Op-Ed: Double-Down on Reinventing Government

Imagine if Stephen King had written Green Eggs and Ham. What if Dr. Seuss had penned The Shining?

Gov. Wolf’s third budget address was an equally disorienting shift in tone and substance—almost as if the most liberal governor in the country were polishing his conservative credentials.

Record-setting income and sales tax increases? Gone. Partisan rhetoric? Mollified. Massive spending hikes? Absent.

But Wolf hasn’t completely broken from the past—he still wants $1 billion in new taxes, amounting to $315 per family of four.

Instead, Wolf targeted bureaucratic waste to close the ever-widening budget deficit, including consolidating agencies, reforming corrections programs, and streamlining government services. Laudably, he proposed reducing corporate welfare subsidies for politically-connected businesses which have failed to encourage long-term job growth.

But Wolf hasn’t completely broken from the past—he still wants $1 billion in new taxes, amounting to $315 per family of four. But the fact is, there’s no reason to demand more from taxpayers.

In the coming months, the General Assembly should take this opportunity to double-down on Wolf’s reform mindset—but do it without tax hikes. Here are three ways to help end the cycle of budget deficits for years to come.

Pension Reform

State public pensions are more than $60 billion in debt—about $5,000 for every Pennsylvania man, woman, and child.

But for ten years, government union leaders have denied the pension crisis and argued against reform. Meanwhile, state taxes and property taxes have ballooned to fund the ever-growing pension burden. School districts have laid off teachers and cut programs—even as education funding reached record high levels—as more education dollars are consumed by pension costs.

But major change could be just a few votes away. A proposal placing newly hired state workers into a new pension plan needed just three more votes to pass the House last year. The bill provided a 401(k)-type plan alongside a smaller traditional (defined benefit) plan for new hires. Although this alone would provide little immediate savings, it would shift billions in future financial risk away from taxpayers.

More than 54 percent of Pennsylvania voters want this sort of pension reform, and Wolf, though not proactively pushing for change, has said he would sign it.

Full Liquor Privatization

On a recent trip to Giant, I witnessed a couple excited to finally buy wine with their groceries—a result of last year’s marginal liquor reform. But excitement turned to frustration as they ping-ponged across the store, barred from buying wine at the regular checkout and unable to buy groceries at the wine register. Pennsylvania’s government liquor monopoly and archaic alcohol laws still make no sense.

Full liquor privatization, both retail and wholesale, could deliver Pennsylvanians the convenience they want and generate between $1.1 to $1.6 billion in immediate revenue.

Indeed, grocery stores can buy wine only from the government wholesale monopoly, in which a handful of bureaucrats determine what can and can’t be sold across the state.

Full liquor privatization, both retail and wholesale, could deliver Pennsylvanians the convenience they want and generate between $1.1 to $1.6 billion in immediate revenue.

Reinvent Medicaid

Let’s face it: Medicaid doesn’t provide quality health care. Medicaid recipients experience more difficulty finding doctors and longer wait times than those with private insurance, thanks to low provider reimbursement and a maze of red tape. 

Yet, more than one-third of Pennsylvania’s total operating budget goes to Medicaid programs, to the tune of $26.9 billion. That’s more than PreK-12 education, higher education, transportation, and debt service combined. These costs are rising faster than the state economy, making the program unsustainable.

With talk in Washington, D.C., of block granting Medicaid to the states, lawmakers have a new opportunity to reinvent Medicaid for truly those who need it.

Florida, for example, improved the quality of Medicaid through a waiver that emphasized choice counseling, saving $161 million annually in the first five years.

Other states have requested more robust Health Savings Accounts to ease the transition from Medicaid to private health insurance. Work requirements—which in other programs have helped individuals transition out of poverty into the workforce—and sliding scale premiums are other worthwhile policy solutions that would concentrate resources on individuals most in need.

A one-year budget absent major reforms will simply kick budget-deficit can down the road. Lawmakers should view Gov. Wolf’s proposal not as a final product but as a starting point they can improve upon with reforms that will benefit all Pennsylvanians.