Editorial: Cuts first, taxes last

Pennsylvania's budget problems are getting worse, and so are some of the solutions.

The state expects a $3.2 billion shortfall by the end of June, when Gov. Rendell and the legislature are required to approve a new budget. Rendell initially had ruled out raising the state's personal-income or sales taxes to balance the budget. But he changed his tune after a further erosion in tax collections in May. "Nothing is off the table," Rendell said. Translation: The governor is now open to a broad-based tax increase.

House Appropriations Chairman Dwight Evans (D., Phila.) also is eyeing a general tax hike.

But Rendell and House Democrats can't make an effective case for a general tax increase until they show more commitment to cutting the budget further, wherever possible.

They need to prove their thriftiness to taxpayers, because the legislature has been a circus of waste and corruption. The credibility of both Democratic and Republican legislators as stewards of tax money is in tatters.

The fraud conviction of former State Sen. (and chief appropriator) Vincent J. Fumo of Philadelphia showed how gleefully some legislators waste tax dollars on themselves.

And then there's the ongoing corruption prosecution against a dozen current and former House Democratic officials for allegedly doling out taxpayer-funded bonuses to staffers as a reward for campaign work. In a two-year period, Democrats and Republicans paid nearly $2 million in bonuses to legislative aides.

Legislators can't waste tax money to that degree, and then turn around and tell taxpayers with a straight face that state government has been cut to the bone.

Senate Republicans have proposed a budget of $27.3 billion, compared with Rendell's spending plan of $28.9 billion. The GOP plan avoids tax hikes, but slashes services just as more unemployed workers and their families are placing greater demands on the social safety net.

Rendell has proposed $977 million in cuts for next year's budget - roughly 3 percent of his proposed budget. Given the recession's impact on families, Rendell and Evans must find more cuts before pushing for a general tax increase.

Other states are swallowing bitter budget pills, such as layoffs and cuts to education. Layoffs or furloughs are painful, but, for many working families, so are higher taxes to fund the bureaucracy.

After five consecutive years of hefty school-aid increases, perhaps districts could get by for one year with a smaller increase.

Rendell has trimmed the state workforce by more than 2,600 jobs since January 2003, a reduction of 3.4 percent. And he says he has instituted annual savings of more than $1.5 billion through efficiencies, such as purchasing in bulk and reorganizing departments.

Rendell's budget for 2009-10 would cut 2,995 more state positions - yet all but 500 to 800 are already vacant. And he has cut about $500 million from programs in the current budget.

But cuts alone won't balance the budget. Republican legislators should drop their opposition to minor tax increases, such as an increased tobacco tax, a tax on cigars and smokeless tobacco, and a new tax on natural gas.

It's also reasonable to take $375 million from the state's Rainy Day fund, as Rendell has proposed, but the GOP has opposed. Likewise, Senate Democrats have a worthy plan to make out-of-state corporations pay their fair share of taxes for doing business here.

Both sides have room to give before considering a general tax increase in a dismal economy.