Category: Commonwealth Foundation

Five Facts Concerning 2014 Pa Budget

 Commonwealth Foundation has published these five facts concerning 2014 Pa Budget.

By Bob Dick

On June 30, the General Assembly passed a $29.1 billion budget, sending it to Gov. Corbett for his approval. While Gov. Corbett is taking time to review it, here are five facts you should know.

1. Limited spending growth: The General Assembly’s budget represents a spending increase of 2 percent over the prior year’s budget. This is consistent with Taxpayer Protection Act, which calls for limiting increases in state government spending to inflation and population growth.

If fact, the budgets over the past four years have limited spending, with an average growth of less than 1 percent. In contrast, spending increased at double the rate of inflation over the previous 8 years, and has increased by an average of 6.2 percent per year since 1970.

2. No new taxes: Lawmakers did not include any new taxes in this year’s budget, despite pressure from outside groups pushing to increase the tax burden on working Pennsylvanians.

Not only did lawmakers resist calls for a unfair severance tax, which would have hurt farmers like Shawn Georgetti, but they also moved forward with the phase out of the Capital Stock and Franchise Tax after years of delaying its elimination.

3. State spending exceeds state revenues: For the seventh consecutive year, state spending will exceed state revenue collections. This is possible due to one-time transfers from other funds and one-time revenue collections.

While the state revenue sheet appears balanced, lawmakers will still have to make tough decisions to deal with our long-term fiscal challenges, which threaten the state’s fiscal health and economic growth.

4. Overall spending, including education spending, is at an all-time high:  Despite the myth being touted by government union executuves, Gov. Corbett and Republican lawmakers did not cut $1 billion from public schools.

In fact, state spending on education will be at the highest level ever this fiscal year. Of course, more education spending does not automatically translate into better student outcomes, absent reform.

5. Missed opportunites: The legislature will not pass meaningful pension reform and liquor privatization before the General Assembly breaks for summer recess. Moreover, they delayed action on paycheck protection for the time being.

But those issues aren’t going away just because lawmakers have recessed for a few months. The importance of addressing the state pension crisis, delivering the alcohol convenience most Pennsylvanians want, and ending the use of taxpayer resources to fund partisan politics will be just as great when lawmakers return in September.

 

Five Facts Concerning 2014 Pa Budget

 

Five Facts Concerning 2014 Pa Budget

Union Leaders Above Law

By Matthew J. Brouillette

Pennsylvania’s government union executives should be at the top of any list of political power players in Harrisburg. With the kind of influence that millions in campaign contributions and political ads can buy, shouldn’t they follow the same lobbying laws as other political organizations?

Wendell Young IV, president of the United Food and Commercial Workers (UFCW) union Local 1776, says yes. He told the watchdog group Media Trackers, “We shouldn’t be held to a different standard than everyone else.”

But the fact is, they are – it’s just a much lower one. And a recent investigation reveals an above-the-law attitude that goes beyond mere political privilege.

Media Trackers reports that the heads of three major public unions are not – and haven’t ever – registered as lobbyists, as a 2006 state law requires. A Commonwealth Foundation search of the Pennsylvania Department of State’s lobbyist database confirms this. Yet these union executives maintain frequent contact with lawmakers and staff, in person and via phone and e-mail, on legislative issues.

Young and David Fillman, executive director of the American Federation of State, County, and Municipal Employees (AFSCME) Council 13, are required to report their lobbying to the federal government. According to public records filed with the U.S. Department of Labor and examined by Media Trackers, Young reported 8 percent of his time as being spent on “political activities and lobbying,” while Fillman claimed 15 percent. Pennsylvania AFL-CIO president Rick Bloomingdale, the third union leader mentioned in Media Trackers’ investigation, isn’t required to make the same reports.

None of the three is registered to lobby in Harrisburg, though other leaders of nonprofits – such as the Pennsylvania State Education Association (PSEA) president, Michael Crossey, and Gene Barr, president of the Pennsylvania Chamber of Business and Industry, are.

When confronted about the lack of registration by a Pennsylvania Independent reporter, Young replied, “Clearly I do lobby, but it’s not my primary function as president of the union.” Young was paid $23,421 (8 percent of his $292,765 salary) for political activity and lobbying in 2013. Registration is required by the commonwealth if payment for lobbying exceeds $2,500 per quarter.

How can union leaders lobby against liquor privatization and pension reform for years without registering as lobbyists? No one’s been checking up on them – until now.

Such activities should be a wakeup call for union members who think their dues are separate from political activities. They aren’t.

Union members’ dues can legally be spent on political activity, whether in the form of political commercials, paid lobbyists, or get-out-the-vote efforts. Indeed, the PSEA told its members last year that as much as $7 million of their dues could be spent on “lobbying and political expenses” in 2013-2014.

In the case of the UFCW, even workers who have opted out of the union are forced to fund political activities.

Recently, some absurd ads vilifying the prospect of selling wine in grocery stores have blanketed the state. (They claim, “It only takes a little bit of greed to kill a child.”) Those ads were paid for by the UFCW, which funded a similarly over-the-top $1 million ad campaign last year.

But when the union reported last year’s campaign to the U.S. Department of Labor, it called the nakedly political ads a “representational activity” rather than a “political” one – and the difference matters.

Government workers, like teachers or liquor store clerks, who don’t wish to fund political ads can opt out of union membership. But in many cases, they still have to pay the union a “fair share” fee, which is supposed to only cover “representational activity,” like collective bargaining costs. That fee cannot be used for politics.

The union may view ad campaigns as “representational,” but lobbying on issues before the legislature is clearly “political.” Beyond the legal questions involved, the liquor store clerks and teachers who have jumped through hoops to keep their money from being spent on politics are still being forced to fund union political activity.

And this all happens courtesy of the taxpayers. Government union leaders use public resources to collect union dues, fees, and campaign contributions from workers’ checks and then spend that money on politics with impunity. In recent years, several elected state officials have been prosecuted for using public resources for partisan purposes.

If we can’t control the behavior of union leaders, we can at least stop using taxpayer resources to collect union political money. Tell your representatives in Harrisburg to support paycheck protection, which would prevent governments from deducting union dues from the checks of public employees – and force unions to play by the same political rules as everyone else.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free market think tank.

Union Leaders Above Law

Union Leaders Above Law

Paycheck Protection Benefits Teachers

 By Matthew J. Brouillette Pope Says Redistribute Wealth

Pennsylvania’s AFL-CIO union boss Rick Bloomingdale is absolutely right that there is a “war on workers” here in Pennsylvania—he should know, because he is waging it. His recent opinion piece on PennLive tries, and fails, to defend the indefensible, getting the facts wrong in the process.

What has Bloomingdale so upset?

It’s a proposal that would simply stop using public resources to collect union campaign contributions and political money for government unions.

Far from an attack on workers, this reform would actually give union members a stronger voice in how their dues and campaign dollars are spent. It is not anti-union. It is pro-worker.

If Rick Bloomingdale were interested in protecting the middle class, he’d be standing alongside teachers like Rob Brough rather than against them.

Just ask Rob Brough, a teacher in Pennsylvania who must pay fees to a government union, the Pennsylvania State Education Association, in order to keep his job.

“Their agenda and political ideals are counter to what I believe, and it is a kick in the teeth every time my dues are withdrawn from my hard-earned paycheck and handed off to some organization that I would never contribute to of my own free will,” Brough said.

Shouldn’t the PSEA have to look Rob in the face, ask him for his $680 in dues, and then explain how the union plans to spend it? Since Rob is forced to pay this money to keep his teaching job, isn’t it fair that he should be empowered to have a stronger voice in how his money is spent on politics?

Right now, the leaders of the PSEA and other government unions don’t have to do that. They can use taxpayer resources to collect campaign contributions and political money directly out of employees’ paychecks.

Not only is this unfair to taxpayers; it hurts the very workers government unions claim to represent. Union members are harmed because union bosses don’t have to explain the unions’ political expenditures to members.

That’s what the legislation Bloomingdale references would fix. And he’s wrong that it would affect “all unions”—it only affects government unions, the ones that represent people whose salaries we taxpayers pay.

Bloomingdale argues that ending this special legal privilege for government unions and requiring them to play by the same rules as everyone else “singles out unions only for unnecessary and burdensome rules and restrictions.”

In reality, it is teachers like Rob who are singled out for onerous and unfair restrictions on their hard-earned money—not union bosses.

Imagine if the National Rifle Association or Planned Parenthood demanded taxpayers pay for the collection of their lobbying funds and campaign contributions. They would be ridiculed and rejected – and rightfully so.

Government unions enjoy this same benefit of using your township, borough, city, and state tax dollars to collect their political money and deny union members the ability to hold their union bosses more accountable. No other private or political organization enjoys this financial and political privilege.

Unions can – and should – play by the same rules as everyone else. One questions how viable and relevant government unions are today if, as Bloomingdale implies, they are so dependent on taxpayer subsidies that they would have to close up shop should they lose this exclusive legal privilege.

Paycheck protection would do one thing: Stop the use of taxpayer resources for politics. That, in turn, would set teachers free, allowing them to make their own choices with their own money. It won’t end collective bargaining or keep unions from collecting dues. They would simply have to do it themselves.

Protecting the paychecks of union members and taxpayers is supported statewide. No less than three separate polls of Pennsylvanians reveal overwhelming support for ending Bloomingdale’s exclusive legal privilege.

One survey of likely voters revealed that 79 percent of voters (and 75 percent of union members) agree that unions should not be permitted to use taxpayer-funded resources to collect government union dues.

The public gets it because no other political group enjoys such privileges on the taxpayers’ dime. There is no greater pro-worker and pro-taxpayer proposal than ending the taxpayer-funded collection of dues and campaign contributions for government unions.

If Bloomingdale were truly interested in protecting the middle class, he’d be standing alongside teachers like Rob Brough rather than against them.

Matthew Brouillette is president and CEO of Commonwealth Foundation

Paycheck Protection Benefits Teachers

 

School Spending Transparency Coming?

Pennsylvania earned a “C+” for providing citizens information on how public schools spend money, according to a recent report from the Cato Institute titled “Cracking the Books”.  While the report ranks Pennsylvania 9th among states, our mediocre grade and comparison to “A” states shows opportunity for improvement.

We should strive to provide the most comprehensive and user-friendly tool for parents, teachers, researchers, and taxpayers to know how public schools are spending money.

Legislation (HB 1411) pending in the General Assembly would do just that.  In 2011, state lawmakers passed, and Gov. Corbett signed, legislation which put state spending—including budgets, payments to vendors, and employees’ salaries— online.  That website, PennWATCH, has already proven to be a useful tool for tracking state spending.  HB 1411 would mirror this success, creating SchoolWATCH to put public school spending data (including charter schools) into a searchable website.

There are ways to improve SchoolWATCH from its present form.  Because Commonwealth Foundation has run OpenPAGov.org—a transparency database letting users find school district spending, performance, tax, and salary data acquired from the Department of Education—for the past four years, we have some suggestions. Some of these have already been proposed as amendments to HB 1411.

SchoolWATCH should include school performance data already being collected by the state Department of Education.  Being able to link spending with performance is an important tool for parents and researchers.  Such information will allow education advocates to identify successful schools and develop best practices for what works and is cost-effective.

SchoolWATCH should include collective bargaining agreements.  Putting these union contracts online provides a resource for teachers, parents, advocates, and members of the media—particularly during contract disputes and strike situations.

SchoolWATCH should include individual salary information for all employees.  Salary information is public record and is already collected (and provided on request) by the state Department of Education.  Moreover, salary information for state workers is currently available on PennWATCH. It would be inconsistent to treat public school employees different than state workers.

Commonwealth Foundation already provides individual school employee salary information on OpenPAGov.org—in fact, that is our most popular search.  Newspapers have also posted this information from state data.  If SchoolWATCH is to be the most comprehensive tool for school financial information, it should include data already being provided on external databases like ours.

In the past, transparency has been a bi-partisan issue. Lawmakers should be able to work together once again to enhance our ability to get good information from state government.

Mr. Benefield’s original column can be found at Commonwealth Foundation

School Spending Transparency Coming?

Workers Lose Under Obamacare

Workers Lose Under Obamacare

By Elizabeth Stelle

Yes, workers lose under Obamacare.

Imagine one Monday your boss tells you the company is cutting your hours so they don’t have to give you health insurance.  This bad news is compounded when you start shopping for insurance and discover that premiums have skyrocketed in the last few years.

That’s a tough blow for any worker, but it’s becoming the new normal for individuals and families across Pennsylvania—even labor unions that supported the law are voicing their concerns.

Recently, the Nevada Chapter of the prominent union coalition AFL-CIO released a resolution stating, “The unintended consequences of the [Affordable Care Act] will lead to the destruction of the 40-hour work week, higher taxes, and force union members onto more costly plans—eventually destroying [union health plans] completely.”

No wonder Health and Human Services Secretary Kathleen Sebelius visited Philadelphia to defend the Affordable Care Act (ACA) against growing public opposition. Secretary Sebelius continues to deny the law’s adverse impact on workers, but stories of layoffs due to Obamacare are a dime a dozen.

Thanks to the ACA, public sector workers like school aides around the state are losing hours, pay and in some cases even their jobs.  East Lancaster County School District and Dallas School District in Luzerne County are cutting back on support staff to avoid the ACA’s “employer mandate” that penalizes employers for not offering health insurance to full-time employees—encouraging employers to use part-time workers and contractors, instead.

Ironically, the very organizations that ostensibly exist to protect these public sector workers—government unions—enthusiastically supported the job-killing law.

For example, in 2012 and 2013 the National Education Association gave $250,000 to Health Care for America Now!—a group lobbying for Obamacare.  The Service Employees International Union also launched $12 million in television ads supporting the law. It seems these unions failed to take into account the law’s many negative consequences.

The ACA was intended to expand access to health insurance, but in practice it reduces employment, increases insurance premiums, and hikes taxes through a complex labyrinth of rules and regulations. In effect, it’s making it harder—not easier—for the average person to access health insurance.

Under the ACA, all employers, including governments, with more than 50 employees must provide full-time workers—those working 30 hours or more per week—with health insurance.  Moreover, employer health insurance plans must meet new federal regulations and mandates regarding the cost to employees.  Failure to meet these mandates results in a substantial fine.

That’s a major burden on job creators around the country and here in Pennsylvania.

Because of the health care law’s harsh financial penalties, restaurant chains including Applebee’s and Papa John’s, big box stores like Wal-Mart and even grocery stores like Wegmans are cutting hours or benefits.  In fact, the people who struggle the most to find affordable health care—the working poor—are those hardest hit as their hours and paychecks shrink.

President Obama recently suspended this job-killing employer mandate—though his authority to do so is questionable—until after the next election.  Unfortunately, that still leaves businesses trapped in an state of uncertainty, not knowing when the government will require them to provide insurance or face a penalty.

Not only are these workers being hurt with fewer hours and less pay, but they will pay more for insurance under the ACA.  So, too, will small businesses and full-time workers.

Three years into the ACA, average family premiums have increased by $3,000.  The CEO of Highmark predicts premiums will continue to rise ¾this after Highmark already increased Pennsylvania’s individual and small group rates in 2010 and 2013.  Meanwhile, Aetna raised premiums in Pennsylvania by 10 percent in 2011, noting the ACA as a significant cost driver.

Elected officials must now find ways to protect both public and private sector workers from such skyrocketing premiums and pay cuts. A good start would be giving those without employer-based insurance the same tax benefits businesses receive—leveling the playing field for all Pennsylvania workers.

Elizabeth Stelle is a policy analyst at the Commonwealth Foundation

Workers Lose Under Obamacare

Medicaid Expansion Failure A Win For PA

Medicaid Expansion Failure A Win For PA
By Matthew J. Brouillette

Editor’s note: A version of this commentary previously appeared on Forbes.com

When is the most humane decision the one that seems just the opposite? In refusing to expand the state’s Medicaid program, Gov. Corbett and the General Assembly have been vilified as cold and uncaring. But despite the critics, both the economic and moral arguments are on the side of those seeking to reform Medicaid, not those pushing the expansion of a broken program.

President Obama’s government health insurance overhaul, the Affordable Care Act, calls for states to expand their Medicaid programs to those up to 133 percent of the poverty line—about $15,000 for an individual or $31,000 for a family of four. But even without expansion, Pennsylvania’s program already consumes 30 percent of the state budget and is one of the most generous in the nation.

Expanding Medicaid would add close to a million new beneficiaries, resulting in fully one-quarter of the state’s population being eligible for coverage. The cost to Pennsylvania’s taxpayers through 2022 could reach $5 billion. That’s enough to give any governor or state legislature pause. It’s no surprise, then, that Pennsylvania isn’t alone in its opposition to Medicaid expansion.

So far, 20 other states agree that expansion is not a good solution for their most vulnerable citizens, despite the federal government’s offer to pay all associated costs for the first two years. What makes turning down “free” federal money so popular? Look no further than the strings attached: the results of the Medicaid program themselves.

Decades of academic research show the program has consistently failed the working poor. From greater chances of cancer recurrence, to higher in-hospital mortality rates for strokes, heart attacks, and pneumonia, to limited options for many medical procedures, Medicaid has proven unable to provide patients the care that they desperately need and deserve.

One in three doctors won’t even accept new Medicaid patients at all—that’s the difference between what Medicaid does provide, a health insurance card, and what it doesn’t, quality health care.

Unfortunately, such a harsh indictment of Medicaid hasn’t stopped politicians on both sides of the aisle from pushing for expansion instead of pursuing reforms that will better serve the working and non-working poor. What’s luring them is that promise of “free” federal money.

This same promise has broken the wills of politicians in other states who at one time opposed either Medicaid expansion or the Affordable Care Act as a whole. This list includes Florida’s Governor Rick Scott as well as Ohio’s John Kasich, who have both gone to great lengths to push expansion in their states. But once state lawmakers saw the plan’s costs and failures, as they have in Pennsylvania, they strongly resisted the push to expand the broken program.

Accepting this bribery is a short-sighted move, at best. States should have learned from experience that Washington doesn’t exactly set its promises in stone. President Obama has already proposed cutting the federal reimbursement of state Medicaid costs—twice. That was the very promise that enticed several states to jump on the expansion bandwagon in the first place.

If reimbursement rates are cut, state taxpayers will be footing the bill. Compounded with the ACA’s $500 billion price tag–a cost equal to $6,300 per family–the funding shortfall would hit every Pennsylvanian’s wallet.

But by refusing to expand Medicaid, states like Pennsylvania have helped reduce the federal deficit by an estimated $459 billion. To some, the promise of free federal funding may seem too good to pass up, but the suffering that people will endure from an expansion of Medicaid should not be so easily forgotten.

Thankfully, Pennsylvania lawmakers’ steadfast refusal to trade our neediest citizens and taxpayers for temporary political gain and uncertain federal cash is a sign that other difficult reforms may yet be on the horizon.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation.

Medicaid Expansion Failure A Win For PA

Big Government Party Blocks Reforms

Big Government Party Blocks Reforms
By Matthew J. Brouillette

Why haven’t liquor privatization and pension reform passed yet here in Pennsylvania? Not why you think.

Most answers to this question begin with the fact that one party controls all branches of government in the Keystone State—the Republicans. Many people then posit that free-market ideas such as these should therefore be slam dunks. But this analysis is far too simplistic.

The reason Gov. Tom Corbett hasn’t signed either of those measures is that the true divide in the General Assembly is not between the Republicans and Democrats, but between the Big Government Party and the Taxpayer Party.

And while the Republicans may have a numerical majority, the Big Government Party—the coalition of interests that profit from higher taxes, more spending, cumbersome regulations, state contracts, and special privileges—has a functional majority. It just wielded it.

That’s how liquor privatization fell apart, in spite of bipartisan voter majorities favoring it. Special interests—both those profiting off the state monopoly and those seeking to keep out competition—worked to obstruct and water down privatization proposals.

Government unions representing the state store workers spent big bucks advertising against privatization and countless hours lobbying. Moreover, the union representing liquor store managers worked to hold transportation funding hostage if Senate leadership didn’t kill liquor privatization.

Not only that, the opposition to a longtime Republican priority was aided and abetted by a former Republican Senate leader and a team of former Senate Republican political operatives-turned-lobbyists. This is a case in point: The Big Government Party has adherents among both Republicans and Democrats.

Despite historic progress on liquor privatization in the House, the Senate struggled to get enough votes to join the other 48 states that don’t run complete government wine and spirits monopolies. And once transportation tax and fee increases fell through in the House, it became clear the Senate would make us wait longer.

Similar attacks thwarted pension reform.

The school employees’ union leadership launched a massive campaign to thwart any pension reform plan. They had both current teachers and retirees calling lawmakers saying, “Don’t take away my pension”—even though proposals wouldn’t touch retirees’ benefits or affect benefits already earned by current employees.

They used misguided analyses to argue that changing plans for new hires would cost more, but analysts from Pew Trust and the Public Employees Retirement Commission pointed out their flaws.

The most egregious myth perpetuated by opponents of reform is that pension investments will earn 7.5 percent every year, and that lawmakers will keep making full payments. These assumptions have proven wrong for years, creating our $47 billion and growing pension debt.

Indeed, if switching from a defined-benefit plan to a defined-contribution plan costs an employer more, not less, then why hasn’t the private sector reversed its decades-long move to 401(k) retirement plans?

While both the House and Senate advanced pension reform bills in June, special interests that benefit from the costly status quo created enough confusion to keep any bill from passing either body.

With a state legislature paralyzed by special interests—both internal and external—Pennsylvanians will see the bill for government services climbing without any sign their government is actually working for them.

They’ll simply continue to see rutted roads, endure an extra stop (or two) to buy wine and beer, and watch their property taxes rise to pay for escalating pension costs.

Voters want to see meaningful reform that uses their hard-earned taxpayer dollars wisely, and they don’t want to wait forever. The good news is, they won’t have to. Yes, the Big Government Party has a majority—but it’s a slim one, and more and more people are seeing how the game really works.

The Commonwealth Foundation was far from the only voice in these battles, but in our efforts alone, thousands of citizens wrote to their lawmakers urging that they side with the Taxpayer Party.

Make no mistake: Those people have had it, and they aren’t going away.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation

 

Big Government Party Blocks Reforms

Case For Corbett’s Tax Reform

By Nathan A. Benefield

Pennsylvania’s small business owners face a daunting challenge: How can you invest and expand your business while paying the second highest corporate tax rate in the country?  If you can believe it, combined with the federal tax rate, Pennsylvania businesses pay the second highest tax on their profits in the entire industrialized world.

And the sluggish economy isn’t making things any easier.  The good news is that Governor Corbett has proposed tax reform to alleviate some of this burden and make Pennsylvania more competitive. This reform plan will boost the economy—growing jobs and raising personal income across the state.

A new analysis sponsored by the Commonwealth Foundation and conducted by economists at the Beacon Hill Institute demonstrates exactly how the Governor’s tax reform plan will put Pennsylvania on the path to prosperity. Specifically, the plan examines the Governor’s call for reducing the state’s corporate income tax.

The report finds that if these reforms pass this year, the state would see over one billion dollars in additional business investment by 2018.  More investment means more jobs.  The analysis concludes that more than 1,200 additional private sector jobs would be created in five years as a direct result of these tax reforms.  And as investment grows in future years, job growth would accelerate.

Increased employment and investment also lead to wider benefits for families.  Based on our projections, Pennsylvania’s real disposable income would grow by $460 million as a direct result of business tax reform.

This is a real stimulus.  Businesses would be able to invest more and expand their operations, in turn creating additional tax revenue and more jobs and income for the working Pennsylvanians who have suffered in recent years.

Given these benefits, tax reform is a no-brainer.  That’s why Pennsylvania isn’t alone in pursuing this path.  This year, Louisiana, Nebraska, Kansas, and North Carolina have all considered comprehensive tax reform, with each state taking a slightly different approach.  Moreover, in recent years, other states of varying political persuasion—ranging from Washington to Texas to Ohio—have also taken proactive steps to improve their economies by reducing or eliminating onerous corporate income taxes.

The timing couldn’t be better.  Pennsylvania consistently lags the nation in job and income growth.  Contrary to its nickname, the Keystone State ranks among the 10 worst states for businesses, according to a survey of business leaders by CEO Magazine, and 39th in state competitiveness, according to the Beacon Hill Institute.

Unfortunately, some fail to see the benefits of tax reform and suggest we hold off on cutting tax rates. Due to lower than expected tax revenue collections for the state this year, some lawmakers are calling for higher taxes to “invest” in their own spending priorities.  Others suggest we need to increase tax credit programs—that benefit some businesses, but not all—to make it easier for businesses to compete in Pennsylvania.

If creating jobs is our top priority, these ideas need to be scrapped in favor of broad tax relief.  Tax increases impede economic growth, while tax relief unleashes it.  Ending targeted tax breaks and corporate welfare programs would allow Pennsylvania to lower its tax rate for everyone.  To realize these economic benefits even more quickly, lawmakers in Harrisburg should look to accelerate the Governor’s tax reductions.

At a time of heightened partisan bickering, sensible reforms like this are worth pursuing, especially when the benefits are so clear.  Tax reform will give Pennsylvania a competitive edge over its neighbors while encouraging business investment and job growth.

# # #

Nathan A. Benefield is director of policy analysis with the Commonwealth Foundation (CommonwealthFoundation.org).

Liquor Privatization Done Right

Liquor Privatization Done Right
By Nathan A. Benefield

Picture this: You’re on your way home from visiting family in Delaware and decide to stop at a wine store near the Pennsylvania border. As you walk through the parking lot, something seems off.  For every Delaware license plate you see, there are three Pennsylvania plates. An aberration?  Hardly.

As a recent investigative video shows, liquor stores in New Jersey and Delaware are filled with Pennsylvania shoppers every day.  The video, produced by the state chapter of the National Federation of Independent Businesses, should shock no one.

We already know consumers shop with their feet—even the Pennsylvania Liquor Control Board acknowledges it.  Their survey of Philadelphia region residents found nearly half shop in other states, costing the commonwealth hundreds of millions annually in sales due to “border bleed.”

Consumers want greater convenience, selection, and lower prices.  They want beer, wine, and liquor to be sold in local grocery stores.  They don’t want to drive as far, or make multiple stops.  And they want the ability to buy alcohol in whatever quantity they choose.  That’s why a Delaware shop had three times as many Pennsylvanians as Delaware shoppers.  But we can bring them back.

Lawmakers, customers, and activists celebrated the historic vote in the Pennsylvania House to end the government liquor store monopoly. Indeed, lawmakers accomplished what many pundits doubted was possible—and what several governors had tried and failed to do—by even holding a vote on a liquor store privatization bill.

But consumers and taxpayers have nothing to toast—not until the Senate and House agree to legislation that will earn Gov. Corbett’s signature. The challenge for lawmakers is balancing the free market consumers want with the demands of those already vested in the current system.

The state Senate has begun hearings on privatization and it is a near certainty they will do something, but what that something will be is far from certain.  Sen. Chuck McIlhinney, who chairs the committee taking up the House-passed bill, says he supports privatization, but what does privatization really mean?

Here are two key things that must happen in any bill to deliver for consumers and taxpayers:

First, lawmakers must increase retail competition.  This means licensing more stores to sell wine and spirits so consumers don’t need to cross state lines, allowing beer distributors and grocery stores to carry wine and liquor for greater convenience, and creating meaningful competition even if they don’t shut down the state-run stores immediately.

No Pennsylvanian wants to see a government monopoly replaced with a private one.  And providing a mechanism to close down state stores once private competition has ramped up, as the House-passed legislation did, will finally get government out of the booze business and allow the PLCB to focus on its regulatory mission.

Second, lawmakers must end the government monopoly over wholesale operations.  The wholesale monopoly allows government bureaucrats to determine what is sold in Pennsylvania and what isn’t, to set artificially high prices for every bottle sold, and to limit competition and selection.

The PLCB’s wholesale monopoly is the source of endless frustration for restaurant, winery, and bar owners and has produced a series of boondoggles on the taxpayer’s dime.  One of the biggest PLCB blunders is the branding and marketing of their own wine label, TableLeaf.  This government wine takes prominent shelf space away from Pennsylvania labels, yet the brand state taxpayers own is actually grown and bottled in California and directly competes with wineries right here in the Keystone State.

Thanks also to the PLCB wholesale monopoly, consumers were treated to the infamous wine kiosk program—elaborate vending machines in grocery stores that required a public breathalyzer test, identity verification, and a video sobriety test prior to allowing a sale.

It’s decades past time to get government out of our Prohibition-era liquor system. Pennsylvanians have suffered from the PLCB’s conflicts of interest and taxpayer-funded boondoggles for far too long.  Until lawmakers pass a plan that satisfies both consumers and stakeholders, we will continue to see shoppers stream across state lines for the convenience our government monopoly has failed to deliver.

Nathan A. Benefield is Director of Policy Analysis with the Commonwealth Foundation (CommonwealthFoundation.org).

 

Liquor Privatization Done Right

1 In 3 Need Gov Permission To Work

1 In 3 Need Gov Permission To Work — About 1 in 20 Americans needed government permission to work in the 1950s. Today it’s 1 in 3, according to Commonwealth Foundation. The loss of freedom comes from requirements for training, fees, licenses and other bits of red tape magic aimed at keeping the Dolores Umbridges of the world happily sipping their tea in bureaucratic positions of power.

A Illinois man, as a remembrance to a friend killed by a drunk driver, began offering tipsy bar patrons a free ride home. He was busted for “operating without a transportation service license” in a sting orchestrated by the local taxi drivers and the police.

In Pennsylvania, an ad hoc barter system popped in where residents gave rides in return for services to the Amish who have a religious prohibition against owning or driving a car.

The state’s Public Utilities Commission pushed  police to set up stake-outs to catch these violators of the requirement to have a transportation license.

It’s for our own good, of course.

“We are trying to protect the public interest and public safety,” a PUC spokeswoman said.

An excellent and scary article by  Katrina Currie of Commonwealth Foundation points out that an attempt was made by the Pennsylvania legislature this year to require a license for interior designers. What was the public safety issue? The danger of mauve rugs clashing with orange walls?

Ms. Currie notes that in 2008 the state sued a a mom for $10 million for selling items on eBay without an auctioneers license and that Philadelphia bloggers now must have a $300 business privilege license if they want to sell ads on their site.

A third of Americans need Big Brothers permission to work. Fighting to stop the encroachment is not enough. It’s time to start being a little like Harry Potter and start fighting to roll it back.

1 In 3 Need Gov Permission To Work