Pa. budget plan is not normal, or good government
et’s cut to the chase: the process that led to a completed state budget is not normal. And good government in this state is impossible if it becomes normal.
The budget is technically in balance. But despite including about $1.5 billion in efficiencies identified by Gov. Tom Wolf, it raises so little new revenue that it does too little to close a structural imbalance between spending and revenues. The next fiscal year will begin with a deficit of at least $1 billion.
This result is entirely the fault of the extremists who lead the Republicans in the House of Representatives. They have consistently rejected bipartisan compromises embraced by Gov. Wolf, Democrats and their fellow Republicans in the General Assembly.
We live at a time when the principles, ideals and practices that have governed American politics for generations are being challenged at every turn. The principle that office holders should adhere to common standards of evidence and argument is called into question by politicians who lie repetitively and shamelessly. The ideal of a common good greater than party victory is rejected by politicians for whom the only measure of success is defeating the other side. And the practice of embracing compromise when neither side can rule on its own is overturned by politicians who would rather see disaster befall us all than concede point.
We see the unfortunate results of these trends every day in the federal government. And it is impossible to look at the process by which the state budget was completed this year without seeing the same thing.
At that start of our current fiscal year on July 1, Pennsylvania faced a deficit of almost $3.5 billion. That included a $1.5 billion deficit run up in the last fiscal year largely due to declining state revenues. The rest was the current year deficit.
Political leaders who obeyed the old rules would have recognized their constitutional responsibility to balance the budget, the political necessity of maintaining services the voters want, and the impossibility of either side securing all its goals in divided government. And they would have then embraced a compromise between Democratic tax increases and Republican spending cuts.
For a moment, such a compromise seemed possible. The governor proposed on an ideological closing one-third of the deficit with business tax increases and two-thirds of it with deep cuts in spending from efficiencies in the delivery of state services. The governor’s spending proposal was so austere that Republicans found few reasons to complain.
The House and Senate agreed to a spending plan the governor allowed to become law. And then Democrats and Republicans in the Senate passed a bipartisan funding plan. It raised $1.5 billion by floating bonds to be repaid by tobacco settlement revenues. This was not an ideal proposal. But given political reality and the partly unexpected nature of the 20162017 deficit, borrowing this amount could be justified by the agreement of the Senate to raise $571 million in recurring revenue to set the state on a path to close projected future deficits.
The bipartisan agreement was not perfect. Too much of the new revenue was generated from gross receipts taxes that fall heavily on those with low incomes and too-modest severance tax on natural gas drilling included problematic environmental provisions. But it was a bipartisan agreement nonetheless.
Democrats in the House embraced compromise, too. But House Republicans, led by Speaker Mike Turzai and Majority Leader Dave Reed, did not. They continually said no to needed recurring revenue, ultimately accepting only $60 million of those revenues even though a bipartisan majority of legislators in the House appear to support a severance tax. Instead, they proposed to close the deficit with more of the oneyear revenues that do not close the deficit long-term. And they embraced a new source of one-shot revenues – raids on surpluses in the special funds set aside for specific purposes. Yet those who know how these special funds work no more believe in the existence of large, uncommitted surpluses than they believe in unicorns.
They defended their proposals by claiming that state spending was growing faster than the economy, even though IFO numbers show that the exact opposite was true. And they would never recognize that the structural deficit is the product of deep reductions in corporate taxes.
The ideological extremism and rigidity of Turzai, Reed and their followers in the House stand in the way of the compromises that our elected officials must make when different branches are controlled by opposing parties. And their dishonesty about both the source of the structural deficit and their own proposals heightens ideological extremism.
Republican president of the Senate Joe Scarnati put it bluntly, “This is not governing. It is an embarrassment.”
This is not normal and must not continue. The whole state, including the constituents of the extremists, are suffering. Good government will be impossible in our state if this ideologically-extremist faction is unwilling to obey the fundamental principles and norms upon which it rests.
The Pennsylvania Capitol building in Harrisburg. The state now has a budget plan, but almost no one is happy with it.