Budget based on illusions

As the General Assembly takes final action on the state budget, even before the ink is dry, the spending plan for the fiscal year that started July 1 will have begun its slow collapse.

Although it was structured in the hopes of avoiding new cuts to things that voters care about - schools, early-childhood education, and support for children with autism - the promised funding may never materialize. The budget is balanced with sleight of hand and magical thinking - not actual dollars. And that truth may by revealed as soon as December, when the money begins to run out long before the budget year ends.

This will happen because the governor and Republican legislative leaders failed to confront the realities of revenue in Pennsylvania. Instead of owning up to the fact that the budget for the year that ended June 30 was short by half a billion dollars, they magically wiped away that inconvenient truth through creative accounting. Then lawmakers used one-time transfers, overly rosy revenue projections, and accounting tricks to close a $1 billion projected revenue gap.

The honest way to balance the budget would have been to increase revenue; instead, they washed their hands of budget deliberations and made plans to head home.

It didn't have to be this way. There is broad bipartisan agreement that it is time to adopt a severance tax on natural-gas drilling, as has every other major gas-producing state.

The Marcellus Shale resource is among the lowest-cost of the gas reserves to develop, and it sits in the middle of the lucrative Northeastern gas market. Drilling there won't end anytime soon.

The commonsense move would be to return a portion of the profits from the sale of this resource to the citizens of the state, to be reinvested in our communities to build a strong economy. Natural-gas producers shipped gas worth $11.8 billion in 2013, triple the amount produced just three years earlier, but the impact fee rose by just 10 percent, shortchanging Pennsylvanians.

There were other opportunities to square the budget. Pennsylvania remains the only state not to tax smokeless tobacco, and it isn't regulating and taxing e-cigarettes, as many other states - including big tobacco producers - have begun to do.

The House could have agreed to a Senate proposal to close a new tax loophole written specifically to boost banks' profits. Instead, the House opted to reward companies that work diligently to find new ways to avoid taxes rather than create jobs. The rest of us, and those companies that play by the rules, will end up paying more.

But lawmakers in Harrisburg did none of that.

Legislators like to boast that the new budget doesn't increase taxes on Pennsylvanians. That isn't so. Within hours of the budget's passage in the House, the Shippensburg school district was forced to raise property taxes to make up for the state support it had counted on that didn't materialize. Philadelphia taxpayers will contribute almost $12 in sales and cigarette taxes for every new dollar the city gets from the state.

Meanwhile, support for schools fails to reverse cuts to staffing and educational programs that have strapped every school district in the state and hit the poorest districts the hardest.

The only group that truly escaped a tax increase was - once again - the gas drillers.

While on the surface the budget does provide some important support for crucial services, that support will evaporate like dew in the morning as the fiscal year wears on. The revenue projections that underlie this budget exceed those projected by the General Assembly's own fiscal watchdog, the Independent Fiscal Office. Revenue from new gas drilling on public forestland will depend on the outcome of a court challenge. The budget assumes revenue from a Philadelphia casino that is yet to be built.

With the long recession finally beginning to recede in the rearview mirror, Pennsylvania needs to rebuild. Schools, public universities, health clinics, and communities have all paid a high price through years of cuts. Moving our state forward requires a real plan, not an illusion.