Time for Real Spending Reductions

HARRISBURG, PA — As Gov. Rendell delivers his mid-year budget briefing, with General Fund collections $217 million below projections, now is the time to consider the causes of the recent 101-day budget impasse. 

In the 2008 mid-year briefing, Gov. Rendell estimated a $1.6 billion shortfall.  The final shortfall wound up double that amount, at $3.2 billion.

The greatest budgetary challenges have come when state revenues fall short of projections.  This fiscal problem is compounded when the Governor and General Assembly fail to adjust spending downward, accordingly.

Last year at this time, Gov. Rendell outlined the need to reduce state spending, suggesting $500 million in cuts; he later identified the need for additional cuts.  However, the cuts were not fully implemented and were exceeded by new spending elsewhere. Thus, the final spending for 2008-09 was $70 million higher than what was enacted!  Gov. Rendell also implemented a hiring freeze—yet the state proceeded to hire hundreds of employees.  Even following recent layoffs, the state continues to add employees under the freeze.

Indeed, despite a “balanced budget” requirement, the Commonwealth did not end FY 2008-09 with a balanced budget, but a deficit exceeding $1.5 billion.

Recent handouts for Harley Davidson ($15 million) and SEPTA ($7 million) illustrate the continued discretionary ability of the Governor to distribute taxpayer fund to politically selected institutions, without legislative oversight.  Legislators cannot rely on this administration to reign in spending.

Instead of waiting until the end of the fiscal year to both enact a new budget and figure out how to pay for the previous year’s over-spending, lawmakers should maintain a constitutionally balanced budget throughout the fiscal year.

The time is now for legislators to take the initiative and enact real spending reductions.

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The Commonwealth Foundation is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.