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August 17, 2010 | Commentary by NATALIE ROGOL
Time to Exit Rendell's Road to Higher Taxes
Governor Rendell has proposed a series of tax increases to fill a $415 million transportation funding deficit created when the federal government rejected his plan to toll I-80 for a third time. The state's highway system is in sorry condition, but not because taxpayers pay too little.
Pennsylvania spends more on transportation than nearly every other state, and since the Governor took office, transportation spending increased 53%. The biggest problems with the state's infrastructure are misguided spending and inefficiency, which can be resolved without new taxes.
July 9, 2009 | Commentary by NATALIE ROGOL
Pennsylvania’s Gambling Addiction
Five years ago this month, Gov. Rendell signed into law the signature policy achievement of his tenure -- legalized slot machine gambling. Act 71 of 2004 allows for 61,000 slot machines in 14 casinos throughout Pennsylvania. The governor promised many benefits from gambling revenue, the most appealing of which was a predicted $1 billion in property tax relief.
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AUGUST 5, 2010
Wine Boutiques are Latest Effort to Stall Liquor Store Privatization
Last year, the Pennsylvania Liquor Control Board (PLCB) initiated a program that established "wine boutiques." These boutiques allow a small PLCB-controlled liquor store to sell wine in conjunction with a restaurant that does not serve alcohol. The wine selections are created to compliment the restaurant's menu. Garces Trading Company, a restaurant in Philadelphia, operates with the first state wine boutique. A group of restaurant owners, calling themselves the Coalition of Restaurant Owners for Liquor Control Fairness (CROLF), filed a lawsuit against the PLCB in the middle of June.
There are a number of reasons that make the PLCB's latest endeavor questionable.
- The boutique concept violates a long standing code which prohibits drinking of alcoholic beverages on liquor outlet premises. The suit alleges that the boutique within Garces Trading Company does not adhere to appropriate standards.
- The concept gives restaurants with a wine boutique a competitive advantage. Alcohol serving establishments must apply for an expensive liquor license or liability insurance. Wine boutiques can sell wine at-cost, while restaurants must buy wine from the PLCB, and then raise prices to generate profit.
- The PLCB is a regulatory agency, monitoring alcohol sales at restaurants with the power to prosecute. With a boutique, CROLF argues, the PLCB is seeking to compete with the same establishments it regulates.
- There appears to be no formal application or advertisement for the program, contrasting with the PLCB statement that the process for a wine boutique is open. Garces Trading Company appears to be hand-selected to operate with a wine boutique.
So far, Garces is the only restaurant to operate with a wine boutique, but the PLCB appears to be looking for venues in the Pittsburgh strip district. Handpicking political favorites to operate a boutique does not offer a competitive market or level playing field for restaurants. A government agency imitating businesses is no substitute for choice and competition.
posted by NATALIE ROGOL | 10:27 AM | 0 comment
JULY 29, 2010
Tough Questions for Pennsylvania Turnpike Commission
The PA Turnpike Commission (PTC) testified before the Senate Transportation Committee during this summer's special session on transportation funding. Most senators on the committee expressed concern on several aspects regarding the PTC.
Senators inquired about the new toll increase, 3% for E-ZPass users and 10% for cash paying drivers, starting January 2, 2011. Specifically, Sen. Gordner asked about news that the new toll increases will make Pennsylvania the most costly in the nation. PTC CEO Joe Brimmeier said these claims are false, and that 14 states have costlier roads.
What Brimmeier neglected to mention was the Pennsylvania Turnpike will in fact become the most expensive long toll road (roads 100 miles or longer) in the nation. It is true that some states have more expensive toll facilities, but those are limited to short range highways spurs and bridges. The Turnpike will cost 8.5 cents per mile after the toll increases.
The PTC is also $6.5 billion in debt, a debt that has nearly tripled in the last three years. Last month, Moody's downgraded its rating on some Turnpike bonds, and issued a negative outlook due to rising debt. Standard and Poor's also issued an analysis warning that steep increases to tolls will create public and political backlash. The CFO said the Turnpike has taken steps to address the bond issues that were not reflected at the time of Moody's downgrading.
Still, Sen. Earll said the debt gives her the "heebie jeebies" and that the Senate Transportation Committee will need to maintain pressure on the PTC, and evaluate whether administrative overhead is in line with the overall budget.
Both Earll and the committee chairman, Sen. Rafferty, questioned some of PTC positions with high salaries and ambiguous names, asking about their purpose. The PTC has been successful in eliminating 15 management positions and 180 collector positions, but still has nearly 2,100 employees, and still has many more workers per mile than PennDOT.
The PTC has a long history of corruption dealing with patronage, inefficiency, and litigation.
To be fair to the PTC, the commission has made some improvements, which several of the senators attributed to talks of privatizing the Turnpike (the PTC was scared into an attempt at efficiency). The Commonwealth Foundation has touted the benefits of a Turnpike lease in the past. Some steps the PTC is taking to "act more like a private business" (in the words of the CEO) include:
- Outsourcing its plaza service to HMS Host and Sunoco, which is saving the expense of $170 million to build new service plazas.
- A partnership with State Farm to enhance road safety through the "State Farm Safety Patrol." State Farm has paid to brand PTC-owned and operated safety vehicles.
- A partnership with TransCore, to operate the "back-office" operations of the E-ZPass accounts.
- Becoming more transparent through the 2008 introduction of an Electronic Bidding System. Bids are advertised on the Turnpike website.
Many senators reiterated the necessity of having more frequent meetings with the Pennsylvania Turnpike Commission in order to promote progress and observe the debt situation.
posted by NATALIE ROGOL | 11:07 AM | 1 comment
JULY 28, 2010
Corbett on Death Tax and Farmers
Governor hopeful, Tom Corbett, has voiced support for phasing out the state's death tax. At a meeting organized by Farm Families for Tom Corbett and Pennsylvania Agricultural Republicans, Corbett cited the state death tax (inheritance tax) as one of the primary challenges to dairy farmers.
Pennsylvania is one of only eight states in the nation to still apply an inheritance tax, and in 2008, collected the highest percentage of state revenue (at 2.5%) of all states through the death tax. The death tax often hurts small, family owned businesses and farms. Last fall, the Pennsylvania Family Institute released a report outlining the costs the (primarily federal) death tax has on our state's economy.
Eliminating the death tax would present far more benefit to farmers than subsidies could achieve. Corbett seems to be following CF advice by supporting the phase out of the state death tax.
posted by NATALIE ROGOL | 00:38 PM | 1 comment
