Coming off several years of notorious lack of success at shackling a mounting pile of urgent infrastructure needs to imposing a severance tax on gas drilling, Governor Wolf is apparently undeterred. Not only has he revved up Restore PA for another run, he is jumping into the same strategy pool again.
His daily double for state budget 2020 involves connecting a lofty public purpose – a new student scholarship program – with an unrelated revenue source, gambling-derived funding for the horseracing industry. An old comedic line says the difference between playing the ponies and the stock market is that one of the horses has to win. Does the governor have a better chance at plundering horse money than he has at parlaying a severance tax?
The scholarship program is gaining wide acclaim. After all, who is going to vigorously object to scholarships for debt-laden students? Seems reasonably thought out and involves a fair exchange. We commit to you, and you in turn commit to our commonwealth. Comes at a crucial juncture of public concern over access to higher education and the consequences of rising student debt on long-term job prospects and economic contributions. Take into account the circumstances of the eligible students, and they as well as the universities will be cashing winning tickets, if this plan comes into being.
True, this measure masks the drop off in percentage funding support for the state-owned universities. That problem has mushroomed over decades, and is layered in years of duct tape. No single remedy going to relieve it in the short-term.
Skeptics assert there is no special obligation to students attending the fourteen state universities. Yes, rising student debt is a problem across the board. Trying to help all the afflicted is clearly beyond the political appetite for raising revenue to that dimension. Even more, the argument is misleading. The obligation for funding higher education begins with the state-owned universities. It does not take a PhD in finance to figure out the forty-year erosion in the percentage of state funding has contributed to tuition escalation and consequent debt load. So this is a logical and legitimate place to start a debt-relief initiative.
An applause line in a budget speech does not certify sound policy or a successful shotgun marriage of disparate partners. Commentators who usually drip purple prose all over political and legislative horse-trading are beguiled by this one. Reflexive editorial punning aside, this is really not a horse trade in the true sense. It is more a heist, taking money from an unsympathetic source and putting it toward a popular cause. Linking the two items is a bad bit of budgeting business.
If grabbing this money were so easy, it would not be sitting there waiting for Tom Wolf to reach in. Terminating the horseracing money looms as a tough political fight. Granted, with all special funds receiving legislative scrutiny during times of tight revenues, this fund is no more exempt than any other in debating continuing justification. If state officials and legislators want to audit the fund, redirect a portion of the money, or renegotiate the entire deal, go for it straight up. Whatever it is the governor has stuck in his craw, making student scholarships contingent upon a successful outcome of the revenue roundup comes across as misguided policy and cynical politics.
Assisting horse and harness racing in Pennsylvania was a foundational rationale for gambling expansion. Racing was caught in a downward spiral, where attendance drops off, purses diminish, and the best horses are entered elsewhere. Those content to let this Darwinian trot to extinction play out fail to see the strong rural and agricultural attraction to racing. Ever visit a horse farm in a city or borough? Once again, rural Pennsylvania is not getting much constructive consideration from the Wolf administration.
Part of the original casino deal is an exceptionally high state tax rate that yields dependable revenue feeding designated state purposes. If the state pulls one of the pillars from beneath the law and years of investment that have built a gambling industry profiting investors and taxpayers, what other pieces start coming loose?
With the proliferation of gambling outlets and options, which will grow significantly if the so-called skill games someday get clearance, the demise of horse racing is not going to dent whatever the social costs of gambling are. For better or for worse, Pennsylvania is all-in on gambling as a substitute for higher taxes or lower spending.
Just to make clear, I have no financial or emotional stake in horseracing. It has been forty years since I was at a track. My objection is the linkage of the plan and the funding. We have the lamentable example of badly needed infrastructure projects and the economic hopes attached stuck at the starting gate. Student debt load is a serious economic handicap, and watching the governor double down on a losing strategy is beyond frustrating. This is a gratuitous problem, easily avoided. Evaluate student scholarships and debt reduction on their own merits. If there is an insatiable urge to link it to something constructive, try better funding for the state-owned universities.
David A. Atkinson is an Associate with the Edward H. Arnold Institute for Policy Studies at the Susquehanna Valley Center for Public Policy.
The views expressed here are those of the author and not necessarily those of the Susquehanna Valley Center.
Nothing contained here should be considered as an attempt to aid or hinder the passage of any legislation.