Corporate Welfare In, Fiscal Restraint Out
Commonwealth Foundation calls House budget irresponsible and misguided
HARRISBURG, PA — Today, the Commonwealth Foundation charged that proposals by the Pennsylvania House Democrats to increase Governor Rendell’s proposed budget by adding in WAMs and draining the “Rainy Day Fund” are irresponsible and misguided.
House Democrats recently amended into the proposed budget legislation increases totaling $148 million. This raises the overall General Fund budget proposal to $28.5 billion, or a 4.9% increase over the previous year’s spending. The additions include a number of Community and Economic Development programs frequently termed “Walking Around Moneys” (WAMs) that the Governor had eliminated in his budget proposals. Among these additions were:
* $21 million for Community Revitalization
* $19.5 million for Urban Development
* $10 million for Local Government Resources and Development
* $8.5 million for the Regional Development Initiative
* $2.7 million for Community and Business Assistance
* $2 million for Cultural Exhibitions and Exhibits
“Despite their seemingly merit-worthy names, these programs are really for political and personal development of elected officials,” said Matthew Brouillette, president and CEO of the Commonwealth Foundation. Criminal investigations of former Rep. Mike Veon and the trial of retiring Senator Vince Fumo for directing Community Revitalization funds for personal use are pending.
“WAMs and other corporate welfare programs have demonstrably failed to revitalize Pennsylvania’s economy, and it is folly to think they will do so in the future,” said Brouillette. “The very existence of these programs further demonstrates just how bad the business climate is in Pennsylvania. If we simply had a system of low and fair taxes, then we would not need these so-called ‘economic development’ schemes.”
The Democrat-controlled House Appropriations Committee also amended the budget legislation to drain the entire Budget Stabilization Reserve Fund, or “Rainy Day Fund.” Twenty million dollars would be used to pay state workers during a budget impasse, while the rest (about $720 million) would be transferred into the General Fund for future spending purposes.
The Budget Stabilization Reserve Fund was created for use during emergencies and periods of economic downturn when General Fund revenues decline. State statute requires a two-thirds majority vote to appropriate funds from the Budget Stabilization Reserve Fund.
“There is no justification for dipping into the ‘Rainy Day Fund,’” Brouillette commented, “There is no economic crisis for state government. In fact, Harrisburg is expecting a budget surplus–meaning that yet again, taxpayers have been over-taxed.”
The Commonwealth Foundation also noted the unusually late timing of this year’s budget negotiations. While final enactment of the state budget occurred after the start of the fiscal year (July 1) in each of the past five years under Governor Rendell, this is the first time the state House has failed to send the bill to the Senate before the end of May.
“Unfortunately, the long delay by House Democrats virtually guarantees the budget will be late again this year,” added Brouillette. “It seems some lawmakers want to use this impending deadline, and the fear of furloughing thousands of state workers, to push through a largess of irresponsible and misguided new spending.”
The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.