Pennsylvania is staring at a fiscal cliff.
It’s easy but perilous to ignore state budget minutiae amid a contentious presidential election. Right now is when the state budget needs the most sunlight. That’s always tough to find in Harrisburg, which makes lawmakers’ abbreviated schedule (they meet Wednesday for the last time until after the election) particularly risky.
After the shutdown in March, revenues cratered, and Harrisburg passed a five-month budget that flat-funded most state agencies (except education). It bought time to get a clearer economic picture, and for the federal government to provide fiscal relief for state and local governments.
That federal help never came, and our budget expires at the end of November. If we don’t start looking at the budget in a new way, this recovery could be slower and more painful than the one that followed the 2008 Great Recession.
First, we can’t keep throwing money into the same old buckets. COVID has forced a radical realignment of priorities, and Pennsylvania’s budget should reflect that. Industries across the commonwealth have not fared equally — restaurants and hospitality have suffered mightily, for example. Arts and culture organizations are looking at a year or more of virtually no income. More than a million Pennsylvanians could be facing eviction come January. Targeted stimulus spending could help, but any flat budget ignores the radical shifts that a COVID and post-COVID economy demands.
Second, the state needs to be more transparent about what cuts we’re likely to see if federal help doesn’t come soon and to give Pennsylvanians a clearer voice in the process. That transparency was lacking when the five-month budget passed in June. State law requires that Pennsylvania balance its budget, and yet we’re currently looking at an approximately $4.5 billion deficit. Compare that with the Great Recession deficit of 2008-09, when a $3.2 billion deficit was offset with more than $1.2 billion in federal recovery dollars. If Congress doesn’t pass a relief package that includes help for states and municipalities, services will be cut, and state government won’t be able to deliver vital help when people need it most.
Finally, the state needs new revenue. If Republicans retain control of either the U.S. Senate or the White House, federal relief is no more likely to come than it has been in the last seven months. Even if Democrats win both, relief is unlikely to come before February. So lawmakers in Harrisburg must find new revenue and fast. Gov. Tom Wolf has proposed marijuana legalization, which would help, but so far Republican lawmakers say it’s a nonstarter. The alternative? Absurdly, earlier this month, the Senate held a hearing on a bill that would expand gaming. That lawmakers still default to this tired alternative does not bode well. They should also be challenged on their insistence on holding onto a $172 million surplus in their own budget.
The usual tricks and sleights of hand that comprise many budget seasons are not going to cut it this time. Without radical transparency and a willingness to consider innovative funding sources, lawmakers will doom this recovery to be longer and more painful than the last one.