After seven years of watching the Wolf administration turn what should be an accounting task into a public spectacle, I’d like to suggest a change in how Pennsylvania puts together a budget.
Let’s make it a two-year document — again.
Nineteen states currently pass two-year budgets, with 15 of them meeting annually to review and adjust their books according to revenue shifts. At one time, 44 of the states had two-year budgeting procedures, which fell by the wayside as the postwar economy expanded and revenue projections became volatile.
So, why would Pennsylvania benefit from returning to a system it abandoned in 1959? The argument at the time was greater oversight and ability to adapt to shifting fiscal winds. That, of course, was before the process devolved into a tug-of-war between the governor and the leaders of the general assembly.
Right now, the budget starts with a fantasy document by a governor who lays out a wish list, then dissolves in the caustic reaches of partisan politics in the House and Senate where something vastly different often emerges. The rancor runs so deep that an on-time budget, passed by June 30, is rarer than leap years.
Generally, the final document is assembled by a closed circle of leaders and presented to members who might have a few hours, at most, to read a massive book accounting for nearly $40 billion in spending. To say that not everybody has a firm grasp on what they’re passing is being kind.
It is not unusual for legislators to learn the full details of the budget in news reports after it has been passed.
It’s also how one of the most notorious switcheroos in the state’s fiscal history was pulled. Coming out of the record recession of 2008-10, Democratic legislators, acting at the behest of then-Gov. Ed Rendell, pulled state funds from the general education budget and then backfilled it with one-time federal stimulus dollars.
The move created a disaster. That $1 billion in federal dollars vanished the following year, leaving a flaming hole in the education budget for schools that had hired teachers, expanded programs, and incurred other annual costs as if that money would be there for them in the next budget.
A two-year projection, forced into the minds of legislators eager to play Santa for the folks back home, would have made it clear that one-time allotments can’t be treated as forever dollars.
A two-year budget would require revenue projections well into the future, and in a volatile economy, those projections can shift. Budgeting would be a continuous process in terms of knowing where we’re going and what we need to adjust along the way. But those variables are a hidden asset in that they will let us see if a new program or project is really working. It takes more than a year to really know.
This opens the door to another improvement: A budget that takes longer to assemble and covers more ground and demands careful tending, is something that the entire general assembly can — and should — join in. As it is, the current process not only fails to allow all members to ask questions of agencies about their budget requests — it doesn’t even allow time for every agency to appear for questioning before Appropriations.
We need to stretch out the process a bit, if only so your representatives can know what they’re passing and doing so with a full understanding of all the implications. That’s not accomplished in a two-hour reading of the budget.
There is also a strong economic growth argument to be made for a two-year budget: Business hates uncertainty. When a company sets up shop, they cost things out over a period of years; they don’t all turn a profit in the first 12 months. Survival depends on accurate projections based on reliable data.
A young entrepreneur can take their best shot knowing that taxes will stay the same. A human services agency will keep workers on his payroll knowing that county departments that use their services have two years of state funding allotted.
How a state spends, and how it taxes, are something that can make or break a company, or deter them altogether from locating someplace. A two-year budget might require adjustments during the journey, but it’s not prone to the annual impasses that have made us look ridiculous.
The two-year budget is not a perfect solution, but we’ve reached the point where we have to do something to avoid the rolling catastrophe that our current process has become.
Keep in mind: during a budget impasse the state can’t pay its bills. But it keeps collecting taxes. You should pay only for something that works.