Skip to content
Link copied to clipboard

A tale of two states' budgets: Time to trade places?

Pa. and Ill. have lots of similarities: new governors, pension and budget woes, and bold ideas to fix state finances.

LET'S TALK about Pennsylvania and Illinois. They have plenty in common.

Both have brand-new governors from the private sector: Democrat Tom Wolf in Harrisburg, Republican Bruce Rauner in Springfield.

Both capitals are in relatively small towns. Springfield is Illinois' sixth-largest city; Harrisburg is Pennsylvania's ninth-largest. Both are roughly in the middle of their states.

Both governors are dealing with legislatures of the opposite party: Republicans control Harrisburg; Democrats control Springfield.

Both states are similar in size: 12.8 million people in Illinois; 12.7 million in Pennsylvania.

Both states are known for corruption: A 2014 study ranks Illinois fourth among states, Pennsylvania fifth.

And both face huge budget and pension problems: Illinois has a $110 billion pension shortfall, ranked by some as the nation's worst; Pennsylvania's is about $50 billion, ranked among the worst 10 states.

Ah, but approaches in each state to attacking these woes are as different at you can get. In fact, to get the budgets they want, these guvs might need to trade places.

Last week, Gov. Rauner proposed $6 billion in cuts - with no new taxes or tax increases - to balance his state's $32 billion general-fund budget.

The cuts hit health care, local government, universities and pension benefits for state workers.

And leaders in the Democratic-controlled Legislature were quick to express displeasure. Illinois Senate President John Cullerton said Rauner's plan presents "significant questions about its viability."

So, you know, it's hard at this point to see how Rauner's wants survive.

And in Pennsylvania?

Well, look for the reverse sort of budget proposals - with the same sort of opposite-party response.

Gov. Wolf presents his budget next Tuesday. It's unknown if it includes any cuts. But it's certain to call for new and/or increased taxes.

Wolf's made clear that he wants a new severance tax on the extraction of natural gas, with the bulk of an estimated $1 billion going to public education.

But with the state facing a $2 billion-plus budget shortfall, other new revenue sources or deep cuts also are needed.

The 3.07 percent personal-income tax is the lowest flat rate in the nation. The 9.99 percent corporate-net-income tax is the highest.

Wolf isn't offering budget specifics, but during the campaign he advocated a "fairer" tax system including switching to a graduated income tax to increase taxes on upper-income earners, and reducing the corporate-net-income tax.

So those moves are likely. And maybe a new tobacco tax. Maybe even sales-tax changes. But cuts are another question.

When I ask House Democratic Leader Frank Dermody if Wolf seeks an income-tax hike, he says, "I think it's hard not to." And Dermody says past budget cuts hurt education and jobs, so it'll be difficult to cut further now.

Philly Sen. Vincent Hughes, Democratic chief of the Senate Appropriations Committee, hasn't been briefed on Wolf's plan but predicts it will include GOP-backed elements such as business-tax cuts and property-tax relief.

"I have a feeling it's going to be bold," Hughes says.

As to possible cuts as proposed in Illinois, Hughes says, "It sounds like the guy in Illinois wants to replicate what Gov. Corbett did, and that didn't lead to growth."

Republicans here want to sell off state stores and cut pension costs before considering new taxes. If Wolf sticks to opposing GOP plans while pushing for new taxes, then the governor's budget is certain to raise "significant questions about its viability."

House GOP Leader Dave Reed says, "I think pension reform is going to be part of any budget framework." And GOP Senate President Joe Scarnati says, "How do you sit down and negotiate with unrealistic expectations?"

So, you know, it's hard at this point to see how Wolf's wants survive.

Time to trade places?

Blog: ph.ly/BaerGrowls

Columns: ph.ly/JohnBaer