Pennsylvania’s budget process is broken, but not because we have a left-of-center governor and a right-of-center legislature. We’ve had combinations like this before.
The real problem is deeper: Our state’s economy is under-performing — and has been for decades. If it were a student, an honest teacher would have to give a grade of “F” for effort.
One problem is that our built-in expenses far exceed our revenue — and that has been the case almost every year since Ed Rendell was governor. Our pension system requires about a half-billion dollars each year just to keep us from falling further behind. Health-care costs for state employees, state retirees, and those on Medicaid continue to grow faster than inflation.
Harrisburg has a moral obligation as stewards of taxpayer dollars — and as representative of citizens truly in need — to make sure that every dollar is spent wisely. Our elected officials ought to rein in unnecessary spending, reform state programs, and eliminate or modernize agencies. Those steps will address the expense side of the ledger, but can’t fix a sluggish economy alone.
Pennsylvania has been in the bottom of the 50 states for job creation for much of the last generation. Our unemployment rate is usually worse than the national average. And, in 2016, we lost population.
Reducing the cost of government alone won’t increase jobs — nor will raising taxes on working families or the few segments of the economy that are prospering.
This isn’t about blame. It’s about losing sight of the bigger picture during annual budget fights. Without that larger vision, we focus on stop-gap measures to “balance” the budget, such as one-time spending cuts, borrowing against various funds, or (worst of all) raising taxes.
Instead, we should be focusing on long-term, meaningful economic growth. We need to incentivize employers to create jobs, entrepreneurs to start businesses, and small businesses to expand.
A growing economy would create new businesses, raise wages — and, yes, send more dollars to Harrisburg. And, there would be fewer people in need of aid — be it unemployment compensation or medical, food, housing or income assistance. That’s a smart, effective, and compassionate way to reduce the pressure on government’s budgets.
Now here’s the good news: Pennsylvania has the tools not just to do better economically, but we also have the assets necessary to have the strongest economy of any state.
Here are some of our assets: more natural gas resources than Saudi Arabia; more universities than any state per capita — and among the nation’s leaders in research, business, medicine, and engineering; some of the finest hospitals in the nation; bio/pharma hubs in the Lehigh Valley, Philadelphia’s suburbs, and the Pittsburgh region; and a location within hours of half of the nation’s population, connected with them and the rest of the world through highway, air, rail and port facilities.
Policy-makers in Harrisburg need to leverage those assets to grow our economy. They need to cut our corporate tax rate; adjust our regulations; fix our misguided legal system; reposition our secondary education and community college system; and invest in our infrastructure to get our people, customers, and products where they need to be.
If we properly develop and use the assets we have, no state can match us.
The commonwealth has a clear choice. Keep plodding from one short-term budget crisis to the next, burdening citizens and businesses in the process, or create a brighter future for all Pennsylvanians.
Harrisburg, it’s time to act.
Guy Ciarrocchi is the president and CEO of the Chester County Chamber. Guy@CCCBI.org