales tax collections have experienced modest growth this year, state government spending continues to grow at a much faster rate.”
Signs early in the fiscal year support Hutchinson’s warning that this year’s budget increases put pressure on state government to increase taxes even higher next year.
For one, tax collection receipts are already running below the anticipated figures. The Department of Revenue reported that General Fund tax collections for August were $73.4 million, or 3.5 percent, less than anticipated. Fiscal year-to-date, General Fund collections total $4 billion, which is $73.6 million, or 1.8 percent, below estimate.
In another sign, just last week the Commonwealth was again forced to borrow another $1.2 billion from the state Treasury to pay the bills to keep the state functioning, which is in addition to a $2.5 billion line of credit borrowed in August. The money must be repaid by the end of the fiscal year.
The Commonwealth’s complete fiscal picture is displayed on a page on Hutchinson’s legislative web site appropriately entitled, “It’s Your Money.” The page lists an array of government expenses, starting with Hutchinson’s salary, and how, as he says, it all dovetails with overall state spending.
“No matter what we do in Harrisburg it always comes back to the same thing,” he said. “We have not made the hard choices to control spending of the people’s money.”
He calls the public pension crisis “Exhibit A” in the fiscal mess. Legislative remedies trotted out this year would amount to a pittance in cost savings compared to the $63 billion, and growing, unfunded liability in the two pension systems, SERS and PSERS. Annual payments to cover solely the interest rates on the growing debt have reached the billions, diverting funds from other vital government services.
Business leaders say the lack of fiscal discipline has us again heading for a fiscal whirlpool, which, if unabated, will take jobs and entire businesses down with it.
“Fiscal discipline by state government is the first and most necessary step to improving Pennsylvania’s economic performance,” said PMA President N. Taylor. “Scott Hutchinson understands this and is willing to fight for spending restraint, setting an honorable example for other leaders in Harrisburg.”
Hutchinson stands up to government’s overreach locally as well. He led the fight over the Department of Environmental Protection’s (DEP) “knee jerk, unjustifiable attempt” to burden the conventional, shallow well drillers with the same regulations that govern the deep wells in the Marcellus Shale. The traditional drilling industry is already enduring the double scourge of over-regulation and soft energy prices, and piling on more government rules would have almost certainly put even more drillers out of the business.
“It’s just one of those things that DEP decided to do because it hadn’t been done in 30 years,” Hutchinson said regarding the proposed regulations. “There really wasn’t any other justification than that. And in doing so the Department completely ignored state law that requires it to consider the impact the regulations would have on small businesses.”
“The industry is an integral part of the economy in northwestern Pennsylvania,” he added, “and it cannot afford to be stymied by excessive and unnecessary regulatory burdens.”
Victory came after many skirmishes in a long war. DEP first ignored a law signed by then-Governor Tom Corbett requiring it to develop separate regulations for the conventional wells, and a year later ignored another similar directive in a Fiscal Code bill. Hutchinson sponsored the legislation, signed by Governor Tom Wolf in June (Act 52), that requires separate regulations for the conventional wells and also establishes the Penn Grade Crude Development Advisory Committee, giving the industry appropriate input crafting any new regulations.
President of Pennsylvania Independent Petroleum Producers, Mark Cline, said that Hutchinson’s bill was a lifesaver and called him, “the best friend you can have in Harrisburg.”
“What people in Harrisburg don’t realize, or don’t want to realize, is how valuable this industry is even in down years.” Cline said. “Pennsylvania crude is used in over 6,000 products and is the best lubricating oil in the entire world. “
On what Hutchinson calls the other side of the economic spectrum, he fought this year, along with House members Matt Gabler (R-Clearfield) and Tedd Nesbit (R-Butler), to insert a credit in the sales tax that covers service and data storage equipment. An underground storage area operated by Iron Mountain, Inc. in an old limestone mine in Boyers (Butler County) employs hundreds of employees and is adding more.
“Storage began years ago with paper records because of the cool dry environment in the old mine,” he said. “Now everything is becoming digital. The servers need to be replaced more frequently than people realize and the sales tax would have been a huge burden on the industry.”
Hutchinson's approach to economic development in the region, Oil Region Alliance President John R. Phillips II says, is ideal for an economy that has been hit hard by the decline of some traditional, large employers.
“Scott understands that we’re in a transitional economy, and it can’t be one industry that brings us back,” Phillips said.
Along those lines, Joy Global, Inc. is shutting down its mining equipment manufacturing plant in Franklin (Venango). Nearly 400 jobs are at stake.
Hutchinson hopes that the Shell ethane cracker plant being constructed in Beaver County, just over 100 miles south, will spur job creation.
“I’ve been told that an area of 250 mile radius will benefit and that certainly includes us,” he said.
But, he says, the cracker plant is only the beginning of taking advantage of a big part of the answer to the state’s economic sluggishness -- the answer lies under our feet.
“We have such much affordable energy right here that we can grow Pennsylvania again,” he said. “And I’ll keep fighting the good fight to see that it happens.”
Born in Oil City in 1961, Hutchinson graduated from Oil City Area High School and earned a Bachelor of Science degree in Economics from the Wharton School of Finance at the University of Pennsylvania in 1983. He represented the 64th Legislative District in the state House of Representatives from 1992 to 2012. His was elected to the Senate in 2012. His district includes all of Venango, all of Clarion, all of Forest, part of Warren and part of Butler.
He is married to the former Mary Beth Radkowski. They have three children, Sophie, Anne Marie, and Lucy, and live in Oil City.