Sen. Bob Mensch: State Budget Redux

State Budget Redux

By Sen. Bob Mensch

On Feb. 9, Gov. Ed Rendell delivered his eighth — and final — budget, and not surprisingly the greatest applause during the speech was for his statement to have the budget finished by June 30. It's not surprising this comment would be met positively. After all, last year was painful and caused a lot of financial difficulty for Pennsylvanians.

But when I'm asked if I think the budget will be done on time this year, my response is a skeptical, "I doubt it." The newly proposed budget is, in my opinion, not affordable, not sustainable, and must be rejected by the taxpayers and the legislature — but more on that in a moment.

First, let's look at history. We have not had a budget completed on time in any of the past 7 years — but that has not always been true. To find the next most recent budget that was not completed on time, you have to go back through many administrations, to I believe, Gov. Raymond P. Shafer in the late 1960s. So past performance by this administration is not encouraging.

And when we take a closer look at last year's budget mess, you will realize that the House majority leadership (Democrat) did not even put a budget in front of the House until July 13. That's right, despite the Constitutional requirement for a balanced budget to be completed by June 30, the House majority leadership decided to ignore the Constitution and do what it wanted. More importantly, last year's budget was unaffordable, just as this year's budget is unaffordable, so there is a great probability there will be another "battle" similar to last year’s 101-day impasse.

Some residents just want us all to go along and agree, but had we last year we'd have higher taxes this year, and we'd have even worse spending that we can't afford. Please realize that February 2010 is the 24th consecutive month of negative revenue collections by our state. That's right, we haven't been able to meet our spending obligations for two solid years. Yet this year's proposed budget has a further spending increase of $1.155 billion, and it includes two very significant tax increases — a sales tax increased designed to raise $1 billion or more; and an onerous business tax strategy that will chase more jobs out of Pennsylvania.

We can't afford the increased spending. We can't afford to pay more in sales taxes. We can't afford to lose any more jobs from Pennsylvania. So when someone suggests there is disagreement about this year's budget, instead of someone asking why we can't all just agree, the question should be why must the administration insist we need to spend more than we can afford?

The sales tax proposal will hurt our seniors with new taxes on medical and pharmaceutical services. We'll all pay more for financial and legal services. We'll all pay new taxes on 74 new categories of items to be taxed — we can't afford it.

Our businesses will be further stressed for providing jobs. Pennsylvania is already the 44th lowest state in new jobs creations. But the solution offered by the administration is to "close the Delaware loophole," which is actually a tax increase.

The easier solution is just lower our corporate tax rates to be competitive with other states — we presently have the highest rate in the nation - and then our businesses won't feel the need to incorporate in Delaware. But the strategy offered in the budget is actually a tax increase so don't look for a lot of compromise on corporate net income tax.

I welcome any comments regarding these thoughts. Call me at 215-529-1215 or write me at bmensch@pasen.gov

State Sen. Bob Mensch is a Republican who represents the 24th District, which includes parts of Bucks, Lehigh, Montgomery and Northampton counties.