RECENT REPORTS have begun to unveil the extent of the structural financial hole that will be left behind by the Corbett administration. According a report by the Independent Fiscal Office, Pennsylvania is facing a budget deficit of at least $2 billion. This has been confirmed by the Governor's own Budget Secretary who said, "I would never have guessed that our Year Four budget would be more difficult than what we faced in Year One. But that's where we are today."
Though we do not yet know the full scope and depth of the fiscal situation Gov.-elect Tom Wolf will inherit once he takes office next month, one thing is clear: The extent of the budget deficit will be massive and will pose a significant challenge for the Wolf Administration.
How did we get here?
It's not hard to see how the fiscal situation became so dire. The current 2014-15 budget was built on gimmicks and one-time revenue sources that cannot be used in next year's budget. In fact, Gov. Corbett's budget secretary recently admitted that they relied on $2 billion in one-time sources of funding. Combine this with the fact that the budget promises more spending going out than the revenues coming in and it's a recipe for a serious fiscal mess.
In addition to budget gimmicks and structural problems, Pennsylvania is 50th in job creation. During the past four years, Pennsylvania has dropped from the Top 10 in the nation in job creation to dead last. Without sustainable job growth, Pennsylvania's ability to grow our way out of this hole, generate new revenue, and attract new businesses and families to the commonwealth will be even more difficult for the new governor.
What are the effects?
The effects of the multibillion-dollar projected budget deficit are far reaching into all parts of Pennsylvania's economy.
As a result of misplaced priorities and fiscal mismanagement, Pennsylvania is projected to be cash-flow negative from January through March of next year. This type of budgeting is not sustainable.
Just last month, Pennsylvania's fiscal situation took another blow when the Corbett administration was forced to take out a $1.5 billion loan just to pay the bills and keep the lights on. This credit line is alarming not only because of the large amount borrowed, but because it was necessary so early in the fiscal year. It's also not clear whether this borrowing alone will be enough to fill the gap until the bulk of the tax revenues arrive in March.
As a result of this kind of fiscal irresponsibility, the commonwealth suffered five credit downgrades in the past two years. This means that more of your hard-earned tax dollars will now have to go to pay the costs of borrowing as opposed to funding our schools.
How do we move forward?
What we know now is only the beginning of what we will learn about the structural budget problems left by the current administration.
It is clear we cannot continue down the same path if we want to move Pennsylvania forward. We must find ways to grow our economy, and that starts with properly funding education to lay the foundation for long-term growth. We can begin to properly fund education with a reasonable 5 percent extraction tax on natural gas. Pennsylvania remains the only state in the nation without an extraction tax.
Pennsylvania is ready for a fresh start, and we can build a stronger economy by rearranging priorities. In a budget the size of Pennsylvania's, surely we can find ways to fund education, make oil and gas companies pay their fair share, train people for a modern economy and move our commonwealth forward.
Pennsylvania deserves better. I am confident that Wolf will be able to tackle the massive fiscal challenge before him. But make no mistake, the mess he is inheriting will limit future opportunities and slow progress on key initiatives. If Harrisburg comes together - Democrats and Republicans - and works with our new governor, I know that better days are ahead for the Keystone State.