Thursday, July 13, 2006

Tony Phyrillas: Lessons for Pa. from N.J.'s budget fiasco

The budget crisis in New Jersey has been in the news recently. What made it front-page news across the country was the forced shutdown of the state's casinos, which can't operate without state inspectors on the premises. The three-day shutdown cost New Jersey millions of dollars in revenues and ruined the travel plans of hundreds of thousands of people from neighboring states.

I watched the showdown between the N.J. governor and legislature with amusement. It appears Pennsylvania doesn't have a monopoly on foolish politicians. While Pennsylvania still has the worst legislature and governor in the country, New Jersey is a close second.

There were some interesting parallels between the fiscal crisis in New Jersey and what's happening in Pennsylvania. Here's a few thoughts.

Separated at birth

Democrat Jon Corzine ran for New Jersey governor in 2005 on a campaign to lower taxes. As soon as he was sworn into office, Corzine proposed raising the state sales tax by more than $1 billion. Democrat Ed Rendell promised to lower property taxes when he first ran for governor of Pennsylvania in 2002. When Rendell took office, he pushed through a $1 billion increase in the state income tax. Four years into his term, Rendell still hasn't delivered on his promise to lower taxes. Do we need any more proof that tax-and-spend liberals like Corzine and Rendell would say anything to get elected?

Casinos are in control

The casino shutdown ended when the Democrats who control the N.J. legislature gave Corzine what he wanted: a boost in the state sales tax from 6 percent to 7 percent, which is expected to generate at least $1.1 billion a year in revenues for the state. Part of the money will go to property tax relief, but the bulk of it will stay in Trenton for politicians to spend.

The so-called compromise wasn't good public policy. It was the best politicians could do under the circumstances. New Jersey elected officials had a loaded gun pointed at their heads the entire time. The shutdown of Atlantic City's 12 casinos for three days cost the state $1.3 million a day in lost tax revenues.

In the end, the state's $30 billion budget was passed because the casinos had to re-open for business. The casino owners, not the elected representatives of the people of New Jersey, forced the deal. That's the insidious nature of gambling. Its tentacles are everywhere.

In Pennsylvania, Rendell pushed through legislation that will bring 51,000 slot machines to race tracks and casinos across the state. The slots are only the beginning. Once the money rolls in, politicians will expand gambling to include full-service casinos. Rendell has sold out Pennsylvania to the casino industry. The corporations that own the casinos will eventually call all the shots. Politicians cannot serve two masters. The choice will always be between the casino interests and the people. And the people will lose every time.

Any more excuses?

One of the reasons so many Democrats in the Pennsylvania legislature opposed a plan to eliminate property taxes by increasing the state’s sales tax (or decreasing it and expanding the number of items that can be taxed) was the fear that Pennsylvania residents would flock to New Jersey to buy things if the Keystone State raised its sales tax. That's one of the main arguments the Philadelphia legislative delegation (controlled by Rendell) used to defeat the Commonwealth Caucus plan advocated by conservative Republicans. Now that New Jersey has raised its sales tax to 7 percent, why can't Pennsylvania do the same? The money from the higher sales tax could be used to provide property tax relief for all Pennsylvania residents.

Gambling is not the answer

New Jersey is facing a $4.5 billion budget deficit despite 28 years of additional revenues from the casinos. What makes Ed Rendell think that the cure-all for Pennsylvania's budget woes is to open the state to gambling? Politicians, like problem gamblers, are addicts. They become addicted to spending other people's money.

See you on the radio

I'll be the guest of Lowman S. Henry on WHYL AM 960 in Carlisle this Saturday at 9:05 a.m. The interview will also be posted at www.lincolninstitute.org for a week, and at www.voiceofpa.net, which also has the audio available and archives the show. Henry is chairman and CEO of The Lincoln Institute of Public Opinion Research Inc. in Harrisburg and has been one of the citizen activists leading the charge to reform Pennsylvania government.

The Voice of Pennsylvania is a Web site for television, radio and streaming media Webcasts focused on Pennsylvania government, politics, and culture. It was created and is maintained as a public service by the Susquehanna Valley Center for Public Policy (www.susvalleypolicy.org) based in York.

Tony Phyrillas is a columnist for The Mercury in Pottstown, Pa. E-mail him at tphyrillas@pottsmerc.com