Penn­syl­va­nia should learn from last year’s bud­get

The Kutztown Area Patriot - - OPINION - Bob Dick is a se­nior pol­icy an­a­lyst with the Com­mon­wealth Foun­da­tion.

Here we go again. It’s early sum­mer and the state bud­get de­bate is reach­ing a cri­sis point. But be­fore you dis­miss the pro­ceed­ings as po­lit­i­cal the­ater, con­sider this: The deals hashed out in Harrisburg could blow a hole in your own bud­get or even strip you of your liveli­hood.

The un­nat­u­ral dis­as­ter in­flicted on the va­p­ing in­dus­try last year is a per­fect ex­am­ple. Fac­ing a pro­jected bud­get short­fall (sound fa­mil­iar?), law­mak­ers and Gov. Wolf slapped a 40 per­cent whole­sale tax on va­p­ing prod­ucts — forc­ing shop own­ers to pay the tax retroac­tively.

Less than a year later, at least 30 per­cent of vape shops in Penn­syl­va­nia have shut their doors. Dozens of small busi­ness own­ers, hun­dreds of em­ploy­ees, and thou­sands of cus­tomers were dev­as­tated just to “raise rev­enue.”

The truth is, tax in­creases weren’t nec­es­sary last year and aren’t this year. Low taxes aren’t fu­el­ing Penn­syl­va­nia’s prob­lems — we have the 15th-high­est state and lo­cal tax bur­den in the na­tion, in­clud­ing the high­est gas tax in the U.S. and the sec­ond­high­est cor­po­rate in­come tax in the in­dus­tri­al­ized world.

Over­spend­ing and ane­mic eco­nomic growth are the real rea­sons for the bud­get short­fall. Rais­ing taxes solves nei­ther.

From 1991-2015, Penn­syl­va­nia ranked 46th in job growth, 45th in per­sonal in­come growth, and 46th in pop­u­la­tion growth. For the first time in three decades, Penn­syl­va­nia’s pop­u­la­tion shrunk last year, and nearly 13,000 col­lege-ed­u­cated mil­len­ni­als fled to greener pas­tures.

If law­mak­ers and Gov. Wolf set­tle for busi­ness as usual in­stead of rein­vent­ing gov­ern­ment, th­ese de­press­ing trends will worsen.

Con­trary to what we’re hear­ing out of Harrisburg, plenty of op­tions ex­ist to shore up the state’s fi­nances with­out re­sort­ing to risky loans or tar­geted tax hikes.

First, it’s time to stop giv­ing pub­lic money to pri­vate busi­nesses. At the same time vape shops were taxed out of ex­is­tence, the state gave $800 mil­lion in grants, loans, and tax cred­its to busi­nesses with more po­lit­i­cal clout in Harrisburg.

Ama­zon, Net­flix, Kraft, and Har­ley-David­son are just a few of the big busi­nesses granted spe­cial perks at tax­payer ex­pense. The horse rac­ing in­dus­try alone gets $250 mil­lion per year. Penn­syl­va­nia leads the na­tion in this waste­ful cor­po­rate wel­fare spend­ing at $6 bil­lion since 2007. This gravy train ben­e­fits those with big­gest army of lob­by­ists but fails to de­liver eco­nomic growth — let’s ap­ply the brakes.

Sec­ond, Pro­hi­bi­tion ended 84 years ago — it’s time to start trust­ing Penn­syl­va­ni­ans to pur­chase wine and liquor where and how they want. End­ing gov­ern­ment’s liquor mo­nop­oly could gen­er­ate $500 mil­lion next year, plus an­nual li­cense fees and re­cur­ring tax rev­enues from re­duc­ing “bor­der bleed.”

Third, shine a spot­light on the “shadow bud­get.” The bud­get law­mak­ers are wran­gling over now — around $32 bil­lion — is less than half of what the state ac­tu­ally spends.

The to­tal bud­get is $80 bil­lion for the cur­rent fis­cal year. This in­cludes nearly $20 bil­lion in state spend­ing out­side the Gen­eral Fund Bud­get, most of which is left on au­topi­lot to grow year af­ter year.

Hid­den in the shadow bud­get is the Key­stone Recre­ation, Park and Con­ser­va­tion Fund, which has fi­nanced projects like an African Wild Dog Ex­hibit and an Ath­letic Fields Fea­si­bil­ity Study.

Th­ese and other funds found in the shadow bud­get, like $1.4 bil­lion in sub­si­dies to mass tran­sit, should be redi­rected to more im­por­tant pri­or­i­ties.

With pen­sion re­form, law­mak­ers and Gov. Wolf proved they can come to­gether and make progress.

It’s time to sus­tain that bi­par­ti­san mo­men­tum, dou­ble-down on rein­vent­ing gov­ern­ment, and avoid re­peat­ing the mis­takes that cost many hard-work­ing Penn­syl­va­ni­ans their liveli­hoods.

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