Rookie Governor Inflicts Pain, Suffering

Member Group : PA Manufacturers' Assn.

For all practical purposes, the General Fund budget signed in part by Governor Wolf in late December was the same one he vetoed in early July. At the time of the signing, he didn’t indulge the press to answer the most obvious question: why sign it now but not then? Surely, he could have saved a lot of people a lot of grief, and the taxpayers a lot of money. Instead of taking questions, he chastised the legislative leaders, calling the budget "garbage" and "an exercise in stupidity" and then left. The tragedy is that all this was completely unnecessary.

"We had six months of suffering and tens of millions of taxpayer dollars needlessly wasted on loan interest," said PMA President David N. Taylor "None of this was necessary. Governor Wolf gained nothing, despite his unprecedented veto of the entire General Fund budget and his vetoes of subsequent stopgap budgets. For all of our citizens who were denied critical services and for all of the taxpayers whose money was wasted, blame falls solely on Tom Wolf."

The first step to recovery is admitting you have a problem and it seems as though the Governor did just that when he partially signed the budget just two weeks ago. He remarked, "We’re now at a point where I don’t want to hold the children of PA hostage," confirming this is precisely what he’s been doing by vetoing the budget in it’s entirety in June and by vetoing subsequent stopgap spending bills.

It’s now just a month before Governor Tom Wolf’s annual budget address for fiscal year 2016-17 and Pennsylvania still lacks a complete spending plan for the current fiscal year. Future negotiations remain uncertain. Budget analysts in the House and Senate say we could end up with a supplemental budget to cover the rest of this year, or a two-year budget to cover both years. "It’s uncharted territory," one House analyst said.

One bright spot is that the complete elimination of the onerous Capital Stock and Franchise Tax occurred on January 1, 2016. No longer will Pennsylvania be one of two states to levy taxes on both earnings and assets. All that the Governor had to do was…nothing. For more on this, click here.

We were told by the governor, and a union-financed ad campaign, that the budget blame lies principally with "extremist" House Republicans. Never mind that one of the biggest reasons for collapse of the so-called framework budget was that the House Democrats bailed on a pension reform vote. The unions didn’t want it; so neither did the House Democrats.

For their part, the "extremist" lawmakers are simply representing their constituents, the same ones fed up with tax increases and government overspending, and they showed it by giving the Republicans an unprecedented majority in the House and Senate last November.

The mood in the Capitol is unlikely to improve any time soon. Besides the ads, and the personal attacks, the governor in his line-item vetoes targeted programs sponsored by Republican lawmakers – not exactly the kind of programs that could be attributed to partisan favoritism. One eliminated program provides special services for epilepsy sufferers. Others included funding for newborn screening, and lupus and sickle cell anemia treatment and research.

In all, the governor blue-lined 97 of 400 line items, reducing spending by $6 billion, far beyond the amount necessary to balance spending with revenues, the House budget analyst said.

The governor piled on by accusing the Republicans of cutting $95 million from education by including changes (changes he agreed to) to a program, PlanCon, which funds school construction costs. However, the math to achieve the answer of $95 million in "cuts" is fuzzy at best. Read more…

One Senate Republican said the mood was even worse than in July when the attack ads against the Republicans came out after the governor vetoed the budget then. "I just keep wondering how you sit down and negotiate with someone like this," the lawmaker said.

With some pressure off, given that schools and most social services are now starting to receive funding, the Republicans are likely to assume a wait-and-see attitude before taking any further action, according to political analyst G. Terry Madonna, Professor of Public Affairs and Director of the Center for Politics and Public Affairs at Franklin and Marshall College.

"Why do anything until you know what the governor will propose for next fiscal year?" Madonna said. "Then you can form a plan around that."

Madonna predicted that whatever the governor does, and it could include a renewed call for a job-crushing energy extraction tax, pension reform is unlikely to be part of his proposal.

If true, that’s the biggest insult of all. The General Fund costs behind our public pension systems — SERS for state workers, and PSERS for school district employees — are the real accelerators driving the Commonwealth’s fiscal mess, and the principal reason the big financial houses keep dropping Pennsylvania’s credit rating. The Independent Fiscal Office estimates that this year alone it will cost $2.4 billion to cover the state’s share of the pension costs, and most of that money goes to cover the unfunded liability. That’s money that could be used education and other vital services.

Senate Republican spokesperson Jennifer Kocher said that whatever happens with this year’s budget or next year’s, the caucus insists on passing meaningful pension reform. House Republicans are committed to the changes as well.

The next budget address is slated for Tuesday, February 2, 2016. Time will tell if the Governor will yet again seize budget hostages and perpetuate his callous disregard for the public state government is supposed to be serving.

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(An Op-ed piece on the Capital Stock and Franchise Tax by David Taylor)
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