Pennsylvania's "Nightmare Solution" for Gov't Layoffs Guaranteed To Backfire

Given unsupportable runaway spending and pension promises that cannot be met, it should be no surprise that Pennsylvania, like every other state, is running out of money. The crisis has come to a legislative showdown and Pennsylvania Governor Rendell is warning of massive layoffs.

Ironically the state's largest union (and the state's biggest problem) complains "This is a nightmare that just isn't ending."

Amazingly, Governor Rendell thinks casinos are the solution. Please consider Rendell warns of 'minimum' 1,000 layoffs.

Gov. Ed Rendell made it clear Thursday that if a bill authorizing blackjack, roulette and other games at the state's casinos isn't approved by Jan. 8, he will lay off "a minimum" of 1,000 more state employees to cover a projected $250 million hole in revenue. "The Legislature is on notice. We've got to reach closure."

The administration is depending on the gaming bill to generate a needed $250 million in revenue this fiscal year, most of it from table games, but about $50 million from other fund transfers that are in the bill.

Rendell said he will help the effort during the holidays by trying to contact and win the support of some of the 10 Democratic members of the House who voted no this week.

Top state labor officials expressed exasperation with Rendell's latest threat and with the General Assembly's inability to come to agreement on this last piece of a deficit-plagued state budget that has forced state workers to endure payless paydays and 796 layoffs.

"This is a nightmare that just isn't ending," said David Fillman, executive director of Council 13 of the American Federation of State, County and Municipal Employees, the largest of the state employees' unions.

"All we can do is put the pressure on the Legislature to get this thing done by that January deadline he came up with." Fillman said. "We'll just have to keep our fingers crossed."

Casino Gambling, The Seen And Unseen

Over the long haul, casino gambling will not raise a dime. Every dollar gambled away will be a dollar not spent on something else.

Worse yet, some will gamble money they cannot afford to lose, and foreclosures along with marital problems, family strife, and hunger will increase as a direct result.

Moreover, some of the money siphoned off by those at the top of the pyramid (the casino owners), will fraudulently make its way untaxed, out of the country, or other hidden tax shelters.

Here is an interesting paragraph from the article: "House leaders, in particular, feel the Senate language is so severe that it will stunt the ability of many law-abiding people with an arrest in their past to advance in the casino business. Senate negotiators, meanwhile, put a premium on making the industry pass a white-glove test."

White-gloves or not, corruption and fraud will set in. It always does. Yet, if the legislation passes, it will likely appear as if the bill is working, because in isolation, gambling taxes will generate revenue. In turn, proponents of the measure will triumphantly point out the results while ignoring the unseen costs.

The point is not to eliminate casino gambling as gambling can easily be viewed as a legitimate means of entertainment provided people do not get carried away. Rather, the point is to understand that casino gambling is not a lasting solution to any problems.

Money spent on gambling (entertainment if you prefer) simply means there will be less money spent on something else.

Failure To Address The Problem

Governor Ed Rendell has his head buried deep in the sand, or do I mean deep in the pockets of the of the American Federation of State, County and Municipal Employees, the largest of the state employees' unions.

Even IF casino gambling raised money (which it won't), it would not solve problems with union salaries and union pensions.

The bill fails to address the structural problems of rampant spending, union salaries, and union pensions, all massively out of line with revenue. Thus, Governor Ed Rendell is guaranteed to be back at it, proposing still more nightmare solutions (like raising taxes), just to transfer money from productive members of society to state employees who should be outsourced and whose salaries and pensions should be reduced before debt defaults force it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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