Maximizing our state’s potential requires a willingness to break from the status quo and find better ways to govern. Several improvements indicate Pennsylvania is moving in this direction, such as pension reform, increased transparency, and expanded school choice to name a few.
Yet, change is slow and even good ideas aren’t embraced overnight. Missed opportunities should be expected, but not permanently accepted. The following examples demonstrate why elected officials must seize opportunities to improve Pennsylvania's fiscal health now.
The ongoing effort to privatize Pennsylvania's liquor stores.
As we noted in October, the Pennsylvania Liquor Control Board (PLCB) ended the fiscal year with a negative balance of $352 million. Since then, the agency’s financial problems have compounded three-fold. Due to a change in its financial reporting and growth in other post-employment benefits (OPEB), the PLCB now has a negative balance of more than $1.1 billion.
Full liquor privatization could have prevented the accumulation of these liabilities had elected leaders embraced the free market over a government monopoly unfit for the 21st Century. In fairness, the legislature did send a privatization bill to Gov. Wolf in 2015, but he vetoed it for poorly-conceived reasons. Now the legislature will need to decide how to unwind this financial burden.
Inaction on liquor privatization isn’t the only missed opportunity with financial consequences.
Failure to privately manage the state lottery.
The state lottery ended the fiscal year in the red for the first time in its history.
In 2013, my colleague Elizabeth wrote about the expected benefits of private lottery management. Under the agreement, the lottery program would have been in better financial shape today, bolstering services for seniors. Unfortunately, policymakers are instead scrambling to keep the fund solvent.
Failure to lease the Pennsylvania Turnpike.
Perhaps the greatest missed opportunity and resulting fiscal crisis concerns the Pennsylvania Turnpike. In 2008, CF advocated for leasing the Turnpike. This reform could have raised an estimated $12.8 billion and provided a return that would have exceeded annual revenues from transportation-funding Act 44.
But the plan fell through and the Turnpike stayed under state management. Since then, tolls have risen every year and are expected to continue to rise until 2044. Additionally, Turnpike debt has exploded from $3.8 billion in 2008 to more than $12.1 billion in 2017. Currently two trucking associations are suing the state for “excessive” turnpike tolls and seeking a $6 billion refund.
These three illustrations serve as a reminder that failing to seize opportunities can have long-term negative consequences. Today, state lawmakers can change the status quo through advancing Education Savings Accounts (ESAs). ESAs fund students instead of school systems and empower parents to access the best educational setting for their child. Lawmakers also have an opportunity tackle the state's unsustainable spending through the Taxpayer Protection Act (TPA). The TPA, passed as House Bill 110 in December, now sits in the state Senate. The TPA limits General Fund spending growth by tying increases to the rate of inflation and population growth or personal income growth.
Education reform and limits on spending growth are just a few of the ways we can govern better.