PA’s New Deal is a Raw Deal

(November 2015)

Oh, maybe I have been thinking about the talk-of-the-town Broadway Musical, Hamilton, too much, but I am consumed by the lyrical similarities offered in the show and its consideration of the humanity of America’s Founding Fathers while watching budget deliberations in Harrisburg.  With apologies to the maestro:

How does a non-pol, York-son, from the Peace Corps
business world, plopped in the middle of a 
mess in the State Capitol,
the Democratic Governor, in power,
end up sticking it to low-income PA residents in the eleventh hour?

How does a hard-core, right-wing, ring of Senators 
State Reps, propped up by middle-of-the- 
state electors 
in the budget battle, 
averse to increasing taxes, or yielding, 
decide to give up on signature initiatives despite the power they were wielding?

How indeed? 

Candidate Tom Wolf campaigned on a platform that included as a central plank the promise of increased state funding for public education paid for by a severance tax on natural gas (pay to frack?) in Pennsylvania.  Governor Wolf made that initiative a foundation of his first proposed budget last winter.

Republican legislators have generally opposed efforts to increase taxes and have focused budget battles on ways to reduce state spending or enhance revenues through non-tax-related means.  The legislative majority has looked toward state pension reforms and ending the state's control over liquor sales as ways to address budget issues.

Deal Us In

Details are still being hammered out, but, five months after the state's deadline to pass a budget, the Governor and legislative leaders seem to have embraced a compromise proposal, which would increase education spending (though not as much as Wolf originally proposed) funded by an increase in the Commonwealth's Sales Tax.  That Sales Tax increase would also generate enough money to fund a property- tax rebate for Pennsylvania homeowners.  Frackers would remain untaxed in Pennsylvania, which would be the only major gas-producing state in the nation that does not impose such a levy.  Liquor sales would remain largely unchanged in Pennsylvania, which would be one of only two states (joining Utah) where a government monopoly controls the sale of liquor and wine.  Minor changes to the state pension might create savings at the margins in future years.

As a deal sweetener, the seemingly hard-fought effort to increase a broad-based tax would raise enough money to lower another broad-based tax.  Increased Sales Tax revenues would fund Property Tax rebates for Pennsylvania homeowners under a formula that, like many budget details, is being crafted behind closed doors.  That tradeoff is particularly troubling for lower-income Pennsylvanians who rent their homes, as they would see increases to the (already high) tax on their purchases without seeing a break on their housing spending.

Proponents of this announced budgetary framework tout it as a half-a-loaf solution that will advance the goal of increased educational funding while making some progress on issues like growing pension costs and consumers’ desires for a more modern system of liquor sales in Pennsylvania.  But, make no mistake; the tradeoffs made in this deal represent capitulation not compromise.  Both sides abandoned core principals, not for a greater good, but to appease most narrow special interests.

What The Frack? 

Harrisburg observers had hoped the Democratic governor and Republican leaders of the General Assembly might actually consummate a grand compromise to make progress on a number of problems that have eluded solutions for years.  Despite widespread public support for rationalizing and expanding public education funding, increasing taxes on the fracking industry, and modernizing alcohol sales in the Commonwealth, the parties could not find the will to take on special interests.  

Instead of taxing the frackers, Republicans in the General Assembly supported a broad and dramatic increase in the Sales Tax and instead of bringing liquor sales into the 21st Century and angering a few thousand state-liquor-store workers, the Democratic governor agreed to raise taxes that fall disproportionately upon the shoulders of millions who are least able to pay.

We Need A Drink!

Surely, we can find a way to ask frackers to pay a tax to the state whose natural resources they are despoiling that would represent just a tiny percentage of the profits they are reaping, right?  Surely, we can find a way to move away from Stalin-like government control over alcohol sales to give consumers what they want while reasonably protecting current employees during what is sure to be an unsettling transition, right?  

Oh, to understand how this raw deal was forged.  The lyrics of Hamilton’s show-stopping "The Room Where It Happens" come to mind when considering the baffling budget deal that has finally been floated from Harrisburg. 

No one really knows how the game is played
The art of the trade
How the sausage gets made 
We just assume that it happens
But no one else is in
The room where it happens.

No one really knows how the
Parties get to yes
The pieces that are sacrificed in
Ev’ry game of chess
We just assume that it happens
But no one else is in
The room where it happens

The art of the compromise
Hold your nose and close your eyes
We want our leaders to save the day
But we don’t get a say in what they trade away 
We dream of a brand new start
But we dream in the dark for the most part 
Dark as a tomb where it happens

Hold your nose and close your eyes, indeed.  This budget deal should be rejected by people of principle from both sides of the political spectrum.  Our leaders should get back to working (preferably not behind closed doors) on a deal that does not allow special interests to trump the public good.