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What the PA Credit Downgrade Means

  By PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget

The decision by Standard & Poor’s to downgrade Pennsylvania’s credit rating should come as no surprise. There was ample warning by S&P and other credit agencies, as well as by political observers including us at PBPC, that this would be the result of the continuing failure of Republicans in the General Assembly, and especially Speaker Turzai and his followers in the House, to raise sufficient recurring revenues to close state’s long-term structural deficit.   Instead, year after year, budgets passed with Republican majorities have been balanced with one-year revenues, phantom funds, and other budgetary gimmicks. This year, even as the sword of a credit downgrade was hanging over the heads of the taxpayers of the state who will bear the burden of the increased taxes at every level of government from school districts and municipalities to counties to the entire state, Speaker Turzai ignored the danger. Even when a bipartisan… Continue reading

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On the Passage of the PA House GOP Revenue Plan

  By PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget

HARRISBURG – Marc Stier, director of the PA Budget and Policy Center, made the following statement on the passage of the House GOP revenue plan: “After a long debate that was mainly remarkable for the failure of House Republicans to adequately explain or defend their proposal to transfer $600 million from special funds into the General Fund, the Pennsylvania House of Representative enacted a revenue plan that (1) includes zero recurring revenues, which means that the next fiscal year will begin with a deficit of over $1 billion, (2) is fundamentally unbalanced in that it includes many proposals that are unlikely to raise the revenues expected, including proposals that have been included in previous budgets but have never gone into effect, and (3) is a stealth cut in government spending on critical programs in public transportation, public safety, environmental protection and agriculture, small business, economic development, and other areas that… Continue reading

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Budgets and Balances: The PA House GOP Budget Plan to Raid Special Funds Explained

  By Pennsylvania, Pennsylvania Budget

The Pennsylvania House Republican plan to balance the budget in part by raiding other state funds is something of a moving target. A new amendment Representative Moul (A03286) to House Bill 593 is the legislative vehicle in which elements of the plan will move to the floor of the House as early as today. We want to take a step back and put the whole plan to use supposedly “surplus” money that is “sitting around doing nothing” into perspective. This plan rests on a fundamental confusion between bank balances and budgets, one that has played a role in the life of most married couples once or twice. And perhaps the easiest way to understand it is to consider a scenario not unfamiliar to most of us. One partner — I’m going to make him the husband in this version but it doesn’t have to be — picks up a flyer from… Continue reading

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Where the Budget Stands

  By Budget, PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget

As legislators return to Harrisburg after a far too long vacation, it’s time to take stock of the state of the unfinished budget. In early July, the General Assembly enacted a budget that took many step forwards. It provided new funding for child care and pre-K education, for K-12 education, for the Pennsylvania System of Higher Education; for those who are intellectually disabled and face long waiting lists to get services; and for those for those who suffer from opioid addiction and mental illness. Yet, as of today, the General Assembly has not managed to pass a funding plan to pay either the budget for the current year, which remains about $900 million underfunded, or for the deficit of $1.5 billion accumulated last year. Weeks went by after the appropriations bill was passed with no action, but finally the Senate took a step forward. With strong bipartisan support it passed… Continue reading

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On the PA House GOP Budget Plan to Raid Special Funds

  By Budget, Memos, PA Budget and Policy Center, Pennsylvania Budget

This press memo, released on September 5, 2017, details how the budget plan released by a group of Republican House members fails in the most important task before our state today: to resolve the long-term structural imbalance between expenditures and revenues. MEMO To: Editorial Page Editors, Editorial Board Members, Columnists, and Other Interested Parties From: Marc Stier, Director, Pennsylvania Budget and Policy Center Date: September 5, 2017 Re: On the PA House GOP Budget Plan to Raid Special Funds The budget plan released today by a group of Republican House members fails in the most important task before our state today: to resolve the long-term structural imbalance between expenditures and revenues. Even if every fund transfer proposed by the Republican back-benchers today were constitutional and legal, and even if they had no impact on the commitments made by the General Assembly to provide funding for public purposes, this one-time transfer will provide almost no… Continue reading

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Pay No Attention to the Budget Cuts Behind the Curtain: the PA House GOP Budget Plan

  By Budget, PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget

For the last few weeks, we have been told a Republican plan to balance the budget was coming, one that would, almost miraculously, come up with more than $2 billion without raising taxes or cutting any public programs simply by transferring “surplus funds” that were “not doing anything” into the General Fund. We knew and said that this plan was, at best, a one year fix that would not do anything to reduce the long term structural deficit in the state budget. And in the same piece we strongly suspected that it was based on some false assumptions about why there are numerous state special funds and why, at certain points of the year, they run a surplus. But we were not prepared for what we heard today when the program was revealed and the whole effort was shown to be a sham of Wizard of Oz proportions. This plan… Continue reading

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Why We Shouldn’t Raid Special Funds to Balance the General Fund

  By Budget, PA Budget and Policy Center, Pennsylvania Budget, Policy briefs

In August of 2017, some Republican members of the House of Representatives were readying a plan to borrow massively from many of the 100 or so special funds that, along with the General Fund, are part of the state budget. In this Reports and Briefing Papers, we examine this plan, first from a theoretical point of view and then by looking at a few of those state funds. Click here to print or read the full policy brief full screen.   Continue reading

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Let’s Not Let Cranky Uncle Mike Raid the State Budget

  By PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget

Last November we elected a President who reminds many of us of a cranky uncle who sits at the far end of the Thanksgiving or Christmas table, muttering under his breath about the “damn government” and “wasted taxes” and, quite often, “those people who cause all the trouble.” When you try to engage him in discussion, you find that he has a ready – and extremely simplistic – answer to every question, one that is lacking in any detailed understanding of what government actually does and that assumes that “it’s very simple to do x or y” if not for conniving politicians. Right now, some Republican members of the House of Representatives in Pennsylvania, with the support of outside advocates, are readying a plan to borrow massively, perhaps up to more than $2 billion, from many of the 100 or so special funds that, along with the General Fund, are… Continue reading

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Evidently You Can Make This Stuff Up: The Commonwealth Foundation (and the House GOP) on the State Budget

  By PA Budget and Policy Center, Pennsylvania Budget

Marc Stier | 08/24/2017 The Commonwealth Foundation, in recent op-eds and website posts, has presented a misleading analysis of the state budget, one that falsely claims that state spending has been increasing relative to the states’ economy. The opposite is true. Between Fiscal Year 2001 and the current fiscal year, General Fund spending has shrunk from 4.74% of state GDP to 4.25% of state GDP. The Commonwealth Foundation has also been misleading the public by claiming that state is hiding spending on a so-called “shadow budget.” 59% of what they call the shadow budget is not state spending paid for by taxes raised by the state but federal spending that flows through the state. Leaving aside this federal spending, all state spending, including but the General Fund and various special funds, has declined from 7.36% to 6.91% of state GDP between FY 2001 and FY 2018. Forthcoming proposals by the… Continue reading

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How to eliminate Pennsylvania’s budget deficit

  By Budget, Pennsylvania, Pennsylvania Budget, Public Policy, Taxation

Originally published by the Allentown Morning Call on July 31, 2017 Members of the General Assembly were recently sworn in to office only to face another budget crisis. Between an already existing structural deficit, higher-than-expected human services costs, yet-to-be-realized gaming license revenue and a general revenue shortfall, the combined deficit for this year and next in Pennsylvania is roughly $3 billion. Leaders of the General Assembly rightly oppose a substantial general tax increase to fix the deficit. A higher personal income or sales tax rate would make our tax system even more upside down than it is today. Pennsylvania taxes those with high incomes at a far lower proportion than those with low incomes. State and local taxes take 12 percent of the income of families in the bottom 20 percent of the income scale, 10.3 percent of the income of the middle 20 percent of families, but only 4.2… Continue reading