A Capitolwire Column
By Peter L. DeCoursey
Bureau Chief
Capitolwire
HARRISBURG (May 3) – Today the state government is going to announce it is more than $1 billion behind in its revenues for this year, with two months to go.
Tomorrow, Gov. Ed Rendell will start a special session he has said should find at least $500 million in new revenues for transportation by July 1, to replace revenues lost when the federal government nixed the tolling of I-80.
“It will be tough, but I am optimistic that facing two tough problems at once is something the General Assembly can do,” said Rep. Josh Shapiro, D-Montgomery, a Rendell ally.
But House Democrats and Senate Democrats, not to mention their GOP counterparts, say they will not approve a gas tax, lease the turnpike or otherwise fill in that revenue gap by July 1.
Many leaders say that problem, along with the unemployment compensation billions owed to the federal government, the looming pension liability problem, and the under-performing revenues, will likely have to await the next governor.
“I think it is going to be hard to get something done on transporation this year,” said Sen. Jake Corman, R-Centre. “As important as transportation funding is, I don’t know there is a deadline, whether there is a huge impact if we pass something next year.
“But we have to deal with this budget, and pass it by June 30. And so far, we have to not only deal with a $1 billion shortfall now, probably $1.2 billion or $1.3 billion by June 30, but the governor has to re-do his entire proposal.
“Because as the revenues came in, his budget spends $1.5 billion more than we will have.
“And we need to do this by June 30, so that has to take priority. The governor says he wants to get it done on-time this year, and we take him at his word, so we have to get working on that.
“And it will take a lot of work, since that means that we can’t spend any more this coming budget year than we did this year, and we have to find the revenues to afford that.”
Shapiro said getting to the point where current levels of spending are affordable next year may not be the problem: “We have $800 million in welfare funding that the House and Senate have approved, the FMAP money, and another $215 million in welfare funding, called the “clawback” that is already signed into law.
“So if we finish this year $1.3 billion in the red, we have that $1 billion coming, and with some revenue measures, we can get to this year’s spend number.
“And transportation and infrastructure, keeping those projects going is important to our economy, it is important to preserving jobs, so it is vital we move forward on that plan, by raising revenues, by bonding, by finding some way not to cut the PennDOT budget because of the I-80 problem. And we can do it. This General Assembly can walk and chew gum at the same time, and we have to do it.”
Corman said that since there is no appetite to raise taxes for either transportation or the budget, the budget must come first.
The revenue shortfall “also means we are looking at cuts in spending,” Corman said.
Shapiro said that with the federal $1 billion in new revenues plus $250 million from imposing new taxes on natural gas drilling and tobacco products, plus removing the vendor’s sale tax exemption, “means we can fill that gap.”
“The challenge we have is with the spending increase proposals the governor has made and House Democrats support, including the increases in education spending. Those become more difficult with the shortfalls.”
Corman agreed, saying “even if we pass all those taxes the governor wants, and we think they don’t raise nearly as much as he says they do, that does not solve more than a small part of the problem, and those federal revenues don’t help us fill in this year’s budget.
“We need a budget by June 30, everyone wants to pass it by then, until we get a budget passed, transportation and other issues are going to take a back seat. Because right now, the governor’s budget, the budget the House passed is $1.5 billion out of balance.
“That is what we have to work on now.”
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We, as working people, must all live within a budget and if we don’t, we know the consequences. Simple. Do not spend more than you can comfortably afford and don’t expect anyone to cover the expense for you if you default.
Our government works differently…..spend today and don’t worry about tomorrow and, if it doesn’t work out, well….the taxpayers will cover it with increased taxes or less public services.
Are we tired of being the “fall guy”?