Pennsylvania’s Budget Impasse

POSTED BY MARTIN KICH

All state budget impasses do not have the same causes, but, at the risk of oversimplification, there are basically two main categories of causes. The first is fiscal irresponsibility that involves overspending on special-interest projects and underfunding of major continuing costs. The second is fiscal irresponsibility that places such a priority on tax reductions that deficits are allowed to balloon despite massive and very consequential reductions in spending on just about everything.

In both cases, the fundamental issues are often masked in flush economic times but become suddenly catastrophic during economic downturns. In both cases, governors become all too adept at moving money around like a compulsive gambler trying to keep a half-dozen loansharks at bay. But once the crisis occurs, those governors usually walk away on two good legs, while the taxpayers in their states get kneecapped by both long-overdue increased taxation and a continuing, if slowed deterioration in public infrastructure and services.

Illinois seems an almost singularly extreme example of the first category, though the Far Right keeps trying to make it into an emblematic example. Brownback’s Kansas and Jindal’s Louisiana are very clearly examples of the second category. From the outside, Pennsylvania seems more to belong in the second category.

Reuters reports that the budget impasse in Pennsylvania may result in some $860 million worth of bills going unpaid. Here are the highlights of the situation:

The state legislature passed a $32.5 billion spending plan on June 30, the end of the fiscal year and the deadline for the current year’s budget.

But it failed to agree on a revenue package to pay for those expenses, and the state has been borrowing money from its own short-term investment pool.

Treasurer Joe Torsella has said he will not issue more such loans and that the state’s general fund will likely run down to zero on Friday.

Not surprisingly, Pennsylvania’s funding crisis has only been exacerbated by a political dispute over whether the state’s budget gap should be filled with extra taxes and/or expense cuts.

On Wednesday night the state House of Representatives narrowly approved a revenue package, but the Senate appeared likely to reject it unless a compromise can be reached over the weekend. . . .

The Senate had passed its own plan in July, proposing to close a $2.3 billion budget gap with borrowing and two new taxes: a first-ever severance tax on natural gas and a gross receipts tax on consumer utility bills.

But tax-averse Republicans in the House balked and did not pass their own bill until Wednesday night. It proposes no new taxes but would raise about $1 billion by selling a portion of the funding stream from the 1998 tobacco settlement, in which tobacco companies agreed to pay U.S. states for tobacco-related healthcare costs.

Former Pennsylvania Governor Tom Corbett’s relations with the fracking industry in Pennsylvania are very reminiscent of Jindal’s efforts on behalf of the oil and gas industries in Louisiana, except that while Jindal’s reckless reduction of taxes on the industries dramatically constricted his state’s major source of revenue, Corbett’s hands-off treatment of the fracking industry constricted a major new source of revenue that might have offset the shrinkage in other sources, while also reducing the long-term environmental liabilities related to the industry’s rapid expansion and its very secretive technologies. If any states should be aware of the long-term environmental liabilities related to mineral extraction, they should be the Appalachian states, including Pennsylvania, that were once the nation’s major coal producers.

But the following paragraphs from the Wikipedia article on Corbett demonstrate where his interests were concentrated:

Corbett maintained that Pennsylvania should not institute a natural gas extraction tax, due to its already high corporate net income tax. In February 2011, Corbett repealed a four-month-old policy regulating natural gas drilling (including hydraulic fracturing) in park land, deeming it “unnecessary and redundant” according to a spokesperson. The Pennsylvania Democratic Party called the repeal a “payoff” to oil and gas interests which donated a million dollars to Corbett’s campaign. According to Corbett, “had they not given me a dime, I would still be in this position, saying we need to grow jobs in Pennsylvania.”

 On February 17, 2012, Corbett signed The Marcellus Shale Law (House Bill 1950). The law subjected natural gas drillers to an impact fee to offset any environmental or community impacts of drilling. In 2012, the law generated over $200 million for Pennsylvania municipalities, twice the estimated amount of an extraction tax. The law also changed the zoning laws applicable to Marcellus Shale well drilling, more commonly known as hydraulic fracturing. Some provisions are that all municipalities must allow Marcellus Shale well drilling in all zoning districts, including residential and municipalities may not limit hours of operation. Water and wastewater pits must also be allowed in all zoning districts, including residential. Compressor stations must be allowed in industrial and agricultural zoning districts and towns may not limit hours of operation. Gas processing plants are allowed in industrial zoning districts and hours of operation cannot be limited. Gas pipelines must be allowed in all zoning districts, including residential. The law helped gain access to land for new pipelines, one of which transports natural gas from Pennsylvania to export terminals in Maryland, from which it will be shipped to Europe and Asia. Others contend that the pipeline’s purpose is to transport the gas to Maryland and D.C. markets. There were concerns that exporting natural gas will result in more jobs going overseas, leading to increased unemployment in Pennsylvania and other states as gas prices rise globally.

The Marcellus Shale Law (House Bill 1950) also contained a provision that allows doctors in Pennsylvania access to the list of chemicals in hydraulic fracturing fluid in emergency situations only, but forbids them from discussing this information with their patients. The information can only be used for emergency medical treatment, and the doctor must immediately verbally agree to keep the information confidential and later sign a document to that effect. The bill also reduced the legal responsibility of vendors, service providers, and operators regarding the identity and impact of contents of the hydraulic fracturing fluid they use.

Once again, the political ideology that bemoans top-down government and the loss of states’ rights to federal power demonstrates the same disregard for the wishes of individual communities and the processes of local governance. Likewise, only an ideologue would see a difference in a government mandate that projects governmental power and one that projects and protects.corporate power. In both cases, individual rights are being sacrificed to other interests at the most fundamental level. And, although I am certain that there is some linkage between types of government overreach and increased morbidity, I am equally certain that, in most instances, the linkage between corporate excess and increased morbidity is much more direct and definitive.

The difficulty with talking about budgets, statewide and otherwise, is that the discussion seldom moves beyond ideological talking points. One of the most prominent of those on the Far Right is the desire to get government out of our lives. But it turns out that it is never a choice between government and nothing else. There is always something else, and the discussion should be focused on how what is filling the vacuum compares to and contrasts with government. And in such an analysis, government is starting to look better than it has in a long time, as long as those doing the governing are not anti-government. One does not hear a lot of good news about the promised efficiencies and savings to taxpayers being achieved by privatized prisons. Nor does one hear a lot about the unprecedented academic performance of students enrolled in corporate charter schools. (In Ohio, more than three-quarters of such schools are performing as poorly as the lowest-performing public schools, and the public schools don’t have the luxury of expelling high percentages of the most challenging students.)

There is still much truth in the truism that all politics may be local, but there are patterns that inevitably emerge beyond the local level and that help us to clarify what is credible from what is just so much gas.

 

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  1. Pingback: Pennsylvania’s Budget Impasse | Ohio Politics

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