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Lowman Henry: Pa. has budget, but problems remain

| Monday, Nov. 6, 2017, 9:00 p.m.

It was perhaps the strangest budget season in Penn's Wood since King Charles II granted William Penn a charter to establish a colony in the New World. The end came relatively quietly, with the General Assembly passing a variety of gimmicks aimed at plugging a $2.2 billion budget hole of its own making.

The only good thing that can be said about the 2017-18 budget process is that it didn't take until April of next year to resolve. Recall that in Gov. Tom Wolf's first year in office, it took that long for the budget — due by July 1 of the previous year — to be enacted.

The same dynamics that resulted in that historically long budget battle were at play this year: a governor who never met a tax he didn't want to hike and a Republican-controlled House that fought to the end to block tax increases. Add in a Republican Senate majority that acts more like tax-and-spend Democrats than Republicans and the formula for gridlock is complete.

Candidates for public office often pledge to “run government like a business” or at least abide by sound business principles. That certainly did not happen this year.

Such is the collective opinion of the business owners and chief executive officers who participated in the fall 2017 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research. A lopsided 91 percent of the owners/CEOs surveyed said they are unsatisfied with state government's budget process.

Fueling that negative perception, perhaps even more than the inability of the governor and Legislature to get the budget done on time, is the manner in which this year's budget process played out. It had one unique feature: The spending plan was adopted with no revenue component in place. That cast in stone the spending number and forced the conversation away from cutting spending, thus placing the entire focus on how to come up with enough revenue to fund the budget.

And so it was that from the beginning of July until the end of October, lawmakers and the governor battled over how to fund the revenue gap.

House Republicans produced the only truly innovative approach to raising revenue. They dug through the state's finances and came up with hundreds of millions of dollars left unused by various agencies. The final revenue plan included using some $300 million in such revenue.

One reason for this year's large budget deficit was dependence the past two years on revenue from sources not currently in existence. That revenue, especially from gaming expansion, never materialized. No lesson was learned from that experience. Lawmakers voted to expand gambling by legalizing slots in a variety of public venues and authorizing the establishment of mini-casinos. None of those currently exist, but revenue from such sources is booked to help fund this year's budget.

The legacy of this messy budget season will not only be making Pennsylvania's finances even more precarious, but setting up what could be a politically volatile budget fight next spring. The governor, half of the Senate and all of the House are up for election in 2018. Nothing was done this year to address Pennsylvania's spending problem, and the funding component is just smoke and mirrors. When the smoke clears, the budget problems will remain — and voters will be watching.

Lowman Henry is chairman and CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.

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