State Money is Limited

Member Group : Lincoln Institute

Mark Twain, a true libertarian and a committed realist with a cynic’s wit, once noted "Facts are stubborn, but statistics are more pliable." No where is this more evident than the ongoing budget battle in Harrisburg.

First, the facts. For the past two years under Governor Rendell we were able to spend far more money than we had, thanks to a Federal Stimulus package that did little more than stimulate the deficit. Depending on how you count it all up, it allowed us to over spend revenues by about $4 Billion dollars – roughly 15% of the total budget.

Unfortunately – and this is also a fact – the heady days of stimulus dollars are over. So, barring a massive tax increase, Governor Corbett and the Republicans in the House and the Senate had one choice: slash spending.

This is not political posturing; it is a cold, hard fact. There is simply no way to grow revenues by 15% this year – not with a Marcellus tax, an income tax, a sales tax, or a property tax. And even if we managed to find another billion dollars, we would still need to cut the budget by over 10% this year alone.

Faced with this stark reality, Governor Corbett did the responsible thing – he proposed a budget that lived within our means. Granted, there are legitimate issues of debate over how he allocated those funds, but this one issue is settled given the political realities of the moment – Pennsylvania will have a budget that lives with in its revenues – and that means a limit of $27.3 Billion dollars.

Once this central fact was established, and once the Governor made clear he would not sign a budget that exceeded $27.3 billion dollars, the various vested interests started to make their case. The first segment to gather its troops was higher education – a segment that took a huge hit in the Governor’s proposed budget. There were the usual lines of attack – all valid on some level but totally oblivious to the larger fiscal realities facing the Commonwealth.

Significantly, the education industry failed to do one critical thing – they failed to offer the place to either generate the new revenue or to identify what we should cut instead. Essentially they argued for the value of what they do in a vacuum, as if there existed an infinite supply of money somewhere to pay for anything of public value. As our revenue and economic numbers demonstrate, this is simply not the case.

And that is a crucial reality we all need to deal with: when there is not enough money in the public coffers we have to make choices – tough choices. NO ONE wants to cut education funding simply for the sake of cutting it; the fact is we don’t have enough money and higher education is simply a lot more discretionary than, for example, medical assistance.

So, while the fact that education is to be valued is a given, the method by which we pay for that value – and whether we get the results we want for our money – is a political question that must be resolved with the larger budget context. And that is where statistics about economic impact and brain drain lose their relevance – when stacked against the mountain of priorities that have to fit within a $27.3 Billion dollar budget. Quite simply, if we want more money for education, you have to cut money from somewhere else – regardless of statistics.

Which is exactly what the House proposed last week. In the budget the House passed – along partisan lines – the education cuts were softened significantly. However, limited by the fact of the $27.3 Billion dollar budget limit, the House had to cut something to fund education. They did – Public Welfare.

Shortly after the House budget passed, the protests started. The claims about hurting our most vulnerable citizens echoed throughout the capital. Again, there is some validity to these complaints but they too ignore this simple reality:

Responsible government budgets are a zero sum game – they have a set amount of money to spend and what they can’t afford they have to cut. It is really that simple – the only question within that game is priorities.

So, if you want to advocate for more money for higher education, then make your best argument for it. But standing next to you will be AARP asking for more money for senior issues. And next to them will be alternative energy and growing greener projects claiming that they are an investment in the future. And behind them all will be capital budget projects like hospital expansions and training centers. Shushing us all will be the libraries. These interests – and hundreds more – will push and prod the legislature to protect "their money. "

The fact is there are a lot of interests in the state budget, and as Twain noted they all are armed with mountains of pliable statistics. The political process requires they make their case.

However, in the end, fiscal reality requires they all accept one fact that governs it all – all of their wants and needs have to fit within a budget that spends no more than $27.3 billion dollars. That is what we have and that is what a responsible government does – even when doing so means cutting things we value and want, but simply can no longer afford.

I’m Scott Paterno, and that is the uncomfortable truth.