A serious, nasty, and debilitating budget deadlock that boils over into a second calendar year should be the catalyst for fundamental reforms of the state budget process. People argue about everything these days, but that assertion is really hard to refute.
The entrenched political, philosophical, and regional differences found across Pennsylvania mean the state budget process is unlikely to ever be straightforward and harmonious. Throw in negative economic and fiscal factors complicating the situation, and the odds are against a healthy budget surplus easing the discord soon. Those who want to expand state government and those who want to shrink it fight more fervently. Put these factors together, and the conclusion is discouraging: our state faces a succession of difficult budgets, and that increases the chances for continuing budget crisis.
Fortunately, legislators have the power to fix this broken process, and need just to find the will.
Not long ago, taxpayers and some legislators said enough is enough. In 2009, the impasse over Governor Rendell’s next-to-last state budget went past the hundred-day mark. Unhappiness in local communities dictated that substantial repairs to the state budget process were needed.
Why no action then? Tom Corbett’s ability to deliver on-time budgets seemed to subtract from the sense of urgency. The arguments over the content of those budgets intensified, but at least the timetable was on track.
The current budget standoff dwarfs its predecessors in length and depth and disruption. The balance sheet on this prolonged problem is ugly – disruption for service providers, hardship for many who depend on state services, annoyance for taxpayers, diminished citizen confidence, suspended development projects, and a sharp drop in financial standing.
The most effective remedy is to continue state funding when a new budget is not approved by July 1st. Keep running the state under the old budget. To prevent overspending, set the funding rate at 80%, leaving room for deciding the ultimate spending and taxing levels. It is short enough of the needs that the incentive remains for adoption of a full state budget. By preventing a bottomless budget crisis, this step reduces the potential for a bad budget done out of desperation. Put this carry-forward budget requirement in the state Constitution, so it is not ignored or suspended, as a law can be.
Complementary legislation sets a timeline for concrete steps legislators must take between the budget address and the budget deadline, to help compel action and avoid the recalcitrance that contributed to the 2009 deadlock. These proposals are essential, but not exclusive. Reform measures advanced by other legislators could easily be folded in.
A budget standoff results from political disagreement, miscalculation, and intransigence. These factors will always threaten to metastasize into a malignant deadlock. The prudent, reachable goal is to avoid harmful impacts – borrowing, layoffs, program cutbacks or shutdowns – when political brinksmanship takes over.
The current crisis has stripped the standard objections to change of their persuasiveness.
Governors generally believe they alone have statewide and long-range interests at heart. In their view, lose leverage, lose power, lose ability to force a productive result. However, the exercise of power in the name of leverage exhibited by Governor Wolf’s veto of the entire state budget last June did not advance solution and deepened the harm to Pennsylvania.
Bury a myth – split political control does not ordain a budget crisis. One of the worst occurred in 1977 when the Democrats controlled state government.
How about changing the players? Well, since 2009, there is a new governor, most of the legislative leadership has turned over, and many rank-and-file legislators are new. Must be the process itself is defective.
The overriding argument for reform is the realization that this budget crisis and those to come are different in cause and in consequence. For decades, budget crises occurred when recessions cut into state revenues and drove up spending obligations. Eventually, agreement would be reached on tax increases to tide things over until economic recovery revived revenue collections. Legislative leaders would then line up the votes to carry out the deal.
That formula is obsolete. Taxpayer resistance to tax hikes and insistence on spending cuts to deal with revenue shortfalls grows each year. In competitive times, relying on tax increases as a first resort is economically counterproductive. Discretionary money once used to secure votes has been done away with. Funding for the project pots used similarly has been diminished. Moderates who would support negotiated budgets are fewer in number. But the biggest difference today is that rising future costs, most notably pension contributions, outrace expected revenues.
So there it is. The modern budget crisis is more complicated. The method for solving crises in the past has been rendered outmoded by irreversible economic and political changes. Pennsylvania has tried changing the players. The only option remaining is to reform the process itself.