PBPC Op-ed: Rendell's Budget Looks Ahead to Fiscal Challenges

Sharon Ward: Rendell's budget looks ahead to fiscal challenges

Allentown Morning Call

The recession continues to take a toll on Pennsylvania, and nowhere is this more evident than in the austere budget proposed by Gov. Rendell.

Pennsylvania starts its budget deliberation, like 40 other states, with a recession-driven shortfall. This comes on top of $500 million in cuts last October that slashed resources for libraries, job training, people with disabilities and low-income seniors, among hundreds of other items.

Once again, there is not a lot to celebrate in the proposed budget. Additional cuts will impact children's programs, agricultural funding, state parks, behavioral health services, job training and libraries.

Still, given continuing economic uncertainty, the governor has proposed a responsible budget that looks ahead to the state's fiscal challenges. He laid out an ambitious plan to address two challenges in particular -- the end of federal recovery funds and an increase in state pension contributions. Now lawmakers must decide whether to engage with the governor on his proposals or leave the hard decisions for another day.

General fund spending would increase modestly to meet mandated costs for health care and prisons and to maintain investments in education. These three items comprise more than 80 percent of the total general fund budget. Most of the overall increase is unavoidable.

Health care spending is important for another reason. It keeps tens of thousands of people working in hospitals, nursing homes and clinics statewide. Cutting health care would only add to unemployment and threaten the fragile recovery.

The governor has proposed to continue a new education funding formula that allows school districts to maintain evidence-based reforms that improved student outcomes measurably over the past four years.

To prevent further cuts and to create a reserve to replace federal stimulus funds, he proposed a variety of revenue changes, including, once again, a tax on natural gas extracted from the Marcellus Shale. Contrary to industry protests, this tax will not slow development of gas reserves, but it will ensure development is done responsibly.

The governor also proposes to add a tax on smokeless tobacco, which 49 states already have. This will deter children from picking up this habit, reduce health care costs and save lives.

The governor proposes to close corporate tax loopholes and reduce the corporate tax rate. The proposed budget would modernize the sales tax to reflect growth of the service economy, while reducing the rate from 6 percent to 4 percent. By eliminating questionable exemptions, this plan would also prevent cuts in education, health care and services for vulnerable Pennsylvanians when federal recovery funds run out.

Some lawmakers will say the budget spends too much. But those same lawmakers promised that last year's budget could be balanced by cutting waste and wouldn't hurt anyone. They broke that promise, instead reducing tiny monthly payments that seniors and disabled Pennsylvanians rely upon to buy food and medicine, and increasing health insurance premiums by 80 percent for people who pay for adultBasic.

The General Assembly should consider the governor's proposal and adopt a balanced approach to a budget constructed in the worst of times, find savings where it can, raise revenue and preserve services. Then we'll have something to celebrate on July 4th.

Sharon Ward is director of the Pennsylvania Budget and Policy Center in Harrisburg.