Uncertainty still clouding state budget
Pennsylvania’s House of Representatives returns to work Monday with a 2017-18 budget-funding plan, but it’s a proposal not without serious questions, the most important of which is whether there’s any chance that the Senate will concur.
The Senate has had its own plan on the table for weeks, and the competing fiscal “remedies” appear to be 180 degrees apart, portending a lengthy task to reach some middle ground.
Caught up in all of that is whether the commonwealth will, by week’s end, run out of the cash needed to continue paying its bills. Another complication is whether another downgrade to the state’s battered credit rating is about to be imposed by the national credit agencies — a downgrade that would increase costs associated with state borrowing.
Those costs ultimately would be paid by taxpayers.
The budget-funding plan revealed last week by a work group of House Republicans is attractive from the standpoint of avoiding tax increases, but of concern is whether the plan really is as good as it appears to be.
It’s important to ask why the Senate hasn’t opted for a similar approach, and why it has taken so long for the option even to be suggested.
Is the opposition that’s already being voiced regarding the House plan valid? Regardless, it needs serious discussion, not only looking at the 2017-18 fiscal year, which began July 1, but beyond.
Some people are saying that a modest state income tax increase — even a temporary one of maybe two or three years’ duration — would be the fairest, most effective way to eliminate the state’s approximately $2.2 billion fiscal shortfall. However, the House has remained committed to its no-tax-increases stance.
Therefore, prospects for a recurring revenue stream remain in limbo, despite the fact that the lack of such a reliable money stream is at the root of Pennsylvania’s fiscal dilemma.
As good as it might seem to be to get the state by for another year, the House workgroup’s plan wouldn’t ensure long-term fiscal stability — and might cause harm along the way.
Relying mostly on transfers from various state special funds purportedly having inordinately high account balances, the plan leaves state residents to ponder how much would not be able to be accomplished as a result of such a budget-based raid.
But residents also should be asking why the targeted money has been left sitting in the accounts in question for extended periods of time rather than being put to use for its intended purposes.
The biggest proposed transfer under the 41 funds that the work group hopes to tap would be $357 million — from the Public Transportation Trust Fund.
The funding plan that the Senate has put forth calls for a new natural gas severance tax; a gross receipts tax on consumers’ natural gas, electric and telecommunications bills; assessing the state’s 6 percent sales tax on vendors who reach a certain volume of sales on Amazon, eBay and other online marketplaces; and presumably some borrowing.
From the start, the Senate’s plan evoked criticism. Now, in the days since the introduction of the House work group’s plan, fears have mounted about potential harm to transportation, environmental and agricultural projects, as well as to the state’s educational endeavors.
If the best agreement is truly one in which all sides compromise, this isn’t going to be an easy week in Pennsylvania’s state capital.