DN Editorial: Pennsyltuckered out
Corbetts miscues (shale tax, Medicaid expansion) could make this budget his last.
THE GENERAL Assembly is now grappling with what could be Gov. Corbett's last budget. And given some of the obstacles to finishing it, we're grappling with the best way to characterize the story it tells. Is it "Back to the Future"? Or "Welcome to Pennsyltucky"?
(We are not disparaging the rest of the state, which is sometimes referred to as Pennsyltucky, but conveying a general theme of "backward." If you're an "Orange Is the New Black" fan, you'll know it refers to the meth-addled hillbilly character.)
Lawmakers are scrambling to fill a $1.5 billion shortfall in the budget that came about because revenue projections fell short of what Corbett had anticipated in his budget address in February.
That's bad news, because "revenue shortfall" means that business and other activities in the state are stagnant. Corbett can't blame a soft economy, either. A recent federal economic report found that Pennsylvania - with an increase in gross domestic product of just 0.7 percent in 2013 - boasts one of the slowest economies in the country, with only three states worse. West Virginia saw a 5.1 percent growth.
That sluggishness is remarkable considering that the state also is home of the 21st-century version of the Gold Rush: huge stores of natural gas that drillers are extracting at a record rate. But there are no taxes on that output. This is why West Virginia's growth as a state is notable: its 5 percent tax on gas extraction enriched the state's coffers by $800 million this year alone.
Meanwhile, according to the Pennsylvania Budget and Policy Center, corporate taxes that drillers paid in Pennsylvania last year are back to the levels they were paying before drilling even began. (And if that largesse weren't enough, the governor has allowed drilling on state parkland.)
Another thing the state didn't get this year: Medicaid expansion. Many in the Legislature, like state Sen. Vincent Hughes, are advocating for Corbett to change his mind about accepting a federally funded expansion of Medicaid in the state as part of the Affordable Care Act. Such expansion would be fully funded by the feds for the first few years and grow health spending. A report released this week by the Robert Wood Johnson Foundation measured 14 cities, some of which are in states that expanded Medicaid, and some, like Philadelphia, that are not. The report projected that forgoing the expansion means that Philadelphia alone leaves $8 billion on the table.
The state budget gap is worrisome enough - especially with the added pressure of an education funding crisis. Earlier in the year, Corbett said he wanted to increase education spending by $350 million, but we'll be lucky if the final budget will allow a fraction of that.
Corbett has found ways to avoid collecting revenues, reduce the money that corporations have to pay and create no policies that have sparked growth. As budget battles go, this year's is particularly disheartening because we're on the same old subjects: tax shale or not? Cut corporate taxes yet again? Keep starving education?
At this rate, Pennsyltucky will be a state we aspire to.