Pennsylvania's magical mystery budget

Three weeks of state budget hearings just concluded with nary a fistfight or major snit.

Could this signal an end to annual budget animus between Democrat Gov. Wolf and the Republican legislature? Could it mean stress-free budget passage by the start of the fiscal year in July?

After all, Wolf wants a GOP-style budget, a flip-flop from his prior (voted-down) calls for big new taxes.

Maybe it's a new day in Harrisburg. Lord knows the old days didn't work.

Let's see: a $3 billion structural deficit; a $62 billion pension debt; $300 million more in pension costs next year, and a $600 million hole in the current budget that state law requires filling.

Pretty soon we're talking real money, eh?

And why? Years of gutless governing that annually punts on problems such as property taxes and pensions; bends to the wishes of special interests; then "balances" budgets with phony onetime revenues, some that never happen.

Ah, but now there's a new plan: magically erase years of neglect and the $3 billion deficit with $2 billion in cuts and efficiencies and $1 billion in new taxes -- but not on personal income or (for most) on sales.

Problem solved.

Yet when I ask legislative leaders, rank-and- file lawmakers, budget experts, and administration officials exactly how it gets done, there's a significant amount of: Well, it's a mystery.

"It's a great question," says Senate GOP leader Jake Corman (R., Centre). "The governor's [plan] put lots of new ideas on the table," but there's a need for "further vetting" and "revenue's a problem."

Philly Democratic Sen. Tony Williams says filling fiscal holes is a question with no evident answer: "I can't honestly say I see it."

Sen. John Yudichak (D., Luzerne County): "I don't know how you actually get those [$2 billion savings] dollars."

Sen. Scott Wagner (R., York County), who is running to oust Wolf next year: "We have a lot to discuss. Nobody's doing anything about mismanagement and waste." (Translation: Not buying – not surprisingly -- Wolf's $2 billion savings.)

Freshman Philly Democratic Rep. Chris Rabb: "I can't make heads or tails of it. … A lot of it seems to be smoke and mirrors."

And Wolf's budget secretary, Randy Albright, while "encouraged" by the response to the plan, concedes that the politics and particulars of passing it are "unknowns, as we begin the process."

That's because of a few realities.

Taxes on personal income and sales account for 72 percent of General Fund revenue; education, Medical Assistance, and other welfare programs account for 76 percent of spending.

If you're not raising the former or cutting the latter (Wolf's budget does neither), you can see the challenge -- one that Washington budgeting could heighten.

Plus, Wolf's new taxes include business taxes that lobbyists stopped before and a severance tax on natural gas that lawmakers consistently refuse to enact.

"I'm very confident we're not supporting a severance tax," House GOP spokesman Steve Miskin said.

For these and other reasons, onetime revenue sources are used to patch together budgets year after year.

Last year, more than half of $1.3 billion in new revenue ($700 million) came from onetime sources, according to analysis by the Pennsylvania Budget and Policy Center. And $150 million of that was projected revenue from a new Philly casino license and new internet gaming, neither of which happened.

But the beauty of adding this kind of "revenue" is that once it's on the books, the state can spend it whether it's collected or not. Hence the growing deficit.

I don't suggest change can't happen. I don't suggest a budget that cuts spending to pay for past sins while offering sound fiscal policy free from the influence of special interests is impossible.

I do suggest that how such a budget gets done is, for now, a mystery.