Pa. proud: Best of the worst

The Community Connection - - OPINION -

Re­searchers and econ­o­mists at Ge­orge Ma­son Univer­sity’s Mer­ca­tus Cen­ter have re­leased a fi­nan­cial sol­vency study rank­ing America’s 50 states in de­scend­ing or­der.

Pennsylvania didn’t ap­pear in the top or among the bot­tom five.

Pennsylvania came in 45th-least-broke of the six worst-run, least fis­cally-sound states, but still ef­fec­tively broke.

Based on au­dited 2015 fi­nan­cial state­ments, Mer­ca­tus rated each states’ abil­ity to fund op­er­a­tions, avoid bud­get deficits and meet long-term spend­ing re­quire­ments and pen­sion li­a­bil­i­ties.

The Mer­ca­tus study com­bined with the Tax Foun­da­tion’s 2017 re­port and party con­trol data re­veal that the best per­form­ing states are low­tax, Repub­li­can-run states — Florida, North and South Dakota, Utah, Wy­oming and Ne­braska.

The worst are all high-tax, heav­ily-Demo­cratic ju­ris­dic­tions — New Jer­sey, Illi­nois, Mas­sachusetts, Ken­tucky and Mary­land — just un­der Pennsylvania, whose fi­nances have wors­ened in two years.

In­vestor’s Busi­ness Daily ob­served that, of the bot­tom 25 states, all but five are strongly Demo­cratic; 21 of the 25 most-sol­vent states are solidly Repub­li­can.

Not only does Pennsylvania risk in­sol­vency, the Tax Foun­da­tion’s in­dex ranks Pennsylvania 44th for cor­po­rate taxes, 17th for in­di­vid­ual in­come taxes, 20th for sales taxes, 44th for its un­em­ploy­ment in­sur­ance tax rate and 32nd for prop­erty taxes.

Pennsylvania’s cor­po­rate tax rate, un­em­ploy­ment in­sur­ance taxes and union-friendly la­bor reg­u­la­tions rank the Com­mon­wealth among America’s less-busi­ness-friendly states, too.

State poli­cies dis­cour­age new in­vest­ment, new jobs and ro­bust eco­nomic development.

How are those dis­mal rank­ings pos­si­ble?

Pennsylvania’s leg­is­la­ture is Repub­li­can-dom­i­nated, and, un­til Demo­crat Tom Wolf’s 2014 elec­tion, a Repub­li­can was gov­er­nor, too.

Here’s how: In 2001, Repub­li­cans, in­clud­ing Gov. Tom Ridge, con­trolled Pennsylvania’s gov­ern­ment when state pen­sions were in­creased by 10 per­cent (25 per­cent for leg­is­la­tors).

Repub­li­can Se­nate ma­jori­ties helped raise per­sonal in­come taxes and pass all but one of two-term Demo­cratic Gov. Ed Ren­dell’s prof­li­gate bud­gets.

And new Repub­li­can ma­jori­ties in both cham­bers failed to en­act a sin­gle ma­jor 2010 cam­paign prom­ise on which they and Repub­li­can Gov. Tom Cor­bett ran, but raised Pennsylvania’s gaso­line tax, as­sur­ing Cor­bett’s 2014 de­feat.

Pennsylvania politi­cos — both par­ties — tend to share lousy habits.

Like ir­re­spon­si­ble teenagers flash­ing dad’s Gold Visa card, both have over­spent and over­com­mit­ted, plac­ing Pennsylvania in fis­cal jeop­ardy.

In­evitably, the in­voice and the reck­on­ing are com­ing due.

To re­lieve Pennsylvania’s pen­sion cri­sis, in June, the Leg­is­la­ture passed a plan man­dat­ing changes for fu­ture em­ploy­ees but didn’t ad­dress cur­rent un­funded pen­sion li­a­bil­i­ties.

Re­solv­ing those will re­quire tough choices: ne­go­ti­ated changes to ben­e­fits for cur­rent em­ploy­ees and/or chang­ing the fund­ing for­mula.

But, so far, the leg­is­la­ture lacks the po­lit­i­cal will to act.

Both cham­bers have too many long-serv­ing ca­reer Democrats and Repub­li­cans who voted to in­flate pen­sions, raise gaso­line and per­sonal in­come taxes, au­tho­rize bor­row­ing and pass un­re­al­is­tic, even un­bal­anced bud­gets.

Count Pennsylvania in the top six among Amer­i­can ju­ris­dic­tions that would ben­e­fit from term lim­its.

The Mer­ca­tus Cen­ter re­port sug­gests that, in general, Repub­li­can gov­er­nance is bet­ter than the al­ter­na­tive, but Repub­li­cans have helped place Pennsylvania in their study’s bot­tom six.

The cer­tainty that Demo­cratic ma­jori­ties would have done even worse is small com­fort.

Email Jerry Shenk at jshenk2010@gmail.com

Pennsylvania came in 45th-least-broke of the six worst-run, least fis­cally-sound states, but still ef­fec­tively broke.

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