Round II: Another Budget Battle Lies Ahead

Governor Tom Corbett and Republicans in the state legislature have spent the last six months patting themselves on the back for fulfilling their main constitutional duty of passing a state budget on time. It was a significant achievement, more so because it held the line on taxes. But that victory was fleeting because yet another budget battle is getting underway.

The problem is despite large Republican majorities in both chambers of the General Assembly and the coming to power of a Republican governor the budget victory has not been followed up by the enactment of structural changes to address the cost drivers in the state budget. Major funding issues, such as the state’s ongoing need for investment in roads and bridges, remain untouched.

State Budget Secretary Charles Zogby signaled the start of the 2012 budget battle in late December by reporting that revenue collections are coming in below estimates and that budget makers will once again face a deficit.
Spending interests decried Zogby’s report as a tactic, but the fact is the ongoing national recession coupled with Pennsylvania’s generally inhospitable business climate have depressed economic activity resulting in less income and earnings to be taxed.

Also contributing to budgetary pressures is the Corbett’s administration’s failure to address labor costs. A number of union contracts expired last year and, generally speaking, the new agreements lacked significant cost-saving concessions. It was a missed opportunity to bring labor costs under control that will have a lasting impact for years to come.

Legislatively, unions survived the first year of Republican domination of state government largely unscathed. Even minimal reform, such as increasing the ceiling for prevailing wage laws to kick in on public works projects, have yet to advance through the legislative process. Issues such as ending government collection of union dues and passage of Right-to-Work legislation have not seen the light of day.

Structural reforms to education, such as school choice, ran aground in the legislature. Privatization of the state’s liquor store monopoly is stalled. Calls for passage of a severance tax on Marcellus Shale gas continue to echo around the halls of the capitol, creating uncertainty in the state’s biggest growth industry. A year into the governor’s term, no plan for eliminating waste and cutting the state’s out-of-control welfare system has emerged.

And now the bad news: this is an election year. Every seat in the state House of Representatives and half of the state Senate will be on the ballot in the upcoming April primary. The official start of the election process, gathering signatures to get on the ballot, begins in just a couple of weeks. Typically most major legislative accomplishments occur in non-election years because incumbents shy away from casting controversial votes in the midst of their re-election campaigns. Thus expectations for progress this year are low.

Those who thought large Republican majorities in the legislature would result in a more fruitful session are disappointed. But, the lack of output by the General Assembly reveals an inconvenient truth: Republican control does not equate to conservative policies. There continues to exist within both the House and the Senate – particularly in the Senate – a small, but pivotal number of Republicans who are beholden to labor unions and whose goal it is to prevent enactment of the conservative policy agenda espoused by the governor.

In short, the GOP is a dysfunctional family. Governor Corbett and the state House leadership tilt conservative, but the Senate leadership is under labor union sway. Thus the three power centers cannot agree on an agenda, resulting in gridlock. Given that most state policies currently in place are not to the liking of conservatives, gridlock is a bad state of affairs.

With another budget battle getting underway against the backdrop of election pressures look for little to get accomplished in 2012. In fact, holding the line on taxes and getting another budget passed on time will be a Herculean task. Simply holding on to 2011’s meager gains may be all that is possible in the upcoming year. On the positive side voters have before them the opportunity to elect to office senators and representatives who will pursue more taxpayer friendly policies. The key to future progress is an educated and involved electorate in this important election year.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected].)

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