Pennsylvania’s wacky budget season finally ends

It was perhaps the strangest this year. the line on taxes, but 94% disapbudget season in Penn’s Woods Such is the collective opinion proved of adopting a spending since King Charles, II granted of the business owners and Chief package without simultaneously William Penn a Executive Officers who participassing a revenue package. charter to estabpated in the Fall 2017 Keystone And so it was that fromthe lish a colony in Business Climate Survey conbeginning of July until the end the NewWorld. ducted by the Lincoln Institute of of October lawmakers and the The end came relPublic Opinion Research. A lopgovernor battled over how to atively quietly sided 91 percent of the owners/ fund the revenue gap. Gov. Wolf with the General CEOs surveyed said they are unpushed for tax hikes including Assembly passing satisfied with state government’s his never-ending quest to add a a variety of gimbudget process. fourth layer of taxation on the micks aimed at This year’s budget process had state’s Marcellus shale gas induspluggingtry.a$2.2oneuniquefeature:thespending billion budget hole of their own plan was adopted with no revHouse Republicans dug in making. enue component in place. That their heels and produced the only

The only good thing that can cast in stone the spend number truly innovative approach to raisbe said about the 2017-2018 budand forced the conversation away ing revenue. get process is that it didn’t take from cutting spending thus placThey actually spent the sumuntil April of next year to resolve. ing the entire focus on how to mer digging through the state’s

Candidates for public office ofcome up with enough revenue to finances coming up with hunten pledge to “run government fund the budget. Respondents to dreds of millions squirrelled like a business” or at least abide the Lincoln Institute survey were away and left unused by various by sound business principles. generally supportive of missagencies. The final revenue plan That certainly did not happen ing the budget deadline to hold included using some $300mil- lion in such revenue.

But, the quest for revenue resulted in a move even more harmful to the state’s fiscal condition than tax increases. Senate Republicans originated a plan to borrow money from future tobacco fund settlement payments to help plug the deficit.

Not only will taxpayers pay interest on that loan, but it deprives future state budgets of such revenue. Asked about that, the owners/CEOs participating in the Lincoln Institute poll voiced strong disapproval: 83 percent thought such borrowing was a bad idea.

One reason for this year’s large budget deficit was dependence the past two years on revenue from sources not currently in existence. That revenue, especially from gaming expansion, never materialized. No lesson was learned from that experience. Lawmakers voted to expand gambling by legalizing slots in a variety of public venues and authorizing the establishment of minicasinos.

The legacy of this messy budget season will not only be making Pennsylvania’s finances even more precarious, but it sets up what could be a politically volatile budget fight next spring. The governor, half of the state Senate and all of the state House are up for election in 2018.

Nothing was done this year to address Pennsylvania’s spending problem, and the funding component is just smoke and mirrors. When the smoke clears, the budget problems will remain — and voters will be watching.

Lowman S. Henry is Chairman & CEO of the Lincoln Institute of Public Opinion Research.