No jackpot: Seniors should be taxed more

Pennlive.com

The Pennsylvania Lottery has always been a dubious proposition: It is at its heart a scam on the poor whose proceeds pay for programs for Pennsylvania’s seniors — some of whom are the Lottery’s most dedicated patrons.

And after some record-breaking years, including $4.1 billion in sales that generated $1.1 billion for senior programs last year, the demand for services (and Pennsylvania’s senior population) is growing faster than demand for tickets.

As PennLive’s Jan Murphy reports this week, the state’s Lottery fund could come up $70 million short in the fiscal year that starts July 1, with the situation worsening in the coming years.

The reason for that demand is pretty simple: Seniors are living longer than ever (which is good news), but as they age, they consume more and more services (which are pricey, and that’s the bad news).

Right now, 17 percent of Pennsylvania’s nearly 12.8 million residents are aged 65 and older, according to Census data. That population will grow to a quarter of the state’s residents by 2030, with a preponderance aged 85 and older.

According to state Budget Office data, total Lottery expenses — including the programs it directly underwrites — are projected to rise from $1.9 billion in the fiscal year that ends June 30 to $1.96 billion, by fiscal 2019-20.

Lottery ticket sales, meanwhile, are projected to rise by $4.2 billion in the fiscal year that starts July 1 to $4.4 billion in fiscal 2019-20. Revenues after expenses, including payouts and transfers, will rise from from $1.84 billion fiscal 2017-2018 to $1.87 billion in fiscal 2019-2020, state data showed.

Gary Miller, a spokesman for the Lottery, said the agency is “going to redouble its efforts to keep the Lottery fund full to the best of our ability.”

And, indeed, the Lottery is looking to a number of creative avenues that make it easier to part players from their money. Among them, allowing Powerball and Mega-Millions players to buy their tickets at the gas pump, sparing them a walk into their local Turkey Hill or Sheetz.

But those purchases — and the lure of a jackpot — only get you so far, as Ray Landis of the AARP observed.

“You can only make the magic happen for so long,” he said.

So we’re encouraged that the Wolf administration might shift more of the $300 million cost of nursing home and other services for Medicaid-eligible seniors from the Lottery and back into the general fund budget.

In addition to those Medicaid programs, the Lottery fund also underwrites the state’s property tax and rent rebate, prescription assistance, free- and reduced-fare transportation, and home- and community-based services for non-Medicaid-eligible seniors.

If Pennsylvania’s current pension mess has taught policymakers one thing, it should be that the state’s habit of raiding key budget accounts to cover its expenses elsewhere, results in nothing but a major headache over the long haul.

Gov. Tom Wolf is “making it a point to decrease the amount of money,” that’s transferred from the Lottery to germane programs in the general fund budget, administration spokesman J.J. Abbott said.

That’s a good plan, but we’d go a step further and suggest that a dedicated and predictable revenue source, not dependent on the whims of gamblers, may be appropriate in this case.

It may not be popular to suggest this, but if older Pennsylvanians are going to devour an ever-growing share of public services, and there’s every reason to believe they are, it may be time for lawmakers to reconsider the state’s tax-exemption on retirement income.

According to Kiplinger’s, Pennsylvania is one of only two states that entirely exempts all pension and retirement income from taxation — which is one of the reasons it remains a popular destination for retirees.

As they work on a property tax overhaul in the coming legislative session, a regressive levy that disproportionately hits seniors, lawmakers may want to begin tugging on this third rail.

If seniors are going to consume more services, it’s completely fair to ask them to kick in more than a dollar and a dream to pay for them.