Harrisburg's annual budget ritual is under way, and with the economy in the worst shape in recent memory, the calls for cuts are louder - and more justified - than ever.
But some cuts actually cost the state money. These include cuts that pull productive investment out of the housing market.
Econsult Corp. economist Lee Huang recently told the state House's Urban Affairs Committee that every dollar the state invests in rehabilitating homes generates as much as $2.28 in economic activity. This kind of state investment produces jobs.
Huang, who did his analysis for the Housing Alliance of Pennsylvania, said it follows that every dollar the state cuts from programs that invest in housing takes away as much as $2.28 in economic activity, subtracting jobs.
With the state already hemorrhaging jobs, we should be increasing this investment, not reducing it.
Over the past two years, for example, the state's Housing and Redevelopment Assistance budget has generated some 4,000 jobs while assisting 7,000 homes. This represents a significant boost to the economy through the rehabilitation, repair, and construction of homes that are within reach of working families.
Cutting this program in half, as is currently proposed, would only end up harming the economy, costing jobs, and further destabilizing an already wobbly housing market.
Because of the direct economic benefit of investing in the housing market, the Housing Alliance of Pennsylvania has made the creation of a state housing trust fund our highest priority.
Think about what got us into this terrible economic mess: Too many people were buying houses they couldn't afford, and there were too few small, starter homes and quality rental options.
Years ago, the Housing Alliance warned that government policies encouraging more ownership of single-family homes through mortgages, to the exclusion of other options, were failing. We watched as rental homes continued to decline in quality and availability, while prices rose, and as long-term homeowners were unable to sustain maintenance, repair, and energy costs. These problems still need to be solved.
It's too late to undo past mistakes, but Pennsylvania can begin a new course by adopting housing policies that make sense, bring balance to the housing stock, and create jobs.
It starts during this budget season with maintaining funding for housing programs, and it continues later this year with the creation of a housing trust fund.