Moving Toward a Better Budget Process

Pennsylvania received a bit of good news from Fitch Ratings last week, as the agency affirmed the commonwealth’s credit rating. However, the state’s outlook remains negative.

A downgrade is possible—even probable—without fundamental changes to Pennsylvania’s finances. In their analysis, Fitch makes clear the threat facing Pennsylvania: “A pattern of weakening fiscal practices during the ongoing national economic expansion, including growth in the structural deficit, could trigger a downgrade.”

To state it bluntly, reform isn’t optional. Pennsylvania’s policymakers need to redesign state government. CF has already offered numerous ideas to do so. And our latest policy memo, Overhauling Pennsylvania’s Budget Practices, builds on this work. The memo’s primary focus is on the broken budget process.

The freewheeling nature of the current process has destroyed livelihoods, produced unbalanced budgets, led to higher taxes, and increased spending at an unsustainable rate. A new approach that embraces pro-taxpayer reforms will restore Pennsylvania’s fiscal and economic health. Fortunately, lawmakers have already begun working towards some of these reforms.

The policy memo identifies at least 10 different ideas—including tax and spending limitations, spending transparency, and performance evaluations—lawmakers could adopt to begin redesigning the state’s budget process. And while reforms to the process are important, they shouldn’t be viewed as a cure-all.

Instead, they should be viewed as a complement to the policy reforms CF continues to promote. Together, fixing the budget process and the programs dependent upon it will protect working people from the consequences of fiscal irresponsibility and pave the way for economic growth.