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Breaking down the budget: The political path to Pa.’s structural deficit

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Pennsylvania state lawmakers have made no secret of the fact that next fiscal year’s state budget, which is due Friday, will be a hard one to enact.

The commonwealth is contending with a roughly $3 billion structural deficit, and its reserves are tapped out. It’s also facing skyrocketing pension and human services costs, and for the last year, it’s been relying on a line of credit from the Pennsylvania Treasury to pay off immediate expenses.

So how did we get here?

Many of these fiscal issues can be traced back to the 2008 housing market crash.

The governor at the time was Ed Rendell, a two-term Philadelphia Democrat. In his first budget address during the Great Recession, in February 2009, Rendell acknowledged the gravity of the situation.

“The FY 2009-2010 budget,” he told the General Assembly, “presents challenges the likes of which Pennsylvania and the nation have not seen since the Great Depression.”

Those challenges lived up to expectations.

The 2009-10 spending plan ultimately wasn’t passed until October. It was 101 days over deadline, making Pennsylvania the last state to pass a budget that year.

If you ask Rendell about that period now, he more or less brushes it off.

“They were all tough budgets,” he said.

But financial analysts like Mark Ryan, with the state Independent Fiscal Office, insist that those years were particularly bad and that they left a thorny legacy.

“So many of our current problems at least originated in that time-period,” Ryan said.

Muhlenberg College political analyst Chris Borick noted that those woes weren’t just financial. They cut to the core of what it means to govern.

“It is more adversarial than in the past,” Borick said of state politics today. “Those working relationships within the legislature across party lines are different than they were even a decade ago.”

When Rendell and a split-party legislature finally passed the 2009 spending plan, it leaned heavily on $2.6 billion in federal stimulus money — as did most states that year.

It also drained the commonwealth’s $750 million rainy day fund and moved around various other cash pools to plug gaps. The plan cut spending by about $400 million, but raised state money for education by $300 million — something Rendell recalls with pride.

The budget was technically balanced.

But looking back at the fiscal plans passed under Rendell after the crash and then under his successor, Republican Tom Corbett, Ryan said, one constant stands out.

“Generally, policymakers have used temporary measures, such as existing fund balances and short-term expenditure deferrals, to address ongoing budget shortfalls,” he said. “However, a long-term imbalance is largely unaffected by temporary measures.”

Read the rest of this story at NewsWorks

 

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