No Easy Pass This Year on Cost Overruns

In February Governor Wolf proposed a budget that included $588 million in overspending in the current year. This is now the fifth of six budget years in which the administration has overspent. This time, though, the House may not wave through the governor’s requests for extra money quite so easily.

House Majority Leader Bryan Cutler and Appropriations Committee Chairman Stan Saylor recently addressed the heads of legislative committees and asked them to “evaluate the existing management, structure and results of the departments under your purview.” The call for extra scrutiny comes just in time. In addition to about $590 million in supplemental spending, the governor’s 2020 budget proposal includes a 6% increase to General Fund spending and billions in new debt.

Special scrutiny of the Department of Human Services (DHS) would be particularly welcome. Most of this year’s budget overruns are in DHS under the Medicaid program. The problems aren’t just in the current year, but for the foreseeable future. Instead of coming clean with the public, the Wolf administration continues to submit optimistic cost projections that are significantly lower than those from the non-partisan Independent Fiscal Office (IFO). For the next three fiscal years, the IFO projects DHS will cost taxpayers $15 billion, but the administration only estimates $13.6 billion, a 10% difference. Given the administration’s history of overruns, this looks like purposeful underbudgeting with the intention of asking for more later.

Underbudgeting and backfilling are gimmicks. Lawmakers should be addressing this problem now, while the budget is being negotiated, rather than allowing the governor to back them into a corner later.

Graphic: Hiding the True Cost of Medicaid

The Wolf administration is working to make oversight as difficult as possible by complying only minimally with disclosure requests. Act 15 of 2019 requires the governor to submit a written request detailing the amount requested for potential supplemental appropriations and the need for the supplemental appropriations. The report the administration sent to the legislature in October to satisfy this requirement was laughably thin, without any explanation for the overspending.  

Rep. Stan Saylor’s office responded appropriately in a letter dated December 18:

The House did not receive the required written reasoning for the requested supplementals. As this is a clear violation of the statute, please provide written reasoning for the supplemental appropriations by line-item, including narrative explanation and mathematical computations.

The Governor’s Budget Office responded on February 3 with some extra information, but they were hardly forthcoming, writing, “This met the requirement as per our legal interpretation of the statute.”

In public, the administration has argued that budget overruns in DHS aren’t their fault. The state is legally bound to provide certain services for eligible individuals. “The governor’s hands are tied,” an unnamed official told the Capital-Star.

There is some unpredictability with entitlement programs, but it doesn’t explain the Budget Office’s lack of disclosure to the legislature, or its deceptive practice of underbudgeting to backfill later. The existence of a federal mandate doesn’t excuse the governor from controlling costs and finding efficiency to stick to the legislature’s budget.

The House should keep pressing for answers, and for additional fiscal transparency. House Bill 1861 (Rep. Grove) and Senate Bill 885 (Sen. Phillips-Hill) propose a constitutional amendment that will require supplemental spending to be voted on in a standalone bill, not tucked into the spending bill for the next year. The amendment would make budget overruns more visible to taxpayers, and give the legislature more control on reviewing overspending as it happens. This commonsense legislation will prevent tax-and-spend schemes from passing unnoticed behind the closed doors of back room budgeting. The amendment sponsors should be commended for protecting and informing already overburdened taxpayers.