Lack of Priorities Triggers PA Budget Crisis

Pennsylvania has a prioritization problem. Recent controversies about the State Racing Fund and the legislature’s reserve fund provide two examples of why Pennsylvania consistently wrestles with budget crises.

Auditor General Eugene DePasquale criticized the Department of Agriculture last week for shifting resources from the State Racing Fund to consultants and other non-related programs. But why does the state have an adviser on horse and harness racing issues when we’re facing a $50 billion pension liability? A liability that caused both Moody’s and Fitch to downgrade Pennsylvania’s bond rating, while Standard and Poor’s rated Pennsylvania’s fiscal outlook as negative, down from stable.

If Pennsylvania doesn’t prioritize pension reform, its bond rating could be downgraded again, which would increase the cost of borrowing and the likelihood of future budget gaps.

Likewise, it seems imprudent to squirrel away more than $100 million in the legislature’s reserve fund. The last budget standoff reportedly cost $50 million in reserve funds. To be fair, lawmakers have allocated reserve funds to General Fund needs in the past. However, the reserve fund’s suspicious history is reason for concern. Reserve funds were used for questionable expenditures such as expensive dinners and parking tickets. The most recent audit uncovered $150 for a Starbucks reward card.

On the other hand, taxpayers are facing exploding Medicaid costs with or without Healthy PA. The IFO (Independent Fiscal Office) projects public welfare will grow by 4.9 percent per year for the next five years while state revenues increase by only 3.1 percent.

It’s time to reprioritize the commonwealth’s spending and fund promises before perks.