Solutions, not Stalemates
8/31/2015
By Rep. Bryan Cutler (R-Lancaster) and Rep. Seth Grove (R-York)

Nearly two months have passed since Gov. Tom Wolf vetoed a balanced budget and two weeks have gone by since we offered him a compromise plan. We agree with the LNP Editorial Board (“Get the budget done,” Aug. 27): we must reach a compromise that gives our state a budget. Without it, our state’s service providers cannot access state or federal funding. Not having a budget is hurting our neediest citizens.

Last week alone, Gov. Tom Wolf was unavailable for two meetings with leaders in the General Assembly, prolonging any chance for compromise during this stalemate. Decisions like these by the governor have impacted our most vulnerable citizens, as many organizations wait for money to fund essential services. One group feeling this impact is our students as schools around the commonwealth begin classes without state funding.

The compromise we presented to the governor reflects the priorities of both sides. The Republican plan would make an overall increase to public education by allocating an additional $300 million for the basic education funding line item through reforming the state’s pension system and divestiture of the state-run liquor business. This, combined with our current proposal to increase the basic education funding by $100 million, brings the total increase in K-12 education up to $400 million over the year.

This reflects the governor’s top priority, dollar for dollar, but does so without any tax increases. Instead of a tax hike plan as proposed by the governor and unanimously defeated when voted on in the House, Republicans have focused on reforming the status quo to invest in the priorities of Pennsylvanians. The reason for this is simple: Government should never ask people to change their spending habits if government is unwilling to changes its own.

One such reform, for which we hear constant support, is the privatization of the state’s antiquated liquor system. Currently, the state-run system brings in only $80 million, but this amount will continue to decrease rapidly from growing pension costs. As a result, taxpayers will need to pay into the liquor system to keep it afloat. This was evidenced, last month, by the Liquor Control Board increasing handling fees.

Our plan, supported by a majority of Pennsylvanians, not only removes the state from selling alcohol but also will end the practice of “border bleed,” — the $120 million the state loses when Pennsylvanians buy alcohol in a bordering state. By selling the wine and liquor stores, ending border bleed and increasing alcohol and sales tax revenue, our proposal would raise approximately $225 million each year.

We believe the state’s role is to enforce alcohol laws for public safety — not to sell alcohol. Through liquor privatization, the commonwealth can reform an antiquated system and restore government to its proper function while bringing in new revenue that can be used for something like an increase in education funding.

Another critical aspect of the compromise plan is reforming the state’s broken pension system. According to the Basic Education Funding Commission, more than 60 percent of education funds are used to pay salary and pension benefits. Not only do growing pension costs divert current funds out of the classroom, but also future revenue as well. Pension costs are expected to double by 2019, consuming 63 percent of every new tax dollar. As a result, school districts have been forced to consistently raise property taxes to cover growing pension costs.

Under the modified Republican plan to reform pensions and prevent future property tax increases, future state employees would be placed into a 401(k) plan with an additional retirement security plan. This is nearly identical to the plan Wolf offered his employees in the private sector. Under our plan, and similar to Senate Bill 1, all state legislators would be moved into the same 401(k) plan following the next election. As a result, taxpayers would save more than $10 billion and current employees and retirees would keep their current benefits. Reforming our state’s pension system reduces our unfunded liability and reduces the biggest cost driver to school districts.

President Ford once said that “compromise is the oil that makes government go.” Now, almost two months without a budget, it is time for the governor to compromise and work with Republicans to make government go. We have done what the governor wanted; we included every single penny of the additional $400 million for education funding he requested in the budget. Now we need him to accept, or at least respond to, the compromise we presented two weeks ago. After receiving his top priority, let’s hope we can pass a budget and fund the many critical services the commonwealth provides and our residents desperately need.
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