The new fiscal year for Pennsylvania began July 1. Just one little problem. The state opened the new budget year without a budget. Don’t fret too much. It’s not like we haven’t been down this road before. Ed Rendell has missed the budget deadline every year since taking over as governor in 2003.
But there is something different about this year. Rendell is a lame duck and we are in the middle of the worst recession since World War II. Rendell has squandered most of his political capital on broken promises (property tax relief, business revitalization, health insurance for all, jobs).
Despite increasing General Fund spending by $8 billion — twice the rate of inflation — Rendell’s big government, tax-and-spend agenda has been a monumental failure. He not only spent the $8 billion, but he ran up a $3.2 billion deficit in the past year alone. And Rendell wants to keep on spending. His proposed budget for 2009-10 is a $1 billion increase over the previous year (the one that ended up in the red.)
Most independent assessments conclude that Pennsylvania is much worse off today than it was when Rendell took office as governor. Nathan Benefield notes in a recent post at Policy Blog that Forbes magazine ranks Pennsylvania 41st in a new report on “The Best States for Business” and “Amazingly, despite Gov. Rendell’s ‘investments’ in our economy, that represents a drop of two spots since last year.”
Here are more recent rankings of Pennsylvania’s economic and business climate compiled by the Commonwealth Foundation:
- The Tax Foundation State and Local Tax Burden —11th (50 is best)
- Small Business and Entrepreneurship Council Business Tax Index 2008 — 28 (1 is best)
- Pacific Research Institute State Tort Liability Rankings — 45th (1 is best).
- Beacon Hill Institute State Competitiveness Report 2007 — 34th (1 is best)
- ALEC-Laffer State Economic Competitiveness Index — 44th on Economic Performance; 37th for Economic Outlook (1 is best)
- Alliance for Worker Freedom Index of Worker Freedom — F (Tied for worst)
- Small Business and Entrepreneurship Council Policy Environment for Entrepreneurship —24th (1 is best)
- The Tax Foundation State Business Tax Climate Index — 27th (1 is best).
- CEO Magazine Best States to do Business —37th (1 is best)
On Wednesday, the Pennsylvania Department of Revenue released the June tax collection numbers, showing the state spent $415.3 million more than it took in. For the year, the state spent $3.25 billion more than it collected in taxes.
Gov. Rendell does not understand the first rule of holes — when you’re in a hole, stop digging.
Rendell had done irreversible damage to the state and he plans to continue digging a deeper hole for Pennsylvania taxpayers. Rendell was warned repeatedly last spring that his 2008-09 budget would never balance, but he went ahead and spent $28.3 billion as the recession grew worse and thousands of Pennsylvanians lost their jobs.
His solution to the fiscal mess he created is to raise taxes by 16 percent, or about $500 a year for the average Pennsylvania family. Rendell claims this would be a temporary tax increase for three years, but everyone knows there’s no such thing as a temporary tax increase. Once the government latches on to your wallet, it never lets go.
With the state House controlled by Democrats who typically turn into doormats when Rendell wants something, the only elected officials standing in the way of a massive tax hike are the 30 Republicans in the state Senate.
Senate leaders have said repeatedly that an increase in the state income tax is off the table. Rendell said as recently as Wednesday he will not back down from his demand for a tax hike.
Rendell leaves office after 2010 and he is content with leaving behind a huge fiscal mess for the next governor. There’s no reason for the Republican Senate to give in to Rendell.
The only compromise on the table is for Rendell to accept the balanced budget adopted by the Senate last month. It calls for no tax increases and cuts state spending for the first time in seven years.
In other words, Pennsylvania government must live within its means for the first time since Rendell became governor.
Tony Phyrillas writes about politics for The Mercury. Send e-mail to [email protected]