Note: This commentary was first published in the Pittsburgh Tribune-Review.
Last week, Governor Wolf revved up his Jeep and resumed his “Government that Works” tour in Lancaster. In an ironic twist, Wolf also promised to veto a temporary funding bill that would actually put government back to work, extending a nearly three-month budget stalemate created by his June 30 veto.
The interim budget would have released more than $3 billion to public schools—alleviating shutdown threats—and millions to non-profit service providers.
Wolf made it clear he will stand in the way of funding students and social services helping the needy to force through his own record-high tax-and-spend budget. He even rejected a Republican compromise that would fulfill one of his priorities—a $400 million increase in basic education funding.
Instead, the governor continues to demand a $4.6 billion tax increase, the highest in the nation. This proposal—including taxes on diapers and day care, nursing homes and funerals—would cost working Pennsylvanians an additional $1,400 per family of four.
That’s on top of the $4,374 per person that we already pay in state and local taxes—the 10th highest burden in the nation.
Despite Wolf’s insistence on his tax plan, the House already rejected it by a unanimous 0-193 vote. In fact, Sen. Vince Hughes (D – Phila.), who sponsored Wolf’s plan in the Senate, remains the only Pennsylvania lawmaker willing endorse Wolf’s tax proposal.
Moreover, Wolf’s latest proposals on liquor stores and pension reform will only extend the gridlock in Harrisburg. While Wolf called his new plans “historic,” newspaper editorial boards across the state have seen through the spin.
The Easton Express-Times—which endorsed Wolf for governor—called both plans “Nonstarters.” The Bucks County Courier Times panned them as “phony-baloney ‘reforms’.” On liquor, the Pittsburgh Post-Gazette bluntly said, “The plan is a loser.”
Why the chorus of boos?
Wolf’s plan to lease government liquor stores to a private company changes nothing. It only replaces a government-run monopoly with a government monopoly run by a private company. That’s not competition, that’s cronyism.
Consumers will not see better selection, prices, or service. Likewise, state government will continue to have a conflict of interest in both enforcing alcohol laws and promoting liquor sales.
The governor’s insistence that a private manager keep all current unionized government staff speaks volumes about his priorities. It’s a clear concession to the United Food and Commercial Workers union—one of Wolf’s major campaign donors.
The epic scandals involving gifts, bribes, and strip club visits—paid by vendors to liquor system officials—demonstrate the need to get government out of the booze business. Instead, Wolf’s plan protects the corruption-ridden relationship that lets a handful of people decide what products are sold in Pennsylvania.
Ultimately, Pennsylvania will remain one of two states in the country with complete government ownership of retail and wholesale wine and liquor sales.
Meanwhile, as our pension system faces more than $50 billion in unfunded liabilities, the governor proposed a “stacked hybrid” system which no other state has implemented.
This approach fails to address the problem that got us in this mess. It keeps public pensions subject to underfunding and political manipulation.
Wolf’s continued push to borrow $3 billion in pension bonds—akin to mortgaging your house to bet on the stock market—is particularly troubling. Rating agencies, including Fitch and Moody’s, have warned states against these sort of risky schemes.
Such bonds have a consistent record of failure. Indeed, both Pittsburgh and Philadelphia borrowed to pay unsustainable pension costs but made the problem even worse.
While his plans to reduce Wall Street investment fees and address pension spiking are laudable, they are insufficient. Our retirement system requires meaningful structural reform that shield public employees’ pensions from political games.
Only by moving public employees to 401k-style plans—plans good enough that many government unions offer them to their own staff—can we protect our children and grandchildren from politicians’ unsustainable promises.
Unfortunately, Wolf’s proposals would keep Pennsylvania firmly stuck in the past.
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Nathan A. Benefield is vice president of policy analysis for the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free market think tank.