Economics is called the dismal science; Pennsylvania politicians seem intent on making it an even gloomier discipline.
The current budget debacle is bad enough: more than three months late, $2.2 billion in the red – and still raiding already committed funding while pursuing more borrowing, despite the commonwealth’s sinking credit rating.
If you think it's bad now, just wait until the next recession. Pennsylvania is substantially unprepared for the next downturn and would face major economic repercussions from such an event.
The legislature – led largely, but not solely by, House Republican leaders – appears unable to comprehend that recurring revenues, such as those available from an extraction tax on Marcellus Shale natural gas producers, are what is desperately needed.
A colleague boasts that he’s never voted for a tax increase in his career. At this point in Pennsylvania’s fiscal follies, that stance is costly and irresponsible. By refusing to face facts – namely, that funding needed services costs money – Pennsylvania is loading mountains of debt on our kids and grandkids.
During a recent House debate on yet another revenue scheme that relied on borrowing more money, a Republican lawmaker compared the strategy to “using a Visa card to buy groceries.”
Another Republican noted, “We’re talking about putting the next generation of Pennsylvanians in debt. It’s not good public policy. If we want our kids to have a better future we wouldn’t be having them pay our bills.”
I can’t quibble with either of them.
But all that’s just the here and now. Pennsylvania has been kicking its fiscal can down the road for years, but that road will get rougher and steeper.
When President Obama took the oath of office in 2009, the economy was 14 months into a historic meltdown. The Great Recession officially ended midway through Obama’s first year, and the economy has continued to stay in a recovery mode – albeit an uneven one – to this day.
But the economy goes up – and down.
When that downturn comes, expect a firestorm of fiscal nightmares in Pennsylvania.
According to a report from Moody's Analytics, Pennsylvania is woefully unprepared for the next economic downturn, flunking its stress test for even a moderate downturn.
“States are slowly but surely learning these lessons and have earmarked more of their fund balances as ‘rainy-day’ reserves than ever before,” according to the report.
Duh. Pennsylvania budget-makers have been donning a dunce cap. The financial affairs website 24/7 Wall Street notes that Pennsylvania has the smallest rainy day fund of any state except Arkansas: just 0.2 percent of 2017 expenditures available, which would finance state operations for about three days.
Pennsylvania can’t find the gumption now to fund vital programs responsibly. It faces a fiscal catastrophe that will dwarf the current budget debacle when revenues slump during the next downturn – and when citizens will need services the most.
It’s a ghoulish forecast fitting for Halloween. We can’t say we weren’t warned.
State Rep. Jake Wheatley is Democratic chairman of the House Finance Committee.