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Study says Pa. is in tough financial shape

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Sunday, Jan. 19, 2014, 9:30 p.m.
 

HARRISBURG — Pennsylvania state government's financial health is the 42nd worst among states, according to a George Mason University study that analysts predict will become political fodder in the governor's race.

The study released last week by the Mercatus Center at George Mason said, “States with the worst fiscal condition have had years of poor financial management.”

The study defined fiscal condition by considering “liquidity, budgetary balance, reliance on debt to finance current and long-term expenditures, and ability to pay for essential services.”

Republican Gov. Tom Corbett is seeking re-election based on a record as a strong fiscal manager who helped form a climate to add or retain 200,000 jobs, his campaign says. Corbett balanced the budget and kept spending under control for three years with “strong fiscal stewardship,” said his campaign manager, Michael Barley.

Corbett delivers his 2014-15 budget proposal to the General Assembly on Feb. 4, a document based on a projected $1.2 billion to $1.4 billion deficit.

His opponents “absolutely” will use the study to try to undercut Corbett's image, said G. Terry Madonna, a political science professor at Franklin & Marshall College in Lancaster.

It has the potential to “hurt him,” said Moe Coleman, director emeritus of the Institute of Politics at the University of Pittsburgh.

Eight Democrats are vying to win a May primary and take on Corbett in November. He could face a primary opponent.

“Despite Tom Corbett's claims that he is fiscally responsible, this study illustrates his inability to lead Pennsylvania into a stable, 21st-century economy,” state Democratic Party Chairman Jim Burn of Millvale said.

But Jay Pagni, Corbett's press secretary, said the administration inherited a $4.2 billion deficit from former Democratic Gov. Ed Rendell in January 2011.

“The study underscores the fiscal challenges the commonwealth continues to face,” Pagni said.

Corbett worked to reduce the state's debt, downsize government, and make state government efficient without increasing taxes, Pagni said.

The Democratic candidates for governor would raise taxes, Barley said.

Corbett proposed long-term solutions to resolve a $47 billion pension liability, but the legislature has not approved them, Barley said.

Pension reform is under consideration now, legislative leaders say. Pension obligations are one of the issues the study considered.

The broader reasons for poor fiscal conditions are rooted in a hangover from the Great Recession, the study said.

“States continue to face the repercussions of this recent economic downturn,” it noted.

The study, using 2012 data, said multiple sources reviewing state finances point to continued difficulties ahead.

“State tax revenues are still recovering from the recession, tax systems are not structured to collect on services or e-commerce, and there are projected reductions in federal spending on state priorities such as education and infrastructure,” it said.

The top five states, including Alaska and South and North Dakota, have surpluses, according to the study.

Brad Bumsted is Trib Total Media's state Capitol reporter. Reach him at 717-787-1405 or bbumsted@tribweb.com.

 

 

 
 


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