Corbett, Republicans ignored the problem for four years

During his recent mid-year budget briefing, Corbett administration Budget Secretary Charles Zogby said the cost growth in the 2015-16 state budget, which was cited as the reason for the projected $2 billion deficit, is nothing new. Which begs the question: Why didn’t they do something to deal with it, instead of ignoring it for the past four years?

If Zogby and others knew the one-time revenue fixes used to balance the last four state budgets would not solve the state’s overall fiscal problem, that begs more questions: Did they use those tactics merely for “window-dressing” of the budget or were they simply being irresponsible with your tax dollars?

Another example of the Corbett folks simply ignoring the problem with state finances is that everyone knew Act 120 of 2010 included mandated cost increases in the out-years, yet Corbett actually proposed reducing the payments to balance the budget instead of meeting the obligations.

While Zogby might be continuing the false claim that the Corbett administration didn’t raise taxes on middle-class families, the fact is those families did get hit with higher taxes, such as property tax increases and higher gas taxes.

Meanwhile, legislative Republicans and Corbett also gave away the store to the tune of $2 billion in corporate tax breaks instead of fixing our ongoing structural budget deficit problem. Those tax breaks didn’t result in more jobs as promised, instead Pennsylvania’s job growth plummeted from 7^th to the bottom of the pack at 50^th.

Zogby went on to admit that one-time budget fixes don’t work, yet he continues to push for more one-time revenue gains like selling the liquor stores, electric competition and pension reform. Those ideas simply won’t solve Pennsylvania’s structural budget deficit.

Finally, Zogby now admits that legislative Republicans and the Corbett administration created a structural budget deficit of $2 billion, yet here are just a few of the things that incoming Speaker of the House, then House Majority Leader, Mike Turzai said about the budget during final passage on June 30^th:

“We have been nothing but responsible.”

"We have been fiscal stewards.”
“We have been about governing.”
"Let us talk about responsible governance.”
“We have been prudent, fiscally responsible, and prioritized state spending on the most vulnerable in our society.”

 “We are fiscally prudent, recognizing we have a responsibility to the taxpayers.”

 

Maybe not so much …

Bad Republican fiscal policy got us into this budget mess

After attending today’s mid-year budget briefing by Budget Secretary Charles Zogby, the multi-billion dollar budget deficit that Pennsylvania is facing is not unexpected given the past four years’ budget messes and the bad news is not likely to end.

The Independent Fiscal Office’s latest report revealed a multi-billion dollar budget deficit that was reaffirmed today by Secretary Zogby and points to a dreadful fiscal crisis for our new governor. It is certain that the extent of the gap is massive and we cannot continue with the same fiscal policies of the past four years and expect anything other than a continued deficit projection.

I see three main points concerning the budget deficit:

1.    Gov. Tom Corbett’s fiscal year 2014-15 budget was based on one-time revenue sources that the administration now admits was bad policy.

2.    The Corbett administration already borrowed to meet operational expenses and projections indicate the state will be cash flow negative from January through March 2015.

3.    The Republicans that control the House and Senate marched in lockstep with the Corbett administration on fiscal policy for the last four years. They also need to be held accountable for this failed fiscal policy and be willing to work to change it in a bipartisan manner that produces solutions.

Additionally, our state has fallen from the top 10 in job creation to last in the nation over the past four years.

This budget situation also has bad ramifications for policy proposals, such as infrastructure, jobs and equitable education funding, because most initiatives need state money to implement.

The Wolf administration offers a different fiscal policy that received a strong mandate in the recent election. This most recent forecast makes it even more obvious that we need to follow that change in policy.

I’m definitely ready for a fresh start, which begins Jan. 20.

The state checkbook is out of money!

Bad Republican budgeting maneuvers that have crippled the state’s ability to meet its obligations during the past four years have led the state to borrow money from itself.

What's that you ask? How does Pennsylvania borrow money from itself?

Well it goes something like this: the state's checkbook (the General Fund) is what Pennsylvania government uses to pay its recurring bills. This week, the General Fund ran out of money so the state Treasurer had to create a $1.5 billion line of credit out of a cash investment fund operated by the Treasurer. Of that line of credit, $700 million was immediately used. Kind of like using your credit card to pay your mortgage.

The administration has stated that this will actually save the state money, which is laughable. If this were actually true, it should be common practice every month and why hasn't Governor Corbett done this sooner? Ha!

In fact, actual loans to be used for the General Fund have only been done four times.  Even if these types of loans were common, it still begs the question as to whether they should be used for General Fund purposes at all. In this case, using them is an indication of an underlying symptom of inadequate and negligent budgeting. There are only a handful of valid reasons for using the Short Term Investment Program (STIP), but a failure of leadership is not one of them.

If the budgeting process was done correctly, with an accurate revenue forecasting methodology, and a realization that new revenue was needed instead of asking working families to pay more and school districts to make due with less, this whole line of credit would be unnecessary. The Corbett Administration claims they needed to do this to advance funding to Philadelphia schools, but these schools need this money because they were underfunded by Governor Corbett. It is like blaming someone else for your bad budgeting.

But you don't have to just take my word for it that these were terrible budget decisions.

The Independent Fiscal Office and the nation’s three major credit rating agencies have all noted that choices made in recent Pennsylvania budgets are creating a structural budget deficit that cannot be solved with the one-time fixes proposed and passed by the Corbett Administration and Republican controlled House and Senate.

It seems that Governor Corbett and his Republican friends prefer budget gimmicks that set up the next governor for a deficit from day one.

It's time for a fresh start.

"Opportunity" for education dollars, hurt by tax breaks

Crafting a state budget is all about priorities.

For four years now, Gov. Tom Corbett and his Republican colleagues leading the House and Senate have shown that giving tax breaks to some multi-national corporations, while refusing to tax others at all, is their priority and that funding public education is not.

Since he took office, Corbett has provided more than $2 billion in big-business tax cuts. Not to mention allowing multinational corporations to continue using the Delaware loophole to avoid paying taxes while, at the same time, refusing to implement a shale gas severance tax.

In an attempt to cover their tracks, Corbett and the Republicans are now trying to include funding for pensions as part of their calculations of education funding levels. But that's not flying with the parents and taxpayers in Pennsylvania who understand that funding for old pension obligations doesn't help a single student learn to read, write or solve a math equation. It never has, nor should it now be, included in the bottom line. For comparison sake, the total education spend, not including pension costs, (... because historically, no other administration has ever included pension costs when calculating levels of education funding) for 2008-09 -- the year before federal stimulus funding -- was $9.36 billion. Meanwhile, total education dollars spent in 2014-15, not including pension costs, (... because historically, no other administration has ever included pension costs when calculating education funding levels) is $9.18 billion. Clearly less funding, yet Corbett and the Republicans in an attempt to call a lame duck a swan, try to tout this as an increase.

Simply put -- Corbett and the Republican-led House and Senate have cut education funding in Pennsylvania by about $3 billion total over the past four years.

Those funding cuts at the state level have drastically impacted Pennsylvania's 500 school districts, which have been forced to lay off 20,000 employees, cut programs, increase class sizes and hike local property taxes.

But wait ... that's not enough tax breaks for corporations or enough defunding of public education for Corbett and his Republican privateers. To make matters worse, the 2014-15 state budget continues $150 million in business tax credits for the Opportunity Scholarship Tax Credit (OSTC) and the Educational Improvement Tax Credit (EITC) ... or what some like to describe as "the faux voucher program that masquerades as choice."

Some Republican echo chamber organizations continue to tout these programs as vehicles for "saving tax dollars." Their argument goes something like this ... if corporations (remember, they are people too) can pay their taxes to private schools instead of to the state so that a handful of kids can attend the private schools of their choice, the rest of the taxpayers in the state will actually save money. I know ... it makes no sense ... but that's what they are claiming.

However, providing those tax credits to businesses doesn't relieve the school district of their educational expenses or the rest of the taxpayers the burden of paying for the lost revenue.

Those scholarship recipients aren't leaving Pennsylvania classrooms in groups of 25 or 500, which would lead to one less classroom or one less school building. On the contrary, the buses still run past the child's house that opted for the taxpayer-subsidized private scholarship (and in some cases the public schools incur additional costs to transport that scholarship student separately to their new private school). Meanwhile, the same costs still accrue for the public school ... a teacher might have one less kid in their class (although they most likely have 10 more due to the Corbett education cuts), the cafeteria worker still prepares the same lunch (less one serving), the principal still oversees the same number of teachers (although probably 10 less as a result of the Corbett education cuts), the janitor still cleans the same school building, and there are still the same numbers of teacher's aides and nurses … check that, the Republicans cut reimbursement for nurses and teacher's aides so they are no longer a part of any equation anyway. But ... the same lights are still on in the same classroom, the same public school building is still heated to the same temperature by the same boiler, and the same roof still needs the same repair.

So where are all these "savings" other than lurking somewhere in the ideological minds of the faux voucher advocates.

The reality is, these business tax credits don't save any taxpayer dollars. In fact, they are an extra cost to Pennsylvania's pocketbook. The $150 million of taxes otherwise due to the state would be better spent in the public classroom for the basic education or special education line items.

But as we've already discussed, those aren't priorities for Gov. Corbett or the Republican-led General Assembly.

Gov. Corbett's "family budgeting" is hurting PA

Four years ago, Gov. Tom Corbett unveiled his first state General Fund budget proposal and likened it to a belt-tightening family sitting around the kitchen table making decisions on where to save and where to spend.

So let's take a look at how that family budgeting idea compares with this year's House Republican budget proposal.

Simply put: this budget plan is based on either delaying paying the bills or simply not paying the bills at all. Not many Pennsylvania families can balance their budgets in that way.

For example, the PlanCon reimbursement program for new school building construction is behind by $1.2 billion and the 2014-15 Republican budget allocates only $10 million to it. That's like making a single payment on a 120-year mortgage. On that schedule, schools in the program will have to wait 120 years for a new building. Are you kidding me?

The Republican budget plan also suggests putting off this month's payment of $394 million to Pennsylvania's managed care organizations which help to meet the health care needs of some of our state's most vulnerable residents. Cash-strapped families know what happens when you put off making a monthly payment. You're faced with interest and late fees. And make no mistake about it, when the MCOs come calling for their bills to be paid, they're going to charge the state more money to make up for it.

As for higher education funding, four years ago the state cut their budgets 19 percent and that cut has continued year after year after year with so-called "flat funding." For families with students in college, that would be like telling the school: "We'll pay tuition for 4 out of 5 semesters and call it even." How do you think that would go over at Pitt or Penn State?

Standard & Poor’s warned that Pennsylvania’s credit rating would suffer if the Republicans continued to use one time gimmicks to “balance” the budget. This Republican budget is based on $700 million in one-time accounting gimmicks that supposedly balance the budget this year, but will lead to a $2 billion structural deficit in next year’s budget. That's an irresponsible way to budget, even for fiscal conservatives.

I just can't go along with the idea of fixing a budget deficit by creating a bigger one for the next guy to worry about.

Republican budgeting has led to $1.4 billion deficit

Gov. Tom Corbett and his Republican friends -- who lead comfortable majorities in the state House and Senate -- have had four years to take Pennsylvania in a new direction.

Unfortunately for Pennsylvanians, that direction is deep into the red, headlined by a $1.4 billion General Fund budget deficit. We are one of only 11 states nationwide with a deficit. That’s what happens when you give tax breaks to some multi-national corporations while refusing to tax others at all. 

If the state budget deficit wasn't enough, funding cuts at the state level have drastically impacted Pennsylvania's 500 school districts, which have been forced to lay off 20,000 employees, cut programs, increase class sizes and hike local property taxes. But the governor continues to claim he didn't raise taxes?

And so here we are, within days of the budget deadline and the governor and Republican leaders can't figure out how to fix a billion-dollar deficit of their own making.

Now in their fourth year of budget fiascos, they feign surprise that their trickle-down economics aren't working. Sorry governor, you've had three years and three budgets that let you implement your spending priorities. You chose $2 billion in big-business tax cuts over more dollars in Pennsylvania classrooms. You chose to stall on Medicaid expansion instead of accepting Pennsylvania's share of federal dollars and you refused to impose a severance tax on Marcellus Shale natural gas even though every other state with gas reserves imposes one. You don't have the federal stimulus program to blame any more. This is your budget deficit.

Meanwhile, House Appropriations Committee Republican Chairman Bill Adolph is offering some obtuse argument about how our flat income tax as it relates to federal tax rates is causing our budget problem. Again, most other states have a budget surplus, not a deficit. House Majority Leader Mike Turzai believes another thing entirely: that targeted job-creation tax incentives are breaking the state's bank and corporate tax breaks should be across the board. With all due respect Mr. Leader, that's how we got into this predicament in the first place: by Republicans cutting corporate taxes by $2 billion and allowing multinational corporations to continue their tax shifting out of Pennsylvania's state coffers.

We didn’t need to be here … but we are. By implementing fair progressive policies, we could have stopped our slide from 7th to 49th in job creation, and Pennsylvania likely wouldn't be in the budget hole that we are today thanks to the failed leadership of Gov. Tom Corbett and his Republican colleagues. It may be too late to change the governor's fate as a one-term failure, but it's not too late to change the failed policies the governor and the Republican legislature have pursued. We could pass a budget that doesn't rely on one-time gimmicks and selling off assets.

I am not holding my breath …

A light bulb went on, but did he actually see the light?

"It's not fair right now, OK? So we need to address that."

- Gov. Tom Corbett, on education funding, Jan. 22, 2014

There’s been a breakthrough: after 1100 days in office, following dozens of protests across the state, and poll numbers that make the Titanic look recoverable -- in the dark abyss that is Gov. Corbett’s education policy, a small light went on. I’d say it was a 15 watt refrigerator bulb in the cold recesses of a beer refrigerator in the garage, but I digress.

Recently, the governor had sprinted from a Philadelphia public school he was scheduled to visit (the first visit to a public school in the state’s largest district, and one whose chronic underfunding repeatedly makes the national news), because he was notified of scheduled protests inside and out of the school.

See it’s only ok for the governor to use the school as the backdrop for his message and to try to save (or create) a legacy, but when teachers, parents and students want to convey a message at the school they work at day-in and day-out, well then it becomes, in the governor’s words, “theatrics that have been designed by adults.”

A few days later during a non-education related press conference, the governor seemed aware of and even expressed interest in a GOP proposal approved in the House that would set up a commission to develop a formula to distribute money for K-12 education.

And you know how the governor feels about commissions: creating them is his favorite hobby, but taking their recommendations is optional.

The larger irony in this: Pennsylvania had an education funding formula, established in 2008 after an extensive study was completed. However, the state abandoned it, before it was even fully implemented. Care to guess when and by whom?

If you said “2011 when Governor Corbett took office and cut a billion bucks from public schools”-- well you’d be right.

So this notion that Governor Corbett supports a formula just may be because it is politically expedient since his cuts to education are a key campaign issue.

Truth is the governor could invest more money in education today – literally today. Its budget day and the governor could choose to appropriate more state funds for education than pre-stimulus, because despite his claims and excuses Corbett’s number is still below that mark.

So while a light bulb has flickered on, I have little hope he’ll actually step into the light.