As I write this commentary I have an article dated January 15, 2009, in front of me. The Headline: “The PA Budget Deficit Could Be As High As $1.9 Billion. The article quotes then Governor Rendell at the PA Farm Show as he spoke to members of his administration, members of the legislature, and members of the agriculture community.
Does the figure $1.9 Billion sound familiar? Oh yeah, that’s the projected deficit for the 2015-2016 budget. The incoming administration is feigning surprise at a deficit, yet various members of the incoming administration, including the Governor-elect, were members of the same administration in 2009 that projected a $1.9 deficit. Actually, in today’s dollars, adjusting for 3% inflation per year, that deficit would eclipse the current deficit estimate and would come in at $2.26 BN.
And let us not forget the budget deficit of $4.2 BN the outgoing administration inherited in 2011.
Why visit this discussion at all? I think it’s time for honest conversation with the taxpayers. Enough of the feigned surprise. While a deficit is never good news, the current estimated deficit is not the first one in the last eight years. Yet the incoming administration as well as some in the media are treating this as something unprecedented.
Briefly, let us look at the cause of this deficit. Most of us think of a deficit in terms of our personal finances-we either have the money or not, and that is true for the state as well. Yet this deficit is a “structural deficit” meaning that the cause of the deficit is already embedded in our budget.
In Harrisburg parlance, it amounts to “maintenance of effort” spending requirements, particularly in areas of human services and education. The departments of Human Services and Education each command 40% of the state budget (that’s about $11.5 BN per department) and the maintenance of effort requirement to spend as much each succeeding year, with an adjustment for inflation, is driving a lot of the deficit.
Throughout our budget, and especially in education, much of our increased costs are being driven by pension costs. Even though the state spends more each year on per-k to 12 education, our school administrations are finding it difficult to deliver the same funding into the classrooms due to the increasing costs for pensions-both to school districts and the state.
Yet, there are some bright spots on the fiscal horizon for Pennsylvanians. First, our unemployment has continued to improve, down to 5.1% and PA has done better than the national average for 11 months. Second, our revenue receipts are 6.3% higher than estimates, and 2.1% higher than receipts same time last year.
The upcoming budget will be as challenging as each in the past decade or more. The structural issues affecting our state’s budget remain unchanged. To improve the budget picture will require fundamental changes in the way departments are funded; and those attempted changes are always greeted with political rhetoric, not honest debate. Ladies and gentlemen, it’s time for honest debate, and honesty in the presentation of information. After all, at the end of the day, these are your tax dollars.
State Senator Bob Mensch represents the 24th District (including parts of Berks, Bucks and Montgomery counties). He serves as Chairman of the Veterans Affairs and Emergency Preparedness Committee, and Vice Chairman of the Senate Public Health and Welfare Committee. He is a member of four Senate committees: Aging and Youth; Appropriations; Game and Fisheries; and Intergovernmental Operations. He co-chairs the Senate Economy, Business and Jobs Caucus and the Community College Caucus. He also chairs the Legislative Budget and Finance Committee.