Philadelphia Metropolis


The Mr. Potato Head Budget

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By Tom Ferrick Jr.
Watching the Pennsylvania legislature trying to pass a state budget this year was like watching a drunk trying to assemble a Mr. Potato Head.

The best thing to say about the process is that it is over.  It was 101 days late, but it is over, with each of the parties retaining bragging rights on one aspect of the budget or the other: Gov. Rendell got extra money for education; the Senate Republicans avoided a broad tax increase; House Democrats killed the dreaded sales tax on arts and cultural events.

But what about this Mr. Potato Head budget?  The poor guy is a mess.  He's got an ear where his chin should be, a hat for a nose and a mustache on the top of his head.  And he's not going to get prettier with time.

To summarize, the budget agreement consists of a series of unequally distributed cuts in government programs, combined with a variety of new taxes and "revenue enhancements" - also known as a raid on special funds to find money for the general budget.

Since 77 cents of every dollar the state spends gets funneled back to local governments and individuals - mostly for public education and welfare - the effects will reverberate across the Commonwealth in the coming months.

Then it will be time for a new budget.

Wait until next year

If you think this was a bad this year, wait until 2010. With this budget agreement, Rendell and the legislature essentially placed a bet that the economy will improve sufficiently to get tax revenues back to the level they were at before last year's financial collapse.

If they do not rebound, the situation could be worse next year, with the state's political leadership arguing over what to cut and what to tax and by how much.
Only this time, they won't have the cushion provided by the federal stimulus money ($1.9 billion this year) and the state's rainy day fund (which contributed $750 million to the pot.)

And it will be an election year with all 203 House seats, half the 50 Senate seats and the governorship on the ballot. This is not a climate conducive to compromise.

Can we learn anything from what happened this year so we don't have a repeat of the fiasco next year?   Probably not.

Irreconcilable differences usually remain irreconcilable.

The governor is enthralled by big ideas and wants to use government to change basic education, promote economic growth and create new industries. He is an activist, with a capital "A."  Which means he is also a big spender.

Mr Potato Head 2.jpgThe Senate Republicans have constituents who see activist government as the problem, not the solution. The senators' natural inclination to oppose taxes practically became a religion in the aftermath of the pay-grab scandal, as moderate Republicans fell to candidates who "took the pledge" against new taxes.

New players, new game

In his first term, Rendell was able to get a lot of what he wanted from schmoozing Republican legislators who were inclined to make deals, also know as compromise. To name three: House Speaker John Perzel and Senate leaders Robert Jubelier and David "Chip" Brightbill.  Perzel is no longer Speaker and is now under indictment; Jubelier and Brightbill were defeated for re-election.  A third major player - Democratic Sen. Vincent Fumo, a master at making budgets come together, is in a federal prison in Kentucky.

 This year, the governor faced new leaders in each caucus who either didn't know how to draft deals or wanted no part of them. As one lobbyist noted as the mess unfolded, the usual practice was to trade votes for a legislator's pet program or WAMs.  But, how can you make a deal with someone who doesn't want anything?

The governor did not help his cause.  Tax collections were down five percent, but his original budget proposal increased state spending by two percent.  How do you justify increasing spending in the face of a major recession?

During the long process, Rendell looked alternately detached, distracted -- or maybe just bored. And he sent conflicting signals.  At first, he opposed increasing the income tax then he proposed it.  He proposed a tax on natural gas extracted from shale, then he opposed it.  He was against expanding gambling to table games, then he was for it. This is not leadership. This is a comedy routine.  Who's on first, What's on second...

As to the Republicans, their pledge not to increase the broad state taxes - on income, sales and business profits - did not stop them from rummaging through the tax trunk and increasing a half-dozen "mini" taxes.

If the state had cut spending across the board by five percent and raised the income tax by five percent --from 3.07 to 3.22 percent -- the budget could have balanced and we could all move on. Taxes for a household earning $50,000 a year would have gone up about $1.44 cents a week. State departments and programs would have suffered, but suffered equally.

What did we get instead? Government destabilized for three months, a budget that hacks at fundamental state services, a raid on special funds, tax increases and a major expansion of gambling in the state. And the worst may be yet to come.

Poor Mr. Potato Head.  What a monster they have made you.

Tom Ferrick is senior editor of Metropolis

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