MILLER: Harrisburg’s yearly budget fiasco

By Dick Miller

 

WE.CONNECT.DOTS:   In another time, the fiasco otherwise known as Pennsylvania State Government might make us the laughing stock of the nation.

Instead, the political antics at Springfield, IL capture national attention.

At times, the antics are similar to what passes for government oversight in Harrisburg.  But Illinois politicians, like lemmings marching into the sea, are in a class of its own.

Political circumstances are similar, but in the reverse.

Gov. Bruce Rauner, Republican, is in the third year of his first term.  Both legislative chambers are overwhelmingly Democrat, thanks to some creative gerrymandering.

Here, Gov. Tom Wolf, Democrat, plans to run for a second term next year.  Due to even more creative drawing of legislative boundaries, coupled with incompetent Democrat Party leadership, Republicans are in control of the legislature.  Despite a near million vote deficit in voter registration, Republicans rule the Senate 34-16.  This margin is sufficient to overcome a Wolf veto.

This could be the third year Illinois goes without a budget.

However, imaginative judges and legal loopholes in laws permit everyone to get their paycheck.  The governor has been able to pay for many vital services at a reduced level.

That could end this week.

Standard and Poors said Friday it will reduce that state’s credit rating to “junk status.”  The cost of borrowing gets expensive for years to come, not only for state government for road building and such but public higher education to construct dormitories.

In addition, without a budget agreement by Rauner and Democrat lawmakers, by July 1, the state will cease transportation improvements and aid to higher education.

Powerball lottery tickets cannot be sold in the state after Friday.  This inconvenience is one of several based on multi-year contracts, usually authorized in budgets, now expiring.

In a state where the fiscal spending plan should be around $36 billion yearly, unpaid bills now total over $12 billion.

Then there are the unfunded liabilities of Illinois pension funds, estimated at about $130 billion, twice that of Pennsylvania.

Rauner will not agree to higher taxes until he gets certain concessions in operating rules.  These include reforms in worker compensation, pensions, labor relations and public education oversight.  For example, Rauner wants overtime to state employees paid after 40 hours per week, up from 37.5.

What appears to differ between Illinois and Pennsylvania is the political dialogue.

Rauner, of course, defends his more austere budget.  Democratic legislators have their own spending plan.  Republicans in the Senate have also proposed their own budget with GOP House members close to agreeing with it. The Republican legislative version contains tax increases, not as high as the Democratic budget.

Illinois Republican lawmakers are not at war with their governor, but believe their budget could be a compromise. Rauner could still veto their proposal.

This differs from Pennsylvania budget issues.

Gov. Wolf presented his proposed PA fiscal plan for 2017-18 in February.  Again, he calls for imposition of an extraction tax on oil and gas drilling.

Pennsylvania is the only state with major deposits without such a tax.  Texas, for example, levies enough taxes on oil and gas extractions to not need a personal income tax.

The drillers, however, have worked long and hard to prevent such a tax here.  They have been generous with campaign checks on both sides of the aisle.

Bipartisan support contributed over the years to a Republican objective.  Businesses have reduced their share of input of financing of state government from 33 to 16 percent.  Low business taxes are always touted as attractive to new employers.   No definitive study supports that claim.

For the past four months GOP legislative leaders have been chasing a version of the budget that does not raise major taxes.  They float spending cuts and tricky financing schemes almost daily to counter projected shortages of about $2 billion.

For example, one scheme would have the state borrow on future payments by the tobacco companies.  Based on growing evidence that smoking is linked to cancer and heart disease, the four (at that time, 1998) major tobacco companies agreed to pay 46 states something between $206 billion and $368 billion, based on various factors, spread over 25 years.

In 2015 Pennsylvania’s payment was $353 million.  Republican borrowing schemes would use 35 to 50 percent of these annual payments to borrow around $1.5 billion for 2017-18.  This is the latest of one time fixes.

Gov. Wolf says he opposes one time fixes, yet his original budget proposal in February called for selling the Harrisburg Farm Show Arena, then leasing it back.

Gov. Wolf’s budget is the largest.  Working with sluggish revenue collections, he hoped to balance with sales taxes levied on items not now subject to sales tax.  This is in addition to the extraction tax on oil and gas drilling.

Some in GOP House legislative leadership promote an expanded gambling program to include internet and slots wherever liquor by the drink is sold.

Unlike Illinois, Democrat legislators in Pennsylvania have not fielded a budget proposal of their own.  They are not included in the secret budget negotiations between Wolf and Republicans.

Sometimes Democrats have hedged on voting on a Wolf version of the budget.  They see no personal value in being on record for tax increases that never passed.

The media seems to vouch for Harrisburg adopting annual budgets, although not always timely. The impasse in Wolf’s freshman year (2015-16) lasted over seven months and, by some degree, never amounted to a budget at all.

That spending plan and the one that followed (2016-17) were not balanced, however.  If negotiations do not work this week, pundits are already talking about a “get-out-of-town” budget for 2017-18.

Bottom Line: Both states depict gerrymandering raising its ugliest head.  There are too many times where party leadership is told to pound salt by its members.  Small wonder why these people do not reach conclusions in a timely fashion

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Updated: June 26, 2017 — 5:51 am
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