Every once in a while an old idea becomes new again. It seems our never-ending quest for things new and original occasionally gives way to a desire for something old and familiar. In clothing for example, the hottest trend is to pay excessive amounts of money for retro T-shirts and sports jerseys. Sales of Chuck Taylor canvas all-star sneakers have skyrocketed. The old has become new again.
So it is with state government that the idea of returning to the old two-year budget cycle is experiencing somewhat of a renaissance. The two-year budget cycle was abandoned in the late 1950s in favor of the current one-year fiscal cycle to allow the commonwealth to more quickly adapt to changing financial tides.
The one-year fiscal cycle worked reasonably well for several decades. That is until about eight years ago. Former Governor Ed Rendell and the General Assembly failed for eight straight years to pass a budget on time. The complex nature of the state budget, coupled with a contentious political climate made it impossible for the spending plan to be crafted in a timely manner.
Another problem with the one-year budget cycle is that it gives spending interests an almost constant opportunity to exert pressure on legislators. Especially with budgets routinely taking until late July or early August – once even until October – to complete, there is virtually no time in which work isn’t being conducted on a new budget. That means constant opportunity for those seeking more money. The result has been skyrocketing state spending, a $5 billion dollar deficit, billions in unmet infrastructure and pension obligations, along with fiscal chaos in the ranks of state employees, nonprofits and others dependent upon state cash flow.
The unique way the Pennsylvania legislature does business also nurtures gridlock. Real negotiating and real decisions are made by a handful of legislative leaders. The only influence most members of the General Assembly have in the budget process comes in fleeting comments during caucus meetings. With so few players involved the ability to form a budget-passing coalition is limited.
Governor Tom Corbett entered office an advocate of returning to the two-year budget cycle. His support for the concept means it will get serious consideration. Having pledged not to raise taxes, the Corbett Administration is faced with slicing billions in state spending. Howls of protest from the spending interests will reverberate across the Capitol when his budget is unveiled in March. Given the coming contentiousness, the new governor and many legislators may be even more inclined to abandon having to go through the process each year.
In the highly charged partisan atmosphere of Pennsylvania’s state capitol a two-year budget cycle is starting to make sense. If budgets are passed at the beginning of each two-year legislative session that would free legislators to focus more on long-term issues and planning. Perhaps we might even find we don’t need two-year legislative sessions.
From a financial standpoint, it would provide some stability for both taxpayers and tax-funded organizations to have some predictability in state taxation and spending. School districts, for example, would know the level of state subsidies far in advance of approving their own budgets and could make local spending decisions accordingly. Businesses would know what their tax obligations will be, and be better able to plan for expansion and job creation.
Like those retro jerseys and sneakers, two-year budget cycles may be something that was better than the new and improved version. It too may be ready for a come-back.
(Lowman Henry is Chairman & CEO of the Lincoln Institute of Public Opinion Research, Inc., a Harrisburg-based non-profit, educational foundation and host of Lincoln Radio Journal. His e-mail address is [email protected]).
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