Recently, state Senators Gibson Armstrong (R, Lancaster) and Vince Fumo (D, Philadelphia) sounded the alarm that Pennsylvania will be facing a massive budget deficit by the end of the fiscal year. According to Fumo, that deficit could reach as much as $2.5 billion. The two senators also believe that the only way to deal with this budget deficit is with a massive tax increase next year; cutting overspending apparently isn't an option in Harrisburg.
This was not the first warning sign. Last month, Governor Rendell announced plans to reduce state spending by $200 million by ending out-of-state travel by government employees and freezing new hires in most agencies. Rep. Sam Rohrer and other lawmakers joined the Commonwealth Foundation to call for re-examining the budget following poor revenue reports, though these calls went unheeded. Sen. Armstrong himself first predicted a budget deficit back in July. Unfortunately, that warning didn’t make the news until the budget was signed, sealed, and delivered.
What did the General Assembly do following these warnings? They recessed; giving themselves three weeks to focus on their campaigns. Naturally, campaigning before raising taxes is much easier than after. As Senators Armstrong and Fumo—who negotiated the current budget, voted for it, and urged others do so—are both retiring, their warning is basically a parting shot to their colleagues: "So long, sorry about the mess we’re leaving."
Ordinarily, legislators leaving town gives taxpayers a reprieve from bad legislation. But this year, far too much has been left on the table. In addition to the looming budget deficit, lawmakers failed to act on a Turnpike lease, leaving a massive shortfall in transportation funding and further entrenching the Turnpike Commission. Several important "good-government" reforms were ignored in the rush to leave town—while Senate Republicans fruitlessly begged the House to vote on proposals such as a bonus ban, they themselves refused to vote on bills calling a state Constitutional Convention—illustrating the need for a special session on reform issues.
We are reluctant to encourage legislators to return to the Capitol before the election, but doing nothing presents great risk to taxpayers. While the lame-duck session which follows the election should remain off-limits, legislators should use the next three weeks to address the looming budget deficit.
The latest revenue report indicates General Fund collections are $281 million below projection through only the first three months of the fiscal year. This shortfall far exceeds the budget deficits experienced in 2002 and 2003, both of which resulted in significant tax increases. Failing to deal with the budget crunch now will give legislators few options when they return in 2009, other than to raise taxes on already over-taxed residents.
Fortunately, Armstrong and Fumo are wrong on one count—there is an alternative to raising taxes. While Fumo claimed the budget is already "down to the bone," the 39% increase in spending over the last six years belies that claim. Indeed, the Commonwealth Foundation’s report Government on a Diet identified $6.6 billion in wasteful programs alone. Here are some targets for budget cuts:
- Estimates of the cost of Walking Around Money (WAMs)—slush funds controlled by lawmakers to earmark spending on their pet projects—range from $250 to $750 million dollars. These should be eliminated.
- The are literally billions of dollars in corporate welfare in the state budget, including programs like the Opportunity Grant Program, found by the state Auditor General to have lax standards and to have failed to “create” the promised jobs. This should be cut.
- The state spends hundreds of millions on paternalistic programs such as livestock shows, food marketing, cultural expositions, marketing programs to attract films and tourism, and the like. These should be eliminated.
- Gov. Rendell’s pet projects Classrooms for the Future and Pre-K Counts—neither of which will improve the quality of our K-12 school system—cost taxpayers over $120 million. These should be cut.
- The legislative leadership accounts—used to fund the bonuses now under criminal investigation (and legislators' legal fees in conjunction with this investigation), "public service announcements," legislators' promotion al calendars, and regular newsletters; all part of the "incumbent protection plans"—are not only examples of wasteful and unnecessary spending, but legislative leaders are sitting on a surplus of several hundred million dollars in these accounts. These should be reduced.
While these budget cuts don’t encompass the totality of fiscally responsible actions the General Assembly should take—controlling Medicaid spending, reforming how we fund education, and reducing the tax burden on working families are needed to put Pennsylvania on the path to economic prosperity—they will help address the current budget crisis, created by years of overspending. Failure to do so now will only lead to higher taxes and greater burdens on our struggling economy.
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Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.
RELATED : TAXES & SPENDING, PENNSYLVANIA STATE BUDGET