State leaders have budgeted a failing grade
An important question hanging over Pennsylvania’s state government is whether the commonwealth’s credit rating, which already is one of the nation’s worst, is destined to deteriorate further.
As the current stalemate continues over fully funding the nearly $32 billion 2017-18 budget passed on June 30, and which Gov. Tom Wolf allowed to become law without his signature, the two houses of the Legislature remain about as far apart on a final funding decision as they were two months ago.
Exacerbating the possibility of a further credit-rating downgrade is the prospect of the state running out of cash before a funding accord is hammered out — later if not sooner.
On the sooner side, state Treasurer Joe Torsella has projected that Pennsylvania will run out of money on Tuesday, while Wolf on Tuesday projected that would occur Sept. 15.
But even if Torsella signs off on a loan from the Treasury to keep the state afloat for now — there’s no guarantee that will happen — or even if Torsella and State Auditor General Eugene DePasquale would agree to authorize the Wolf administration to borrow money from a bank, that won’t fix what’s really wrong with this state’s finances — the lack of enough recurring revenue to avoid budget crises.
Neither the House nor the Senate, regardless of what they’ve done or tried to do during the 2017-18 budget-preparation exercise, has acted responsibly on behalf of recurring money.
And by allowing the 2017-18 state budget to become law without his signature, without a budget-balancing revenue plan accompanying the budget’s spending side, Wolf allowed himself to become party to the fiscal irresponsibility in which the commonwealth currently is mired.
It rightly can be suggested that Wolf should have wielded his veto stamp in an effort to keep lawmakers in Harrisburg to finish all aspects of the 2017-18 budget. But even without a veto, rank-and-file lawmakers should have rejected their leaders’ decision to send them home.
By not balking, lawmakers ignored their responsibility to the people who elected them — people who would pay the higher borrowing costs associated with a lower credit rating.
And it’s safe to say that even if the Legislature dodges the proverbial bullet by balancing the 2017-18 spending plan without ensuring recurring revenue, state taxpayers likely are destined for an unpleasant fiscal reality in the future.
News coming out of Harrisburg last week indicated that House lawmakers were putting finishing touches on a plan to counter a Senate budget-balancing proposal that leans heavily on borrowing and tax increases.
But with the prospect that the House plan will be far from what the Senate deems necessary, cause for optimism regarding a quick settlement seems dim.
Senate President Pro Tempore Joe Scarnati, R-Jefferson, characterized Pennsylvania as being at a fork in the road regarding the annual fiscal package.
He indicated that either $2.2 billion of spending should be axed from the budget, regardless of who is hurt, or take the necessary steps to find that amount of money.
Torsella’s Treasury has warned that if the right decisions aren’t forthcoming, Pennsylvania could be facing a $3 billion shortfall at this time next year — and probably with a lower credit rating.
The most puzzling question hovering over Harrisburg is why most rank-and-file lawmakers are so quiet about the unfinished budget when they’re so vocal about touting their qualifications on the campaign trail.