As poison pills go this would be doozy: After the Republican-led Pennsylvania Legislature failed yet again to come up with a tax, tax, tax revenue plan to match its spend, spend, spend budget plan, Democrat Gov. Tom Wolf took the gloves off last week.
By Jove, the governor declared, he was mad as heck about the impasse and would do the most prudent thing he could do in such a situation – borrow money. Ahem.
There’s certainly a pattern here: No one has the gumption to do what’s right – namely, cut, cut, cut spending.
So, whence did Wolf find a lender? Why, in the state monopoly that is the Liquor Control Board. He plans to secure a $1.25 billion bond using income from the LCB – a “securitization of future transfers” from the LCB to the state’s General Fund, amortized over 20 years.
Some question the legality of the move. But House Majority Leader Dave Reed told Cityandstatepa.com that Wolf “apparently has the legal authority to do this.” Reed says legislators learned of the proposal through the media.
The governor says he has the backing of LCB boss Tim Holden. Holden, a Wolf appointee, and two board members told the website that the full board has not discussed such a move but, as the website put it, “they understand the appeal of monetizing future transfers to ameliorate the commonwealth’s difficult budget situation.”
But as reporter Steve Esack of The Morning Call of Allentown notes, such a loan likely would scuttle any near-term efforts to privatize the LCB, a Prohibition-era anachronism:
“The state could not sell the LCB if the 20-year bond is attached to it,” he theorizes.
Unless, that is, any buyer covers the $1.2 billion. Double Ahem.
But why go through such bureaucratic machinations? It would be far more profitable, if not easier, for the commonwealth to end its monopoly, totally, on wine and liquor sales and sell off the operation once for all.
When is a tax a bad tax? When it’s not the tax you’re proposing, one that you seek to protect, apparently.
Allegheny County, City of Pittsburgh and tourism officials were variously stunned, disappointed and outraged when legislators in Harrisburg, without consultation, proposed a 5 percentage point increase in the hotel tax paid by patrons in Pittsburgh and Philadelphia.
The proposal, which went down in flames last week, would have led to a 19 percent tax on Pittsburgh hotel rooms and 20.5 percent for Philly hotel rooms. That combination of state and local taxes would have been among the highest rates in the nation.
Indeed, such an onerous impost would play a role in customers, be it individual tourists or conference planners, deciding not to come the city or county.
But, and in the perverted world of taxing ourselves to prosperity, local officials appeared to be just as worried that such a state tax-hiking effort would hurt a local state tax-hiking effort.
You might recall that those same local officials already have on the table a proposal to raise the hotel tax by 1.25 percentage points. That, to generate about $6 million annually to fund, among other things, a new Pittsburgh Sports Commission.
The commission would be charged with helping to attract major sporting events and to make sure facilities that might host such events are up to competitive snuff. There’s even been talk of using some of the money to fund improvements at Heinz Field, PNC Park and PPG Paints Arena.
Good grief. Yet further proof that taxpayer abuse begets taxpayer abuse. Another bureaucracy to siphon off more money from private pockets. It truly is what “progressivism” is all about.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
