Governor's 2017-18 Budget Overview

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Executive Summary

Last year at our budget summit, we said that Pennsylvania is at a crossroads and that there are two paths forward. We are still there. Pennsylvanians—and their government—are divided about which of two paths they believe our state government should follow.

One view is that the public sector—both the work of government and the work of non-profits that rely on state government funding—is essential to creating broadly shared prosperity in Pennsylvania. The other view downplays the positive role of government and public investments, and sees the taxes that pay for them as an impediment to economic growth. 

The voters of Pennsylvania have elected a Democratic Governor, who tends to favor the first view of political and economic life, and a Republican-dominated General Assembly, whose leaders have tended toward increasingly extreme versions of the second view. Voters, in other words, have not chosen between these two visions of government; instead, they have set up a conflict between them, one that, together with the large structural deficit the state faces, could lead this year to another long budget impasse. [1]

These political circumstances clearly have shaped the budget Governor Wolf presented this year. While his name is on the budget book, his budget reflects both the necessity of eliminating the structural deficit and the political divisions in Harrisburg.

In response to these circumstances, the Governor has proposed a different kind of budget. At its center is a plan to close a $3 billion structural deficit in part through an ambitious and mostly well-designed, and plausible $2 billion program to reform and restructure government operations and in part through $1 billion in new revenues that mostly come from corporations and the business community, not working people and the middle class.

The necessity of closing a large deficit at a time when the General Assembly is likely to chaff at enacting $1 billion in new taxes means that the Governor has presented an austere budget that calls for little new spending beyond what is necessary to meet mandatory increases. The only exceptions are in critical areas—Pre-K and K-12 education and human services—where the Governor continues to meet his commitment to seek new funding. 

From our perspective, the Governor’s budget invests too little in public goods and asks the wealthiest citizens and corporations to contribute too little to our commonwealth. 

But we understand the political circumstances that limit the Governor’s choices. And we hope that his plan to restructure and reform government, and to close the deficit without burdening working people and the middle class with new taxes, can help convince our fellow citizens to embrace a more active vision of government in the future.

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[1] Gerrymandering of legislative districts enhances this conflict both because it helps Republicans win more seats and because it creates legislative districts that are overwhelmingly dominated by one party or another. When representatives and senators fear defeat by those to their left or right in a primary more than they fear defeat in a general election, they become more inclined to represent the extremes of their own party than voters who stand in the middle in their constituencies.