Hide your valuables - Pa. Legislature needs money

Redrawing America Imbalance of Power
Pennsylvania has a budget shortfall of about $900 million.

Lock your doors and hide the silver, the Pennsylvania Legislature has raiding parties out, scouring the countryside for money needed to balance the state budget.

It won’t be easy. The state is $900 million short this year and predictions of the deficit next year go as high at $3 billion.

It would be logical to assume the legislature would look to raise that money needed in part by raising taxes. Gov. Wolf, for instance, has suggested (once again) that the state levy an extraction tax on the natural gas industry.  He also has suggested eliminating the exemption some items have (helicopters and coffins to name two) from the state sales tax.

To the Republicans who control the Legislature, those ideas are verboten.  In fact, the very idea of raising taxes is taboo. Instead, they look for any other means possible to get cash, including plundering funds that are supposed to go other purposes.

A few years ago, they found a mother lode of money in something called the Oil & Gas Lease Fund, established by the state in 1955 to hold the rental fees paid by oil and gas companies who lease state lands.

In turn, that money is supposed to be used “exclusively used for conservation, recreation, dams, or flood control…” When the Marcellus Shale was discovered, the state was under pressure to expand the acreage it could lease.  Bowing to pressure from the governor’s office, the Department of Natural Resources did so.  New money flowed into the fund – and it caught the Legislature’s attention.

Between 2008 and 2014, the legislature diverted $335 million from the Oil & Gas Lease Fund and used it to help balance the state budget. Environmental groups cried foul and the Pennsylvania Environmental Defense Fund filed suit.

Last week, the state Supreme Court ruled in favor of the environmental groups, saying the Legislature’s raid violated the Environmental Rights Amendment of the state Constitution.

Among other things, that amendment declares that “Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.”

The amendment, which passed in 1971, was born out of the experience of a state that had its natural resources depleted and its environment often despoiled by extraction industries: coal, oil and lumber to name three. Fracking for gas could be another.

The high court said the state erred in not holding a public process before deciding to lease more state forest land and the Legislature erred in taking the money from a special fund devoted to conservation.

The situation has not changed. The Legislature still refuses to consider raising the state’s main source of revenue: sales, income and business taxes.  It relies on bookkeeping gimmicks and dubious ideas such as a major expansion of gambling.

Last week, word emerged of a plan to use the tobacco settlement money, paid by the industry to settle state lawsuits, to float what would have to be a billion-plus bond to pay off the budget deficit.

“Pay off” is an imprecise phrase – what the plan would do is amortize the deficit over 20 years. That’s like taking out a second mortgage to pay your utility and grocery bills.

It’s a dumb idea and bad public policy, but never underestimate a desperate Legislature.

One additional thought: Do you have any gold jewelry? You might want to hide it in the basement along with that set of sterling silverware.