Legislative leaders and Gov. Rendell reached an agreement on a PA state budget deal yesterday. Here are some facts about the $28.05 billion new spending plan:
- Lawmakers were able to reduce Gov. Rendell’s proposal by almost $1 billion, but the budget deal still spends too much — $28.05 billion is more than the state is collecting in revenue (about $25 billion).
The budget deal represents a 39.4% increase (including $400 million that was moved to a mass transit fund) since Gov. Rendell took office. If spending was held to inflation plus population growth, spending would be $25.6 billion, and the budget would be balanced even without stimulus money or new taxes.
- Sen. Dominic Pileggi identified a $5 billion structural deficit that will emerge next year; this is not addressed in the budget agreement. This deficit does not include a $3 billion Unemployment Compensation Fund deficit or $4 billion pension contribution hike looming in 2012.
- Opportunities for cuts and reforms were ignored. CF identified over $4 billion in savings in A Taxpayer’s Budget 2010; even the Senate’s cost-savings commission unanimous recommendations were largely overlooked.
- The deal does not include any of the proposed tobacco taxes, increases in sales tax, or corporate tax hikes, a victory for taxpayers.
- All sides pledged to enact a natural gas tax by Oct 1 (in effect by Jan 1, 2011), but this leaves many questions unresolved:
- How high would the tax be?
- How would the tax be implemented? Would it be phased in? What exemptions would be included?
- Would the revenue be dedicated to environmental costs, or just a slush fund for spending?
- Will the tax be done as part of a comprehensive strategy?
- The budget deal relies on $850 million from federal government through extension of FMAP reimbursements – funding everyone knows will be less than that amount, if Congress passes it at all. This violates the constitutional requirement of a balanced budget.
- The line items reveal that $65.6 million in pork-barrel spending programs called WAMs (walking-around money) that were eliminated in 2009 were included in the budget deal.
- The Redevelopment Assistance Capital Program debt limit be expanded by $600 million – this is essentially borrowing for corporate welfare. This includes edifices to politicians – such as $10 million each for the Arlen Specter Libary and the John Murtha Center for Public Policy.
- The deal includes about $100 to $150 million taken from other funds. This is additional one-time funding sources, and may require cuts in programs with dedicated funding. Last year, the state budget was balanced by using the MCare Fund, which the Commonwealth Court ruled illegal and ordered repayment of $800 million.
- In a bit of good news, the deal includes the intent to create an Independent Fiscal Office.