STATEMENT: On the Governor’s Plan to Securitize PLCB Profits

Marc Stier |

Marc Stier, director of the PA Budget and Policy Center, made the following statement after the release of the governor’s plan to securitize PLCB profits.

“As he recognizes, Governor Wolf’s plan to borrow $1.2 billion on the basis of Liquor Control Board profits is not an ideal or complete solution to the state budget crisis. It is a step made necessary by a General Assembly unwilling to meet its responsibility to pass a budget.

As we have pointed out before, it is not ideal for the state to borrow to pay for operating expenses. And this plan does not provide all the funds the state needs this year or in the future.

“The plan will not provide funding to enable the state to continue to support Penn State, the University of Pittsburgh, Temple University, or Lincoln University or for the University of Pennsylvania’s Veterinary School or for Penn State’s agricultural extension programs. It may not provide enough funds to pay for all spending in the appropriation bill passed by the General Assembly at the end of June. The governor will have to carefully monitor spending in many areas while protecting new funding for education and human services.

“Most importantly, this action does not provide the recurring revenue the state needs to avoid a deficit at the start of the next fiscal year in July or to begin closing the state’s public investment deficit in education at all levels, human services, and roads, bridges, and public transportation.

“What the securitization of PLCB profits does do is close the books on the deficit in last year’s budget and, with the exceptions noted above, funds most of this year’s budget without raiding special funds or relying on phantom funds, two deeply problematic features of the plan passed by House Republicans two weeks ago.

“Securitization of PLCB profits was forced upon the Governor by a Republican-controlled General Assembly that, at the moment, does not seem to have the political will to raise any taxes of any kind for any purpose, including those it has already supported. And it could have been avoided if Republicans in the House, like those in the Senate, were willing to embrace the tax proposal that has broad bi-partisan public support, a severance tax on natural gas drilling.”