We’re in trouble in Pennsylvania and the GOP “fix” is like looking in a funhouse mirror: gambling and bloated borrowing.
This year, Pennsylvania’s budget process began upside down. House and Senate Republican Leaders decided to schedule a vote on a spending plan before the revenue bill.
On June 30, we passed a $32 billion 2017-2018 budget without a plan to pay for it.
And while this cart-before-the horse mismanagement continues, we–Pennsylvania taxpayers–pay a price.
Last week, S&P ratings agency warned that it would likely cut Pennsylvania’s already reduced credit-worthiness rating unless we demonstrate the will to get our house in order, stating:
“While it is not uncommon for states to have periodic structural imbalance, Pennsylvania’s chronic misalignment and eroding general fund position, particularly during a period of economic growth, demonstrate a pattern of financial mismanagement.”
This pattern of financial mismanagement during a period of economic growth has been maddening to Democrats in the General Assembly for six years.
But Democrats are in historic minorities in both the House (82 Democrats, 121Republicans) and Senate (16 Democrats,34 Republicans)–and are largely cut out of the budget process.
And while the Republicans have been at the reigns for the last six years, Pennsylvania has suffered five credit downgrades.
Now we teeter on edge of another, as S&P has us on credit watch, and waits for us to responsibly fill a $2 billion-plus budget hole.
Meanwhile, the Republican controlled Pennsylvania House and Senate are working on a deal to cook the books to “balance” our budget, in part, with expanded gaming, but mostly through big borrowing.
The majority party proposes borrowing $1.5 billion or more, leveraged against, of all things, the federal Tobacco Settlement Agreement.
It is clear to me–and the average person with bills–that borrowing money to cover cash flow is a bad idea.
Like paying your mortgage and groceries with a credit card or a payday loan–incurring $1.5 billion in debt is dangerous, more costly, and yet another example of epidemic financial mismanagement.
Our creditors are watching and this all comes at a price. It already costs us more than $100 million a year in increased interest on our debt because of our weakened credit score.
So the party that boasts of not raising your taxes, is raising your taxes.
And if you are wondering about cuts, the Governor has already reduced spending by $2 billion through cuts, efficiencies, consolidation, closing prisons and hospital and more–as acknowledged by the 98 House Republicans who voted for the $32 billion spending bill.
There is a clear path forward: stop with the one-time fixes, and instead balance our budget with sustainable, recurring revenue.
Pass a reasonable tax on the extraction of shale gas, a measure that is supported by over 70 percent of Pennsylvanians.
The natural gas industry extracts as much as $10 billion a year of Pennsylvania’s natural resource, yet we remain the only drilling state without such a tax. Had we implemented a severance tax in 2011, we would have raised $2 billion.
Or fill in the gap by closing the Delaware loophole, and figure out which of our state’s many tax credits actually grow business, and which are merely corporate welfare.
Without such measures, it’s only a matter of time before we pay a price more dear. Illinois is our warning.
After two years without a budget, and their own financial mismanagement, they now have a credit rating just above junk status. Last month, Illinois was forced to increase their personal income tax rate from 3.75 percent to 4.95 percent, a 32 percent increase.
In the end–and for six years–the party in the lead has failed to lead.
And this is no fun House.
I am tired of the carnival approach to budgets in Harrisburg, and I won’t be complicit: Count me a no to big borrowing without a way to pay for it–and a yes to responsibly paying our bills–for a stable economy and a brighter future for all Pennsylvania.