Monday, May 17, 2010

Rendell Legacy: 'Pennsylvania essentially bankrupt'

A guest column by Lowman S. Henry about the mess Gov. Ed Rendell has left behind after eight years of fiscal mismanagement.

Round II: A budget battle likely to be worse than last year

By Lowman S. Henry

Be prepared for another long, hot summer in Harrisburg as Gov. Ed Rendell and lawmakers fight over a new state budget amid a fiscal situation that has gone from bad to worse.

Rendell has made it clear that he isn't going to change his drive for spending every dollar he can before leaving office. Despite the growing gap between revenue projections and actual tax collections, the governor continues to press for higher spending. And, to get what he wants, he is willing to again use the divisive tactics that last year created a 101-day budget crisis.

Already having to deal with a structural $3 billion deficit that was papered over last year by raiding one-time funds and using federal stimulus money, the state's budget picture has darkened considerably in recent weeks. First, the courts ruled the state could not use $800 million in money from the MCare fund to help balance the current fiscal year's budget. On top of that problem, April's revenue collections were off pace putting the state more than $1 billion behind projections. So, the state essentially faces a $5 billion short-fall.

And, once again, the federal government has denied the commonwealth permission to place tolls on Interstate 80. That leaves the governor without funds he had budgeted to pay for road and bridge improvement. So, convening a special session of the General Assembly to deal with the highway funding crisis, Gov. Rendell placed before legislators a menu of tax hikes and fee increases from which they could choose. He did this knowing they aren’t likely to choose any.

And, as the red ink spreads, the governor continues to propose more spending. Declaring himself to be the "lobbyist" for the state's public school children, he proposed hefty increases in education spending. In a public rebuke, Senate Republicans sent letters to the superintendents of the state's 501 school districts telling them not to expect additional funding this year.

But if Rendell doesn't get his way, well, others will suffer. He is already warning of massive lay-offs. This in an effort to scare state employees into lobbying their legislators for higher taxes, and to instill fear that essential state services will be cut.

The fact is the state is going to have to trim its workforce. Since the recession began nearly two years ago the private sector has shed jobs and become more efficient. That is why unemployment remains stubbornly high while improved earnings have lead to a run up in the stock markets. The state is going to have to do the same thing — judiciously trim jobs to improve productivity.

Rather than seeing this as an opportunity make state government more efficient, Rendell is using the need to cut the workforce as a political club. He won’t cut the unproductive jobs; rather he will cut jobs where the elimination of positions will create the greatest public outcry. Then he can fan the outcry into support for higher taxes, which is his ultimate goal.

When former Gov. Dick Thornburgh took office the state faced difficult financial times. He cut over 15,000 jobs from the state government's employment rolls. Not only did the commonwealth continue to operate, but it did so more efficiently and got more done with fewer people.

The fact is the state budget cannot be brought into balance without eliminating jobs; and changing compensation packages to reflect trends in the private sector, such as co-pays or higher co-pays for health insurance coverage. Changes will also need to be made to the state pension system.

Rather than approach this in a business-like manner, the governor is once again holding all state employees hostage to the budget crisis with his blanket predictions of massive layoffs. It is a strategy that is designed to apply maximum political pressure, not address the problem.

And so, with the General Assembly unlikely to pass any broad-based tax hikes in a highly volatile election year, another budget stand-off appears inevitable.
But Rendell doesn’t care. He hasn't passed a budget on time during his seven years in office, failing in his core constitutional duty. So what is one more delayed budget if it can add to his legacy of overspending and massive debt? When Ed Rendell leaves office next January, Pennsylvania will essentially be bankrupt. Pity the guy who gets the job next.

Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His email address is

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