Approaching state finances with caution
Pennsylvania’s revenue situation can be likened to what every day can be seen on the Weather Channel.
One financial report sees storm clouds bearing down on the commonwealth; then, out of the fiscal atmosphere, rays of sunshine break through the clouds and portend calmer, pleasant weather.
Regardless of the “weather” forecast, state government, as well as the people whose taxes finance it, need to feel uneasy about what lies ahead on the Keystone State’s money front.
That is especially true regarding Pennsylvania’s upbeat financial report for March, which was detailed in a Capitolwire article printed in the April 2 Mirror.
“It’s no April Fool’s joke,” the article began. “If revenue collections continue as they have been lately, the state could end fiscal year 2020-21 with a sizable excess in General Fund revenue.”
But the article contains two paragraphs that should cause taxpayers to take a few steps back from euphoria. Meanwhile, it’s what the article did not say that merits frowns rather than smiles.
The paragraphs in question contain the troubling information “before spending overages for the current fiscal year have to be addressed” and “concerns about a sizable structural deficit, due to many one-time funding sources used to balance the FY2020-21 state budget.”
Then there is the paragraph noting that Gov. Tom Wolf’s administration, as part of his FY2021-22 state budget proposal, made a $941 million supplemental appropriation request for the state Department of Human Services.
That’s a “nice” way of saying that what has been budgeted for human services has not been enough to pay for the services being provided.
Then there is the abyss containing the “creative financing decisions” of past years that enabled the Legislature to produce what appeared to be balanced budgets when, in reality, those decisions amounted to merely a thumb in a weakened financial dike.
At the same time, those decisions put additional stress on that dike — stress not capable of being resolved in the short term.
Taxpayers never have been given a full, clear accounting of how the creative budget-balancing decisions of the past continue to affect what the state is and is not able to accomplish.
Meanwhile, the commonwealth is facing a serious transportation-funding dilemma starting in about a year as the Pennsylvania Turnpike is relieved of delivering a big chunk of money to the state Department of Transportation as the result of the state’s misguided — ultimately federally rejected — attempt to toll Interstate 80 with no financial obligation to Washington.
The bottom line is that, for the above reasons and others, the sunny picture that the March financial report portends to provide really is not as reassuring as many people might think. The words in that first April 2 paragraph “if revenue collections continue as they have been lately” should have sounded an alarm for all who read them.
Even with all of the federal money that might come as the result of President Joe Biden’s stimulus efforts and his infrastructure initiative, if it is passed, Pennsylvania has a lot of financial catching-up to do.
That category “structural deficit” contains many expensive long-term obligations that the commonwealth will be hard-pressed to deal with in coming years.
Therefore, don’t be misled by descriptions such as “above-estimate collections.”
A truly rosy Keystone State fiscal “weather” report still is nowhere on the radar.