With challenges come opportunities. Despite difficult times, Pennsylvania has a chance to be a leader and the envy of the other 49 states by looking for fresh and creative solutions to the numerous problems facing the Commonwealth. All we need to do is show some innovation and a steadfast determination to transcend the business-as-usual practices of the past.
To quote Albert Einstein, "We can’t solve problems by using the same kind of thinking we used when we created them." Gov. Chris Christie of New Jersey seems to get this. So does Gov. Mitch Daniels of Indiana. Will we?
Time will tell, but our first big test will come next February when our newly elected governor will introduce his first budget proposal. And while it is understandable that most folks probably don’t even want to think that far ahead given that we just completed the 2010-11 fiscal year budget agreement, with an expected structural deficit of $3 billon to $5 billion, there is no time to waste.
So let’s put on our thinking caps, show some ingenuity, and acknowledge that it is no longer good enough for us to focus merely on what we are going to cut or burden Pennsylvanians with additional taxes. Instead, we need to ask ourselves, what can be done differently.
In the last year alone, we have had three of our proposals included as part of the 2009-10 fiscal year and 2010-11 fiscal year budget agreements, saving taxpayers over $350 million. But this is only the tip of the iceberg. There is so much more that can be done. Here are a few of our ideas.
Radical concept number one: Pennsylvania needs to become a savvy consumer and make Purchase Cards (P-cards) the primary method of payment for items purchased in the Commonwealth. Last year, Pennsylvania purchased approximately $22 billion in goods and services. If we were to expand the use of P-cards, similar to debit cards, the state could receive 145 basis points – or almost 1.5 percent back – for every dollar spent.
But how much are we talking about? Well, if P-cards were used for 35 percent of our purchases, we could generate an additional $110 million annually in reoccurring revenue via the rebate alone. And while this might be cutting edge for the Commonwealth, others are doing it, including West Virginia (where P-cards are used for 50 percent of all their purchases) and federal government agencies.
Speaking of revolutionary concepts…how about transforming Pennsylvania state government into an entrepreneurial enterprise by processing other state’s Supplemental Security Income (SSI) payments. In 2003, the Commonwealth began processing its own SSI payments saving about $35 million per year.
Pennsylvania could save other states millions of dollars by processing their SSI payments for a fee far less expensive than the Social Security Administration’s current charge of $12 per transaction. By doing so, Pennsylvania could generate at least $50 million annually in this capitalist venture, if not significantly more.
Another proposal worth pursuing is the U.S. Treasury’s Federal-State Administrative Offset program. If we were to participate, we could collect approximately $40 million annually by sharing tax and non-tax debt information daily with the federal government which should significantly reduce our tax delinquency rates. To move forward, all we need to do is enter into a reciprocal agreement with the U.S. Treasury that would require that the Commonwealth collect unpaid federal debt from the offset of state payments (those working for the state, but owe federal taxes) and the U.S. Treasury collect unpaid state debt from the offset of federal payments (those working for the federal government, but owe state taxes). In 30 months, Maryland lowered their tax delinquency rate from 18 to 3 percent using this program. Given the success of our tax amnesty program, this is the perfect follow-up tool for the Pennsylvania Department of Revenue.
So, think of these initiatives and our other proposals (not listed here) as the next phase of David Osborne and Ted Gaebler’s 1992 National Bestseller, "Reinventing Government," introducing common sense and market forces into what is otherwise monopolistic government enterprises.
If we do, Pennsylvania will have a monopoly that taxpayers can enthusiastically support – a monopoly on ideas that work.
State Representative John Bear represents the 97th District in Lancaster County.
The views expressed here are those of the author and do not necessarily represent those of the Susquehanna Valley Center. Nothing contained here should be considered as an act to aid or hinder the passage of any legislation before the General Assembly.