PolicyBlog

Pension Reform Bill on the Move

Commonwealth Foundation — Wed, 19 Jun 2013 16:18:00 EST

We applaud the Senate Finance Committee for moving meaningful pension reform legislation. The Committee advanced SB 922 to put all new state and school district employees into a defined contribution plan, similar to a 401(k).

This is a critical first step to addressing our public pension crisis. Our current pension system is like a sinking ship, and we need to stop adding more passengers. Placing new employees in a defined contribution does just that, plugging the hole in the hill first, so that we can start bailing out the water.

Defined contribution plans provide a sound retirement for workers while also being affordable and predictable for taxpayers. Moreover, this reform will get politics out of pensions and prevent manipulation of pension benefits and payments that created the $47 billion and growing crisis.

Despite the many myths surrounding the pension crisis, there is a way forward. To find out how we can stop the pension crisis from dragging down Pennsylvania's economy, please visit CF's Principles for Public Pension Reform.

Podcast: Fixing Public Pensions

Commonwealth Foundation — Wed, 19 Jun 2013 10:20:00 EST

Two new BOX Program podcasts offer illuminating insight into our public pension crisis and how lawmakers can help fix the broken system.

First, Matt talks with former Utah State Senator Dan Liljenquist about pension reforms enacted in Utah. Liljenquist likened the pension system to a chemical spill—the first step to addressing the problem is cap the spill, then work overtime to clean it up. Likewise, the first step to fixing the pension crisis is moving away from a defined-benefit plan to a defined-contribution plan, where taxpayer commitments are limited. Listen here.

In the second podcast, Matt talks with Mercatus Center senior research fellow Eileen Norcross about how the pension crisis affects both state and local government finances. Norcross talks about principles for reform including accurate accounting to show the true costs of pensions, and moving from defined benefit plans which have been overpromised and underfunded. Listen here.

Senate Liquor "Reform" Falls Short

Commonwealth Foundation — Tue, 18 Jun 2013 17:40:00 EST

This afternoon, Sen. Chuck McIlhinney introduced his liquor "reform" plan which falls short in delivering the convenience, selection, and pricing that Pennsylvanians demand. His proposal, which keeps the state-owned and operated liquor stores as well as the government-run wholesale monopoly of wine and spirits cannot be considered privatization.

With the government continuing as the wholesale middleman—in charge of supplying all wine and spirits to retail outlets—consumers will not see greater selection or lower prices in wine and spirits and would cost taxpayers an estimated $700 million.

But the battle for liquor liberty is not over.

We agree with Senate Majority Leader Pileggi that this proposal is only a starting point in the liquor privatization debate in the Senate, and that more work needs to be done to get government out of the booze business.

Click here to email your Senator and let Harrisburg know that Pennsylvanians want real privatization, not liquor sales "reform." Click here for contact information for Senate leadership and Law & Justice Committee members.

Red Carpets Trip Up Real Tax Reform

Commonwealth Foundation — Tue, 18 Jun 2013 12:35:00 EST

When Rocky Balboa triumphantly climbed the steps of the Philadelphia Art Museum in the 1976 blockbuster film Rocky, he did it without a special government handout. But now Hollywood lobbyists are climbing the steps of the Capitol Building in Harrisburg to ask for just that, and top lawmakers are rolling out the red carpet.

While some lawmakers are talking about keeping an onerous business tax scheduled to end in 2014, others are talking about increasing the state Film Tax Credit (FTC), giving an even greater tax break to Hollywood studios. While bringing movie stars to Pennsylvania is good for headlines, special tax breaks for targeted industries hurt average Pennsylvanians.

The FTC attempts to entice movie production companies to film in Pennsylvania by giving them a tax credit equal to 25 percent of their total production costs. As a bonus, if the tax credit is greater than the taxes they owe (meaning they paid zero taxes) the company can sell their excess credits for a profit.

Supporters of the FTC argue that these tax breaks will bring jobs and economic activity to Pennsylvania. This is only partially true, and comes at expense to Pennsylvania taxpayers. According to an Independent Fiscal Office report, the uncapped tax credits will cost taxpayers $108 million per year, with the state recouping only 14 cents in tax revenue for every dollar given away.

And what do Pennsylvanians get in return for the state’s losing investment? Supporters claim it will bring jobs to Pennsylvania, but the IFO report shows that 70 percent of wages (which make up the majority of production expenses) will go to non-residents transplanted from out-of-state. When shooting ends and the film crews go home, their earnings leave with them

Furthermore, the money could be better spent reducing the tax burden for all Pennsylvanians, making Pennsylvania more competitive and leaving us with more of our hard earned money

The FTC is an example of why Pennsylvania needs real tax reform. Special tax breaks for some are paid for by the rest of us, and primarily serve to benefit politicians. We should leave the FTC and all other special tax breaks on the cutting room floor, and instead bring real tax relief to all Pennsylvanians.

Pa's Economy Improves, But Far from the Best

Commonwealth Foundation — Mon, 17 Jun 2013 14:50:00 EST

Things are looking somewhat up for Pennsylvania’s economy, according to the annual Rich States, Poor States published by ALEC. The 2013 edition ranks Pennsylvania 34^th in economic outlook, up from 40^th last year and the highest economic ranking since the index’s creation.

Rich States, Poor States considers 15 factors heavily influenced by state policies to predict how a state’s economy will perform. While the commonwealth’s high tax burden and lack of worker freedom continue to hinder growth, a slowdown in state spending and continued phase-out of the capital stock and franchise tax have helped the state move from the bottom third to the middle-of-the pack.

But middle-of-the-pack isn’t good enough. To continue to attract jobs and investment, Pennsylvania will have to tackle big cost drivers like Medicaid and the pension tsunami. Continued tax reforms will help too, such as Governor Corbett’s latest proposal, which we estimate will create more than 2,500 new jobs by 2018 if enacted.

We're Not There Yet!

Commonwealth Foundation — Fri, 14 Jun 2013 16:44:00 EST

We've all fought long and hard for Pennsylvania to finally enter the 21st century and end government control of alcohol sales. We've never been closer, but we're not there yet.

Liquor privatization now rests with the Senate, and we must let them know that we want full privatization, not half measures. Time is running out and alternatives have been raised that would fail to end the government monopoly on alcohol sales.

Pennsylvanians want real privatization—in a poll released this week 52 percent of likely voters said that privatizing retail alcohol sales but keeping the government wholesale monopoly is insufficient (only 18 percent said it was sufficient).

The time is now. Tell Harrisburg you support full privatization of alcohol sales!

Click here to send your Senator a quick message.
Call and email Senate leaders and members of the Law & Justice Committee. Contact information below:

Senate leaders:

Sen. Joseph Scarnati, III
Sen. Dominic Pileggi
Sen. Patrick Browne

Senate Law and Justice Committee:

Sen. Charles McIlhinney, Jr.	Sen. Jim Ferlo
Sen. Richard Alloway, II	Sen. Edwin Erickson
Sen. John Rafferty, Jr.	Sen. Donald White
Sen. Gene Yaw	Sen. Wayne Fontana
Sen. Christine Tartaglione	Sen. Anthony Williams

I urge you to pick up the phone, send messages, and share this alert with your friends today.

Pension Cost Conundrum: Cut Teachers or Raise Taxes?

Commonwealth Foundation — Fri, 14 Jun 2013 16:03:00 EST

A recent report released by the Thomas B. Fordham Institute estimates Philadelphia School District (SDP) pension payments will total $349 million by 2020, which is a 378 percent increase from what the state and school district had to pay in 2011. That's a rise of about $1,900 per student. And this pension spike doesn’t just threaten the SDP but school districts all across the Commonwealth.

The report lays out the worst case scenario for the SDP, which serves as a warning to the rest of the state:

When the figures are compared to the district’s likely revenues in 2020, we find that supporting this rise in retirement costs could require SDP to cut as much as $283.9 million—13.0 percent of its spending—on other items. If SDP chose to meet the burden of rising retirement costs by raising the student-to-teacher ratio, it would require eliminating 3,077 (out of 9,227) teacher positions, effectively adding eight students per teacher, from sixteen to twenty-four. If SDP chose, instead, to meet the rise in retirement costs by reducing other components of teachers’ compensation, that drop would need to exceed $30,000 by 2020.

The Commonwealth Foundation estimates that under current law, annual taxpayer contibutions will increase by nearly $1,000 per household to fund pension liabilities for both public school employees and state employees.

The report also touches on Act 120 of 2010. One myth (and there are many) surrounding the public pension crisis is Act 120 solved our problems, but the Fordham Institute puts this myth to rest:

Pennsylvania enacted significant pension reform in 2010, cutting benefit accruals for new hires by 25 percent. However, unlike the other two states we examine (Ohio and Wisconsin), the cuts did not make a dent in Pennsylvania’s rising retirement costs. This is because that rise—coming over the next few years—is due to the deferred funding of benefits previously earned, not the cost of benefits for new hires (which take many years to phase in).

For Pennsylvania to avoid school program cuts and higher taxes on working families, we need real pension reform now. For solutions to our pension crisis, visit Principles for Public Pension Reform.

Districts Save What Cybers Spend

Commonwealth Foundation — Thu, 13 Jun 2013 14:54:00 EST

How much of Pennsylvania’s education spending goes to public cyber schools? Just 1 percent, or $319 million. Keep this in mind when reading about new data on school district reserve funds.

A common complaint we hear about public cyber and charter schools is that they cost school districts too much money. Indeed, along with pension payments and lack of public support for tax increases, the “cost” of charter school students is one of the main budget problems cited by some school districts. Of course this ignores the fact that public cyber schools receive less funding than traditional schools—only 80 percent funding per student. The school districts keep the extra 20 percent without having to educate a child.

But did you know that Pennsylvania’s school districts also maintain generous reserve funds? These “rainy day” funds are supposed to fill budget gaps and compensate for tax revenue shortfalls. Given recent complaints of education funding cuts, these funds must surely be running dry, right? Not quite.

Updated Department of Education data shows that districts across the state hold more than $3.8 billion in reserve fund balances. That’s nearly a $300 million increase from last year.

That number sounds familiar, doesn’t it? $300 million is just about the yearly cost of public cyber schools for the entire state of Pennsylvania, and schools districts sock that amount away in just one year.

For even more perspective, the current $3.8 billion in school district reserves by themselves would pay for all the state’s cyber schools for more than a decade.

The next time you hear complaints about cyber schools taking funds from school districts, remember that districts are saving every year what cyber schools spend.

Help us defend cyber schools from funding cuts at www.CyberSchoolsSave.org and protect choice in public education for more than 32,000 Pennsylvania students.

Government Middleman Bad for Consumers

Commonwealth Foundation — Wed, 12 Jun 2013 12:47:00 EST

The Scranton Times Tribune has an excellent editorial explaining that the state government monopoly over liquor wholesale is just a bad as its monopoly over wine and spirits retail sales.

Currently the Pennsylvania Liquor Control Board determines what wines and liquors can be sold in the state. Moreover, restaurants and bars have to get their wine and spirits from the government—and they have to pick it up themselves, because the PLCB doesn't deliver.

The Times-Tribune writes:

As demonstrated in recent hearings by the state Senate Law and Justice Committee, the alcohol politburo's centralized control of the wholesale booze business is just as harmful to consumers' interests.

In the capitalist world, private sector retailers such as wine shops and restaurants buy directly from many wholesalers, who compete for customers by offering selection and price. Wholesale prices go a long way towards determining competitive, rather than standardized shelf prices.

In Pennsylvania, there is but one 800-pound gorilla of a wholesaler - the politburo itself, the Pennsylvania Liquor Control Board. It determines what the only retailer - also the Pennsylvania Liquor Control Board - can sell at retail, and at what price.

Some have suggested "modernizing" by expanding retail options, but keeping the government monopoly over wholesale. But if taverns and grocery stores still have to buy their wine from the government, Pennsylvanians won't get any greater selection or lower prices than they have now.

For more on this issue, check out recent posts on the cost of "modernizing" the PLCB's wholesale monopoly and why this issue matters to you and listen to our latest podcast in which Katrina Anderson talks with Marcia Lampman, Executive Director of the House Liquor Control Committee, on why ending the government's wholesale monopoly is critical to Pennsylvania consumers.

Podcast: Why Does Wholesale Privatization Matter?

Commonwealth Foundation — Mon, 10 Jun 2013 16:40:00 EST

For most of us, liquor privatization means making liquor more convenient and affordable by getting rid of Prohibition era, state-run stores and unleashing the power of the private sector. But the state’s current retail system is supported by a wholesale network that’s also run by the government. For lawmakers to give Pennsylvania consumers the choice and convenience they deserve, the monopoly over wholesale and retail operations must end.

Marcia Lampman, Executive Director of the House Liquor Control Committee, says, "The PLCB is acting as a middleman, because you still have the 'big guys'—the wholesalers—operating in Pennsylvania as well. They are simply called importers and are only allowed to sell to the PLCB."

This adds a layer of cost and inconvenience that does not exist in other states. In fact, restaurants and taverns actually have to pick up their liquor orders from state outlets—the PLCB doesn’t deliver.

So, what is wholesale privatization and why does it matter? (Boondoggles aside.)

Marcia answers these questions and much more in our latest podcast. Listen here.

Shocking Sheetz Statement Shames Senator

Commonwealth Foundation — Fri, 07 Jun 2013 14:46:00 EST

Fellow Pennsylvanians, we've all been there: road-weary on a long drive home, hungry and low on gas, and there it is…a big, red beacon of hope and MTOs…you have made it to Sheetz.

Okay, full disclaimer: I am a Western Pennsylvanian and my Sheetz card is practically falling off my keychain due to overuse. But you don’t need to know a Shmiscuit from a Shmuffin to be embarrassed by recent comments about Sheetz in a Senate liquor privatization hearing: "They rip people off every day." Another outrageous union boss comment? No, a state senator. The roughly 40,000 fans of Sheetz's pro-privatization Free My Beer campaign likely beg to differ.

Outrageous comments aside, whether you'd like to finally buy your booze at a Sheetz or a Wawa, or perhaps your local bar or restaurant, it's essential not only for lawmakers to increase convenience, but to get government out of liquor sales entirely. If the government maintains monopoly control of wholesale distribution, the PLCB will have complete power to make or break any retail stores that sell liquor.

Full liquor privatization is critical to expand consumer choice in Pennsylvania. The PLCB’s wholesale monopoly doesn’t serve current outlets well and it will only get worse if the number of outlets that sell alcohol increase.

If you wish you could buy your adult beverages this weekend at a store that isn’t run by the government, make sure you let your senator know that you want government out of the business of selling alcohol – completely.

Senate Transportation Proposal Rolls On

Commonwealth Foundation — Thu, 06 Jun 2013 16:11:00 EST

In a bipartisan vote, the state Senate approved a bill that would fund a $2.5 billion increase in Pennsylvania's transportation funding.

Like Gov. Corbett's budget, the proposal calls for uncapping the oil franchise tax paid by wholesale gasoline dealers, which currently sits at $1.25 per gallon. That is, the tax is only charged on the first $1.25 of gasoline prices.

The Senate proposal would also increase driver's license fees from $29.50 for every four years to $50.50 for every six years. Vehicle registration fees would increase from $36 per year to $104 for two years. The bill would add a "surcharge" for various traffic violations.

The Philadelphia Inquirer has a breakdown of how the proposed $2.5 billion would be spent:

Under the bill, the lion's share of money, about $1.9 billion a year, would go toward highways and bridges. Roughly $500 million a year would go to mass transit, including funding to help them convert their fleets to alternative fuels. About $115 million would be shared among airports, ports, rail freight, and walking and biking routes.

The annual Pennsylvania Turnpike payments to PennDOT would be eliminated after eight years.

The Senate's bill differs from Governor Corbett’s proposal, which also included uncapping the oil franchise tax, but does not contain any new fees or fines. Governor Corbett's proposal is estimated to raise $1.8 billion for transportation funding, $700 million less than the Senate’s proposal, and is phased in over a longer time frame.

To find solutions for fixing Pennsylvania’s deficient roads and bridges, check out CF’s Principles for Transportation Funding.

Government Wholesale Monopoly Bad for Pennsylvania

Commonwealth Foundation — Wed, 05 Jun 2013 16:03:00 EST

Testimony to the Senate Law and Justice Committee yesterday illustrated why wholesale privatization must be a part of "modernizing" liquor sales in Pennsylvania.

The PLCB’s wholesale monopoly can’t serve current, much less expanded, retail outlets, restaurants and taverns. The PLCB does not deliver to restaurants, bars and taverns. In fact, the PLCB contracts with private companies for warehousing and even delivery to their own state stores.

Rep. Kurt Masser (a tavern owner) explains the PLCB’s ordering process: "I get my meat delivered to my restaurant. I get my produce delivered to my restaurant. I get my beer delivered to my restaurant. I have to pick up my liquor order. I can’t get it delivered. And if the liquor order is wrong, I have to take it back to the store and redo it." A competitive wholesale system will better serve Pennsylvania’s small businesses

Mark Gorman, Senior Vice President of the Distilled Spirits Council of the United States (DISCUS), whose members account for about 80 percent of spirit sales nationwide, testified yesterday on liquor privatization. Mr. Gorman noted:

Privatization of retail sales should be tied to wholesale privatization of alcohol sales: "…if you decide to privatize one tier of business—you would be best served by privatizing the whole thing."
Pennsylvania’s current state-run system does not adequately serve the state's more than 12 million residents.
If the PLCB were to expand delivery to more than 15,000 restaurants, bars and hotels, DISCUS estimates the cost to taxpayers as high as $770 million a year. In contrast, private wholesalers operating in most other states deliver products to restaurants.
The Commonwealth could take in more than $500 million from selling off private wholesale licenses.

For Mark Gorman’s complete testimony, click here.

Testimony from Dawson R. Hobbs of the Wine and Spirits Wholesalers of America expanded on those arguments by explaining why a private wholesale system will increase selection and choices for consumers:

The existence of multiple wholesalers in a state also benefits retailers and consumers because it introduces competition to the market place. Each wholesaler will carry multiple brands in a given product category, for instance vodka or bourbon. Thus wholesalers are competing to make their particular band the product of choice in that market. This competitive dynamic ensures that retailers are receiving the most competitive prices and marketing support from wholesalers. Over time that means that consumers benefit by having the opportunity to purchase the best products at the best prices.

The successful experience from Washington shows that wholesale privatization can occur in a six month period. Pennsylvania lawmakers should follow that example rather than spending millions of dollars to retrofit a bad system that is destined to fail and lose hundreds of millions in new revenue. Let’s get this right the first time by privatizing the wholesale system to ensure retail stores and restaurants get the quality service they so desperately need.

More Reasons to Pass on Medicaid Expansion

Commonwealth Foundation — Wed, 05 Jun 2013 14:55:00 EST

Elected officials are standing strong in their opposition to the Medicaid expansion under the Affordable Care Act, despite a number of "independent studies" touting the benefits of "free money" from the federal government and constant lobbying by the health care industry.

Last week, State House Republicans introduced their 2013-2014 budget proposal, devoid of Medicaid expansion. House Appropriations Chairman Rep. Bill Adolph stated, "When and if the governor decides to expand Medicaid, then we’re going to be taking a look at those figures."

Here are a couple reasons to pass on Medicaid expansion.

Medicaid doesn't make people healthy. An Oregon study designed to figure out whether Medicaid patients are healthier than the uninsured found no evidence that Medicaid improves the physical health of enrollees.

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

Estimated Medicaid expansion savings are significantly skewed. Department of Public Welfare Secretary Beverly Mackereth challenged rosy predictions cited in the Independent Fiscal Office’s analysis.

Overall, the Department has serious concerns regarding several assumptions included in the report . . . the IFO report contains what we believe to be several material problems that merit further review and analysis before the report’s conclusions could be relied upon.

Altogether, she estimates the IFO overstates savings by about $515 million for 2014. Why the difference? Mackereth contends the analysis underestimates needed staff and training costs, underestimates the number of Pennsylvanians who will sign up for coverage, and overestimates the savings from moving patients from state programs onto Medicaid, where they qualify for more "federal dollars".

Finally, we still don't know what's in the bill. Last week we learned from Senator Jay Costa that federal officials will force children enrolled in CHIP (Children's Health Insurance Plan) to enroll in Medicaid regardless of whether Pennsylvania expands [pay wall]. Even the Governor's office was unaware of this provision until recently. Unlike Medicaid, CHIP patients can choose from a wide variety of private plans, which the government subsidizes on a sliding scale. Kicking kids off CHIP could force families to find new doctors since many CHIP doctors do not accept the lower Medicaid reimbursements.

Governor Corbett should reject any expansion to avoid what Michael Cannon calls a "fiscal timebomb" in the Morning Call and pursue Medicaid reform that improves outcomes by giving patients choice and control.

New Video: What's Happening with Liquor Privatization?

Commonwealth Foundation — Wed, 05 Jun 2013 12:31:00 EST

The final Senate hearing on liquor privatization has concluded, where do things stand for Pennsylvania taxpayers and consumers?

Carl Marrara, director of government affairs for Pennsylvania Manufacturers' Association and Kevin Shivers, executive state director for NFIB - PA join us for a Google Hangout to discuss the hearings, voter support for privatization, and why privatization is good for Pennsylvania businesses.

Want to get involved? Call, write, or tweet your Senator today. Click here to send an email now.

Additional resources:

PMA Poll: Strong Majority of PA Voters Want Liquor Privatization
Follow PMA and Carl Marrara on Twitter
Follow NFIB-PA and Kevin Shivers on Twitter

Time is Ticking

Commonwealth Foundation — Tue, 04 Jun 2013 11:05:00 EST

This morning marks the final hearing in the Senate on the House-approved proposal to privatize Pennsylvania’s Prohibition-era liquor system. Time is ticking for the Senate to finally end the government booze monopoly.

A new poll released today from the Pennsylvania Manufacturers' Association shows that once again, the majority of Pennsylvanians support liquor privatization. Further, support increased when supplementary questions were asked. The poll revealed:

The number [of voters] who would be more likely to support liquor privatization grew to just under 70 percent if penalties for selling to minors became stricter (69 percent) and if displaced workers could find jobs in the private sector (68 percent).

These results bolster privatization proponents because the current legislation being debated in the state Senate increases by tenfold penalties for selling to minors and establishes job tax-credits and training programs for PLCB retail and wholesale employees. Moreover, a recent analysis of policy changes in Washington State reveals that their privatization efforts led to a net increase in jobs and increased overall state revenues.

The Senate needs to hear from you, the majority of Pennsylvanians that want government out of the booze business. Click here to write your Senator today.

On social media? Post on your Senator’s Facebook wall and Tweet out your support (some hashtags: #paliquor #consumerchoice #plcb).

Cyber Schools Receive Less Per Student

Commonwealth Foundation — Mon, 03 Jun 2013 08:40:00 EST

Pennsylvania cyber schools receive on average about 20 percent less revenue per student than school districts spend.

Like other public charter schools, cyber schools receive funds only when families choose them. A portion of taxpayer dollars allocated for a student's education in her resident school district follows the child to her new cyber school. Now proposed legislation would cut cyber schools' funding even further, effectively treating their students like "second-class students."

Though cyber schools have a different learning model, they have many similar costs to regular public schools. For example, they must still pay for facilities, including administration offices and space for teachers to teach by video, and several offer blended learning centers. But they receive no funding from school districts for their facilities' costs. They must also provide health services, and their mandated annual PSSA testing can cost the largest cyber schools with thousands of students scattered across Pennsylvania hundreds of thousands of dollars to execute. Cyber schools also offer extracurricular activities and electronic library services that cost money, too.

For more facts on cyber school funding, see Commonwealth Foundation's latest Policy Memo, and visit Cyber Schools Save to see the success stories of real Pennsylvania cyber students.

Cyber Schools: 1% of Education Spending

Commonwealth Foundation — Fri, 31 May 2013 17:23:00 EST

In 2010-11, public cyber schools cost $319 million out of $25 billion on PreK-12 spending—just 1% of Pennsylvania’s total public education spending.

Cyber vs. School District Spending, 2010-11
	Total	Per-Student
School Districts	$25,095,498,696	$14,167
Cyber Schools	$319,475,044	$11,501
Cyber spending as % of school district spending	1%	81%
Source: Pennsylvania Department of Education, "Expenditure Data for All LEAs," 2010-11, Click here to view or download the AFR Summary-Level Data report. Total 2010-11 cyber enrollment was 27,779.

For more facts on cyber school funding, see Commonwealth Foundation's latest Policy Memo, and visit Cyber Schools Save to see the success stories of real Pennsylvania cyber students.

Washington Liquor Privatization: One Year Later

Commonwealth Foundation — Fri, 31 May 2013 13:42:00 EST

On June 1, it will be one year since Washington state ended its government monopoly on liquor sales. To mark the occasion, the Seattle Times has provided a nice overview of how privatization has affected Washingtonians thus far. Here are some of the highlights:

Liquor sales have increased.
Tax revenue has increased.
Prices have varied, in part because of new fees and taxes.
Washington has seen a net job gain after privatization.
Drunk driving fatalities are on the decline.
The state has seen an increase in shoplifting.

How were things before privatization? "It was a disaster." That is how Tim Sheldon, the Democratic President Pro Tempore of the Washington State Senate, described the liquor monopoly in his state in a podcast.

Senator Sheldon lamented how difficult it was for retail stores to get the inventory they needed. Sound familiar, Pennsylvania? The state's single liquor distribution warehouse could only process 15,000 cases a day, one-fourth the production of a similar private distribution warehouse based in Seattle.

It is true that some liquor prices have increased in Washington. However, privatization is not to blame. Excessive taxes and new fees is the reason many have seen a price increase. Washington now imposes the highest liquor tax in the country at $35.22 per gallon, according to the Tax Foundation. The state has imposed an additional tax on private distributors and will require them to collectively pay $150 million in licensing fees. These costs are passed on to consumers in the form of higher prices, which is driving consumers to other states for their booze.

The disasters predicted for Pennsylvania by vested interests opposing privatization have simply not happened in Washington. Pennsylvania must pass full privatization, which means a complete divestiture of both the retail and wholesale sides of liquor sales, absent any new taxes or fees. The evidence is overwhelming; the government in the booze business is a lose business.

Will Switching to a 401(k) Plan Cost You More?

Commonwealth Foundation — Fri, 31 May 2013 09:27:00 EST

Pennsylvania needs pension reform that provides state workers with a sustainable retirement system that’s fair to new workers, existing employees and taxpayers. What are our options? The current system is a defined benefit pension plan that guarantees a government income for life. Switching to a defined contribution plan would require the government to regularly deposit a guaranteed percentage of a worker’s salary into a personal retirement account, like a 401(k).

This is the sixth in a series of blog posts debunking the myths surrounding Pennsylvania's pension crisis.

Myth: State pension plans cost less to administer than 401(k) plans managed by Wall Street firms.

Fact: A Deloitte study found that 401(k) plans cost the same or less than traditional plans to administer. SERS and PSERS spent more than $760 million last year on administrative costs and investment fees. As a percentage of assets, these costs exceed the average total fees for large 401(k) plans as calculated by Deloitte.

The fact is, Pennsylvania’s troubled state pension funds already rely on expensive Wall Street investment firms to close looming deficits. For example, in 2006, the State Employees’ Retirement System (SERS) gave $6 billion to six private investment firms to buy risky hedge funds in hopes of earning lavish returns to cover its pension shortfall.

Myth: Converting to a 401(k) pension system would create significant “transition costs.”

Fact: Opponents claim government-mandated rules that require Pennsylvania to pay off unfunded liabilities sooner will cost the state, but the national Governmental Accounting Standards Board (GASB) regulates only the accounting methods—it doesn’t mandate when or how debts must be paid. Taxpayers are already on the hook for the $40 billion unfunded liability for state and public school workers. Switching to a new plan does not add to this liability.

Pennsylvania state government and school districts currently put less money into the pension plans than the “Annual Required Contribution” mandated under accounting rules. Regardless of reforms lawmakers may enact for new workers, the current funding system is unsound.