In the political world, 2009 will be remembered as the year that Pennsylvania went longer than any other state without a budget. The Commonwealth went months past the June 30th deadline, let state workers go unpaid, and used service agencies as pawns in negotiations.
This has been par for the course in Harrisburg, as every budget under Gov. Ed Rendell since 2003 has been tardy. This failure to enact timely and fiscally responsible budgets suggests the need to reform the process to both protect taxpayers and provide core government functions.
The greatest budgetary challenges have come when state revenues fall short of projections. This fiscal problem is further compounded when the Governor and General Assembly fail to adjust spending downward accordingly. There is a relatively simple remedy-one that every family and business utilizes when their revenues drop: reduce your spending to match your income.
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 be forced to maintain a constitutionally balanced budget throughout the fiscal year. Article VIII, Section 13 of the Pennsylvania Constitution already requires that “Operating budget appropriations made by the General Assembly shall not exceed the actual and estimated revenues and surplus in the same fiscal year.”
But mid-year corrections are rarely or inadequately made. Indeed, despite this “balance budget” requirement, the Commonwealth did not end FY 2008-09 with a balanced budget, but a deficit exceeding $1.5 billion. This overspending last year has only further complicated the budget impasse.
The Governor and General Assembly should be forced to make quarterly adjustments to appropriations if tax collections fall below projections. In the final quarter of the fiscal year, April through June, appropriations should be adjusted monthly if revenue falls short, ensuring spending never exceeds available funds.
In addition, if the Governor and General Assembly fail to enact a budget for the next fiscal year, appropriations should continue at the same level as the previous fiscal year. This would forever end the ability of politicians to use state workers, taxpayer-funded programs and services, or any other entity as leverage in negotiations.
Other reforms are necessary to aid the process, including:
Tax and Spending Limits. Lawmakers must produce a balanced budget, but there are no limits on what they can spend or how much they can tax. An annual spending limit-with reasonable exceptions-would streamline negotiations and set necessary fiscal guardrails on the budgeting process. Establishing sensible parameters would provide negotiations with a dose of fiscal reality currently missing in Harrisburg.
Part-time Legislature. Pennsylvania is one of only four states with a “full-time” legislature that meets year-round. Texas-which has double Pennsylvania’s population-has a legislature that meets once every two years for 140 days. When Texas lawmakers need to deal with emergency situations or revise their budget, they return for a limited, special session. If Pennsylvania moved to a citizens’ legislature, whereby it would be financially necessary for elected officials to return to jobs in the real world, the onus-and financial burden-would be on them to pass a budget in a timely manner.
Spending Transparency. Pennsylvanians cannot see how their tax dollars are spent. Indeed, even rank-and-file lawmakers don’t know where our money is going or whether it is being put to good uses. Negotiating billions of dollars of spending across dozens of agencies and departments and thousands of line items is much easier when policymakers, the public, and watchdogs can see exactly where and how money is being spent. An online database of all state government expenditures, such as those enacted in several other states, would make Pennsylvania’s budgetary process more open, transparent and accountable.
Only with substantive reforms, like those outlined above, will we be able to prevent the Governor and General Assembly from holding people and programs hostage while also protecting taxpayers and citizens in the budgeting process.