Friday, December 26, 2014

State has itself to blame for this week's mad scramble

An IOM editorial in the Daily News explains why the state's scramble to cut $250 million didn't have to happen:

State has itself to blame for this week's mad scramble

An IOM editorial in the Daily News explains why the state's scramble to cut $250 million didn't have to happen:

Normally, $600 million from the federal government would be good news. In Pennsylvania, it's cause for consternation because lawmakers thought the state would be getting more.

In July, state lawmakers passed a budget that assumed Congress would approve a higher funding level of Medicaid, the state-administered medical-assistance program for the poor. State lawmakers were counting on getting $850 million. The federal government had increased the funding program - known as Federal Medical Assistance Percentages or FMAP - as part of the $787 billion stimulus package passed in 2009. However, the additional funding was scheduled to run out this year.

Congress lowered the package because of fears about the growing deficit. Pennsylvania will be getting only $600 million in assistance. That, plus an increase in state Medicaid costs, means Gov. Rendell and state lawmakers must now make $282 million more in cuts. Now the scramble is on: Rendell is proposing that all departments, as well as the Legislature and elected officials, take a reduction of 1.9 percent. He also wants to cut $50 million from education and use $80 million from a new tax on natural-gas extraction to fill the rest.

Lawmakers are already pushing back. One, Rep. Curt Schroder, suggests eliminating legislative discretionary-spending accounts, known as WAMs (for "Walking Around Money"). A Dwight Evans spokeperson says those accounts don't exist.

We think a combination of cuts and revenue increase is the best way to go, though such a strategy puts off making hard choices and prioritizing what services we really need.

It's impossible to have a real debate when you have to take emergency measures to balance the budget. That didn't have to happen, if lawmakers hadn't treated uncertain federal funds as money in the bank.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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