Rendell leaves behind a fiscal mess

By Tony Phyrillas

Look up the word "chutzpah" in the dictionary and you’ll find a picture of Gov. Ed Rendell next to it. Chutzpah, which means "unmitigated gall, audacity or nerve," is the perfect description of Rendell, who has run up massive deficits during his two terms as governor and now is warning his fellow Pennsylvanians that we have to deal with the fiscal crisis.

In this case, "we" means you and I — the beleaguered taxpayers of Pennsylvania — not Rendell, who will leave the governor's mansion after eight years of fiscal mismanagement to collect a huge taxpayer pension as his reward for screwing up the state’s finances.

It was classic Ed Rendell Tuesday as the governor delivered his eighth — and thank God, his final — budget to the Pennsylvania Legislature. Having run out of things to tax, Rendell proposed expanding the state sales tax to cover more items. Rendell and his lockstep Democrats in the Legislature have repeatedly opposed expansion of the sales tax to cover services when it was attached to a plan to eliminate property taxes. That's what Republican state Rep. Sam Rohrer has been pushing for years.

But now that Rendell has run out of opportunities to raise other taxes, he needs the expanded sales tax to fund his proposed $29 billion spending plan — and pay for years of deficit spending.

Despite running up huge deficits in the past two budgets, Rendell wants to increase state spending by another $1.1 billion for the 2010-11 fiscal year, which begins July 1. The first rule of holes is when you're in one, stop digging. Rendell plans to dig so deep that the next governor will never get out from the fiscal abyss "Fast Eddie" has created.

Rendell wants to pay for the new spending by using $1.1 billion in federal stimulus funds, which may or may not be approved by Congress. (Just imagine what will happen to "stimulus" handouts when Republicans take back control of Congress in November.)

And Rendell is leaving with a final "up yours" to the taxpayers of Pennsylvania. Having presided over a massive expansion of state spending over the past eight years — $9 billion and counting — Rendell warned lawmakers that Pennsylvania is facing a "fiscal tsunami" — a potential $5.6 billion deficit from the 2011 expiration of federal stimulus money and the ticking time bomb of public pension obligations.

For eight years, Rendell has ignored the growing pension crisis, which will result in massive property tax increases for Pennsylvania residents in 2012. That wallop will come after the 2011 deregulation of electricity rates, which will raise most residential bills by at least 30 percent.

You can't spend what you don't have, but Rendell and most legislators flunked Economics 101. Rendell, with the Legislature in tow, has been spending money the state doesn't have for years. The chickens will come home to roost. Unfortunately for Pennsylvania taxpayers, Rendell will have flown the coop.

Rendell wants to reduce the state sales tax rate from 6 percent to 4 percent, but expand it to more than 70 services currently exempt (lawyer and accountant fees, dry cleaning, for example) and items such as firewood, candy, gum, bottled water, magazines and personal hygiene products. (Groceries, clothing and prescription drugs would remain exempt from the sales tax under Rendell's plan).

Rep. Rohrer has proposed a similar plan, but it would lead to the elimination of the state's onerous school property taxes. Most taxpayers, especially senior citizens on fixed incomes, would come out ahead under Rohrer's plan. Rendell simply wants more money from taxpayers to cover his deficit spending.

The state finished with a $3.25 billion deficit for the 2008-09 fiscal year, which led to a 101-day budget impasse over Rendell's 2009-10 spending plan. And what did Rendell and the most expensive legislature in the country come up with for the current fiscal year? A budget that was in the red from Day 1. The state is looking at a minimum $500 million deficit for the 2009-10 fiscal year.

In addition to expanding the sales tax, Rendell wants to extend the tobacco tax to include cigars and smokeless tobacco products and enact a new severance tax on natural gas extraction. Both proposals were rejected by the Legislature last year.

Will any of these taxes pass? Rendell is prohibited by the state constitution from seeking a third term as governor. He's a lame duck. He can propose all the tax hikes he wants, but the Legislature will have the final say. All 203 members of the state House and half of the 50 members in the state Senate face the voters in 2010. How many of them are going to vote for one of the largest tax increases in Pennsylvania history?

Pennsylvania voters are already in a foul mood. A recent Franklin & Marshall College poll found only 16 percent of registered voters say the Legislature is doing a good job. How much lower will that number go if the Legislature goes along with Rendell's tax hikes? How many lawmakers will sacrifice their careers for Ed Rendell?