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Pennsylvania lacks budget surplus, misses trend

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Wednesday, Feb. 5, 2014, 11:33 p.m.

HARRISBURG — Republican Gov. Tom Corbett touts strong fiscal stewardship in his re-election campaign but is trying to balance a budget with a deficit of $1 billion-plus while many other states have surpluses.

States large and small are starting to show surpluses — $4.2 billion in California, $2 billion in New York, $791 million in Michigan and nearly $1 billion in Wisconsin, according to published reports. Lawmakers in states with excess money are debating whether to save it, spend more or return some to taxpayers.

Brian Signitz, director of state fiscal studies for the National Association of State Budget Officers, said most states' revenue exceeded projections in 2012-13. The trend appears to be continuing, though the 2013-14 fiscal year might not be as robust.

Comparing states' finances can be like comparing apples and oranges, said Arturo Perez, a budget expert with the National Conference of State Legislatures. A number of variables affect each state's finances, including taxes and industries.

“Surpluses are a very tricky term,” Perez said. Most states are experiencing slow growth and recovery from the recession, he said.

Corbett's 2014-15 budget anticipates closing the deficit and spending an additional $925 million without raising taxes. His critics say the administration patched it together with one-time revenue and sources of funding outside Corbett's control, such as federal approval of his Medicaid plan to buy private insurance for the poor.

The deficit is a shortfall from the current budget to the proposed budget for 2015.

Asked why Pennsylvania doesn't have a surplus, Budget Director Charles Zogby didn't hesitate: “I don't know that we missed the trend. Because of the prior administration, the governor came into office well behind the starting line.”

Corbett took office in 2011 with a $4.2 billion deficit from Democratic Gov. Ed Rendell's eight-year tenure, Zogby said. Rendell pumped federal stimulus money into education and other programs knowing it would dry up, he said.

“They not only cleaned out the cupboards bare, they took the cupboards too,” Zogby said.

Rendell responded with a statement through his Philadelphia office that Corbett's first proposed budget “showed that $1 billion in funds were carried over from (the) last year of the Rendell administration. That's a far cry from leaving the cupboards bare. The data show that even once the stimulus funds expired in 2011, state revenues rebounded to nearly prerecession levels and were nearly $1.5 billion higher than the last full year of my administration.”

Rendell said that enabled Corbett “to make the decision to cut state business taxes by nearly a half-billion dollars ... in his first year.”

Analysts say Corbett is open to criticism about a deficit in his fourth year because he campaigned as a fiscal conservative who would bring solid management to state government.

“It's the worst of both worlds,” said Jack Treadway, a retired political science professor from Kutztown University. Opponents can hammer Corbett for severe budget cuts in 2011 and 2012, and hit him about having a deficit, Treadway said.

“Tom Corbett likes to pretend that he is fiscally responsible, but the truth is Pennsylvania is facing a budget deficit of up to $1.4 billion,” said Marc Eisenstein, spokesman for the Pennsylvania Democratic Party. “While both Democratic and Republican governors across the country have turned deficits into surpluses, Tom Corbett, a self-proclaimed ‘fiscal conservative,' has consistently mismanaged Pennsylvania's budget.”

Mike Barley, Corbett's campaign manager, said the governor “refuses to raise taxes on hardworking families.”

Treadway said he could not conclude Corbett mismanaged state government.

Corbett's no-tax pledge when he took office has limited General Fund revenue growth, said Christopher Borick, a political science professor at Muhlenberg College in Allentown.

“We are striking in terms of our difference with a majority of states in much better fiscal condition,” Borick said. “Pennsylvania's growth rate is much slower than other states. We're at the bottom of the economic barrel.”

Brad Bumsted is Trib Total Media's state Capitol reporter.

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