By Dick Miller
(261) Sunday, March 27, 2016 – Is the protracted state government budget impasse over?
Not exactly.
Republican legislators claim victory because the spending formula for fiscal year 2015-16 calls for no state tax increase.
A more exact meaning to the preceding is that no forthcoming tax increases will be blamed on GOP lawmakers, helping all of them get re-elected this year.
Certainly, Democrat Gov. Tom Wolf must accept defeat. He wanted tax hikes and some new revenue levies. Wolf hoped to make up Republican Gov. Tom Corbett’s (his predecessor) reductions in spending over the previous four years.
Republicans claim Corbett wasn’t making all those cuts, particularly in public education and social services. Those reductions came about when President Obama’s stimulus funding phased out, said Corbett’s GOP defenders.
Democrats offered no counter offensive, out for lunch when their presence was critical. For example, Corbett did cut funding to public education and other popular programs, blaming the cutbacks on shrinkage of stimulus funds. At the same time, he kept reducing business taxes with Democrats silent.
Gov. Wolf’s tepid relationship with Democrat lawmakers may have been a factor in his decision to allow the latest GOP version of the budget become law. While super majorities are required in both chambers to override vetoes, Republicans were reportedly just three votes shy in the House and two in the Senate.
Reportedly, there has not been an override of a Governor’s veto in Harrisburg for sixty years. With weak Democrat legislative leadership, Wolf decided not to risk humiliation.
In abandoning his ambitious assault this current budget year, Wolf did not exit stage left without some political traps for the Republicans.
First, even though the budget becomes official as of midnight tonight, Wolf intends to veto the normally routine fiscal code bill. Because the fiscal code acts as a roadmap for how education money is divided, the Governor will have more control on administration of funds and Republicans will have less.
Second, the arch-conservative Commonwealth Foundation was quick to cluck about “their success” in keeping taxes from being increased. Most of the 500 school districts in the state, however, announced their intentions to raise property taxes. The deadline for declaration was January. Now with most districts facing a lower appropriation from Harrisburg, they will opt for higher real estate taxes.
Third, as school districts began to run out of cash over the year-end holidays, state officials estimated nearly $1 billion was borrowed to make payrolls and pay bills. Department of Public Education officials estimate the unbudgeted cost of that borrowing could be as high as $50 million.
Fourth, part of Wolf’s original budget included companion legislation for pension reform. Those bills never saw daylight which adds another year to uncontrollable retirement costs. Dr. Edward J. Albert, assistant executive director of PA Association of Rural and Small Schools, reports schools will be paying 29 percent of payroll into the retirement fund this year. It continues to escalate each year until the legislature decides to deal with the problem.
Fifth, Wolf’s financial plan included a $2.5 billion bond issue to reimburse some districts for nearly $300 million in capital upgrades this year. That financing may or may not be able to happen in a timely fashion this year.
Finally, Moody’s Investor Services and Standard & Poor’s have continued to lower the state’s credit rating. Only Illinois, Kentucky and New Jersey have worse credit ratings. Pennsylvania is one of only five states that does not have a “rainy day” fund.
Bottom Line: The rating services, according to Associated Press, do not believe the state legislature has the political will to deal with these problems. They predict another stalemate this year, putting state, county and local school districts out of financial synch. Republicans believe they represent a constituency that is opposed to all taxes regardless of consequences.
Each year, less moderate Republicans are elected to the legislature, almost an exact replica of what transpires at the Federal level.
What differs is the level of responsibility accepted by these ultra-conservative lawmakers. They want re-elected for nothing more than reducing or holding the line on taxes. Seldom do they develop alternate programs that will cost less to operate. Nor do they show concern when state mandates require more taxation at the local level.
Weaker, equally irresponsible leadership by Democrats adds to the mess.
