Originally published at the PA Capital-Star November 17, 2020
By Marc Stier
No matter where we live, what we look like, whether we are native–born or immigrants, or whether we are struggling or getting by, the COVID-19 recession is a threat to all of us.
We need the state government to do more for families and small businesses to meet that threat. Yet the recession will cost the state at least $3.3 billion in revenues—and perhaps more—over two years.
Squaring this circle would be difficult at any time, but the General Assembly must act by Nov. 30 when the stop-gap budget enacted in May, covering about about half of the General Fund, runs out.
Democratic and Republican senators appear close to a compromise that avoids a budget impasse at this dangerous time even as it leaves many problems unresolved.
Our understanding is that it would fund a full-year General Fund budget at the same level as in fiscal 2019-2020 with some adjustments to meet higher levels of Medical Assistance spending, the actuarially required contribution to pension funds, debt service requirements, and contractually required government obligations to vendors and employees.
Revenues to meet this level of expenditures would come from using the remaining CARES Act funding, transfers from special funds, higher estimates of revenues, and other one-time sources.
This is not really a budget adequate to meet the needs of the moment—and relying on one-time revenue postpones rather than addresses the revenue shortfall. But when Republicans control the General Assembly it is likely the best we can do, at least unless and until the federal government provides additional funds to state and local governments.
Yet, this compromise is now being opposed by House Republicans who are demanding deeper cuts to the budget. It is critical that Gov. Tom Wolf, Senate Democrats and Republicans, and House Democrats stand together to oppose the demands of House Republicans.
In every one of these areas, we already invest too little. And deep budget cuts make life would not only make life harder for working people, children and seniors, they would diminish the long-term economic prospects of our workers and businesses which are heavily depending on investment in education.
Most importantly, we cannot drastically cut the state budget without undermining the already slow recovery of our economy from the recession.
House Republicans want to double down on the mistakes of the Corbett years, when deep cuts to the budget during a recession added tens of thousands of working people to the unemployment rolls which hurt local business throughout the state and led Pennsylvania to have one of the slowest recoveries from the Great Recession of any state.
Instead of cutting the budget we would like to see our state fix an upside-down tax system that taxes the top 1% at half the rate of those in the middle, and lets 73 percent of corporations escape taxes entirely.
We can and should ask large corporations and the richest Pennsylvanians—who have seen their income recover and wealth increase during the pandemic — to pay more while cutting taxes on working people.
That would help us do more spending not less to help small businesses, to ensure that families do not lose their homes, to help school districts make up for lost local revenues, and to ensure that everyone continues to have access to doctors and hospitals. And it would provide the revenues we will need once the immediate crisis is over.
We understand that this is too far for Republicans to go.
But if House Republicans are not willing to ask those of us doing better during the recession to help other Pennsylvanians, at the very least they should stop dividing Pennsylvanians from one another to harm us all by demanding irresponsible cuts to a budget that is already tight. They must, at the very least support a workable compromise upon which we can build for the future.
Marc Stier is the director of the Pennsylvania Budget and Policy Center, a progressive think-tank in Harrisburg. His work appears frequently on the Capital-Star’s Commentary Page.