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Statewide Candidates and Social Media: Weekly Update

Bridge Out Ahead

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Perhaps the most under-reported story of Governor Ed Rendell’s budget address was not that he proposed a sales tax expansion and a few other new revenue sources, but instead what he proposed to do with those new dollars.  The governor wants to begin socking away some money from a proposed expansion of the state sales tax, the taxation of natural gas extraction, and the taxation of certain tobacco products to help prepare us for when the federal stimulus dollars dry up.  This type of “lock box” proposal was made famous by then-Presidential candidate Al Gore, who spent quite a bit of time explaining how he wanted to apply the same principles to Social Security.

With 2010 being an election year, we have already begun to hear statewide candidates, as well as rank-and-file lawmakers, bemoan that Pennsylvania’s precarious fiscal status is a result of some sort of gross mismanagement or overspending, and thereby do not see the need for any sort “lock box revenue” to save us all in the coming years.  Just spend fewer dollars, they say, and all will be fine.  Other more pragmatic officials point to a “lock box” scenario with skepticism, only because the past has proven that if there is a pool of money sitting around in Harrisburg, somebody will inevitably find a way to spend it. 

So suffice to say there are three distinct camps here.  In Rendell’s camp are folks who want to raise revenue right now, and keep it in reserve for that very rainy day when the federal stimulus money disappears.  In the second camp are those who feel spending is simply out-of-control, and all our fiscal problems can be solved by hacking another few billion off the bottom line.  And finally, you have folks who might otherwise be open to the lock box theory, but are too used to seeing business-as-usual eat up any revenue that isn’t nailed down.

To all campers, we offer the following report, which is both sobering and downright ominous.

Our friends at www.fivethirtyeight.com came at us on February 11 with a report by the non-profit Center on Budget and Policy priorities.  The CBP found that 48 out of 50 states either started the year with a budget deficit or are projecting a budget deficit in the next fiscal year. Yes, if you live in Montana or North Dakota, you can stop reading, and return to riding the range or whatever it is you folks do out there.

The report also makes it very clear that when the fiscal bridge finally goes out, we should not expect it to come back.  President Barack Obama alluded to as much in his State of the Union Address, where he indicated that the federal government will be turning its attention to slashing red ink and reducing the deficit.

We know from recent experience when the federal government talks about getting rid of red ink, it means more than a few barrels of it end up being dumped onto state government.

Finally, the report illuminates what many had feared all along; states will not recover from the recession anywhere near quickly enough to compensate for the loss of the federal stimulus dollars.  In short, the money was meant as a stopgap, and the gap ended up being about ten times wider than anyone previously thought.

So the bottom line is that Rendell, for all the criticism he has received both rightly and wrongly on a myriad of issues, may have hit the nail on the head here.  The ironic part is that by the time our Commonwealth’s wagon gets to the massive canyon where the bridge used to be, Rendell will have long since hopped off, and a new governor will have to figure out how to get to the other side.

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Admin

Philly Daily News' John Baer cites the same report in his column today. http://bit.ly/9XPtmI

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