State riding dangerous fiscal course

Gov. Tom Wolf’s decision not to seek 2017-18 income and sales tax increases puts Pennsylvania on track for a more amicable budget-preparation exercise than the first two of Wolf’s administration.

Still, it’s premature to speculate that Harrisburg will accomplish its budget mission without serious disagreements along the way. Likewise, it’s premature to assume that a new budget will be in place by the June 30 deadline.

Here’s a capsule of why there is cause for anxiety and pessimism during the weeks leading up to the governor’s Feb. 7 budget address:

— The projected $1.7 billion 2017-18 budget deficit projected weeks ago by the nonpartisan Independent Fiscal Office hasn’t evaporated.

— There’s a projected $600 million 2016-17 budget shortfall that will complicate efforts to fashion a balanced 2017-18 spending plan. Wolf has blamed the problem on underfunding of human services and lackluster tax collections, but there probably are additional fiscal “bogeymen” present.

— Because of past failures to address the commonwealth’s fiscal problems, the state’s credit rating is among the nation’s lowest.

— Pennsylvania’s school-funding disparities remain among the nation’s widest, and education spending is a big part of every state budget.

— With less than five weeks until the Legislature can begin considering what Wolf is proposing for the next fiscal year, lawmakers still haven’t completed 2016-17 budget work, one notable example being fixing the state’s casino tax. And, last week, lawmakers reportedly were seeking to delay addressing that issue.

— Despite backing away from again proposing income and sales tax increases, Wolf has said he will continue to press for higher taxes for the Marcellus Shale natural gas industry — tax hikes that the Republican-controlled Legislature continues to oppose, even though other gas-producing states already collect what Wolf proposes for here.

— December’s revenue collections totaled $105.2 million, or 3.9 percent short of expectations. That weak incoming-revenue total brought fiscal-year-to-date collections to $367 million — or 2.7 percent — below estimate. In fact, that troubling trend could, by fiscal year’s end on June 30, produce a budget hole worse than the $603.76 million that Wolf warned of last month.

— Among the many troubling aspects of the 2016-17 budget — and thus complicating 2017-18 –was that this fiscal year’s spending package was dependent on borrowing $200 million from a surplus in a state medical malpractice insurance fund — money that will have to be repaid.

The governor told The Associated Press last month that he would propose a 2017-18 budget balanced with cuts and steps to make the state government operate more efficiently. Two days prior to providing the warning about the anticipated $600 million shortfall, Wolf announced a move to eliminate thousands of unfilled state government positions.

If the state can operate without those positions, they shouldn’t be filled. And, if the state can operate without tax increases, there shouldn’t be increases.

But Pennsylvania continues on a dangerous fiscal course, one that could have dire consequences for taxpayers in the years ahead, if revenue collections don’t improve.

Republican lawmakers returning to Harrisburg last week lauded Wolf’s anti-tax-increase stance and were hopeful regarding windows for reform.

But perhaps Rep. Tedd Nesbit, R-Mercer, put the situation in the best perspective.

“We’re going to have to do something big,” Nesbit said. “It may not be popular.”

Thus, paving of the road to 2017-18 budget acrimony, amid cautious optimism, has begun.

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