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OP-ED: Wolf right to veto bad budget, liquor and pension bills
Recently, Gov. Tom Wolf vetoed a Republican budget because it did not address Pennsylvania's fiscal problems and failed to sufficiently invest in Pennsylvania's children. The same was true for Republican proposals to sell off state liquor stores and overhaul pension benefits for state workers. The governor has been criticized by some for not using a line-item veto, but that approach was not in the best interest of the state. While Democrats and the governor may agree with many of the line items in the Republican budget, that "agreement" assumes that there will be corresponding revenues to pay for those items. Without sustainable revenue streams, those line items simply add to a structural deficit.
That Republican budget used multiple one-time revenue sources that could not be sustained or may not even be realized, thus guaranteeing another structural deficit and subsequent state credit downgrades ... again. The ill-conceived Republican proposal also failed to adequately restore funding to education, a top priority of Democrats, the governor, the public and, at least during the campaign last year, Republicans also. Their budget only proposed an increase of pennies per student, per school day to help Pennsylvania students, and because it short changed school districts on two of the 12 monthly Social Security tax reimbursements, over one-quarter of the state's school districts would have actually received less total funding from the state this year than they did last year. That translates into higher local property taxes.
Part of the Republican budget relied on one-time revenues from selling off one of the state's most valuable assets, our wine and spirits stores. While claiming that the "basic economics" of competition would result in lower prices for consumers, the Republican privatization plan also claimed to maintain all the current levels of tax revenue and profits received by the state. It also added licensing costs to private retailers and wholesalers, reduced the buying power of the state by dividing up wholesale operations, and by necessity, added a profit margin and advertising costs for private retailers. That's a formula for higher liquor prices in Pennsylvania and any claim to the contrary is just "basic Republican rhetoric." Even the Republican chair of the Senate committee that dealt with the bill said it would result in higher prices for Pennsylvania consumers.
The governor also vetoed Senate Bill 1, a poorly constructed pension "reform" bill that did nothing to address the current unfunded liability and put future retirees in jeopardy. The Republican proposal would have made Pennsylvania's pension system one of the worst in the nation. It also violated the law by having new employees pay for an unfunded liability created by the past decades of underfunding by the state. Even the bill's fiscal note cautioned that the bill did not meet constitutional muster. Contrary to skewed beliefs, a defined benefit pension system currently in place is Pennsylvania is viable. Since changes were made to the state's defined benefit system in 2010, that portion of the system is 100 percent funded, costs just 3 percent of payroll and currently covers 20 percent of state employees. The pension system that is not fiscally viable is the one where the state simply doesn't pay its portion of the plan, as happened in the past. A future 401(k) style plan that was underfunded for 20 years would not be fiscally viable either.
Senate Bill 1 provided no near-term budget relief although its backers did claim $10 billion in cumulative savings over the next 35 years. That was supposedly accomplished by cutting future retiree benefits by 70 percent, $35 billion, and adding $25 billion in administrative costs — the additional amount required to run a 401(k) plan versus a defined benefit plan. If the true objective of pension "reform" is to save $10 billion as opposed to wreaking havoc on public pensions, then why not just cut future defined benefits by $10 billion instead of switching to a 401(k) plan and cutting benefits by $35 billion, leaving future retirees with a costly but worthless pension?
Pennsylvania doesn't need a repeat of the failed policies of the past four years. The vetoed budget did not show real investment in Pennsylvania's future, the education of our children, or a commitment to addressing the state's structural deficit using sound business principles. The commonwealth's assets should not be sold for one-time quick-fixes, and we should not jeopardize the retirement security of hardworking Pennsylvanians. For all these reasons, Gov. Wolf was right to veto the bills.
— Mike Sturla is a Democrat representing the 96th House District in Lancaster.