Corbett’s magical budget

Pennsylvania Governor Tom Corbett is running for reelection. That’s what he’s doing instead of, you know, governing. A few months ago his budget secretary, Charles Zogby, said that the state could face a deficit of up to $1.4 billion in the 2014-15 fiscal year. Zogby pointed to sobering and very real fiscal problems — in particular, the growing cost of underfunded public employee pensions, and the growing cost of healthcare for the poor. Then, last week, Corbett presented his proposed 2014-2015 budget to the state legislature — and lo and behold, the deficit was gone. And this despite an increase in spending of almost $1 billion, including an additional $400 million for the state’s beleaguered public schools. That sounds nice, doesn’t it? Vote for Tom Corbett.

But there are several problems here. First, the magically disappearing deficit. Where did those rising pension costs go? The Pennsylvania Budget and Policy Center took a closer look. Unspecified reforms — which would likely need approval from the barely functional state legislature — are relied on to reduce pension contributions by the state and its public schools by around $300 million. $225 million would come from a one-time transfer from the tobacco settlement fund, which is generally set aside for health care. Another $170 million in projected payments would simply be “collared,” or postponed to a later date.

Deferral may seem easy now, but it has severe long-term consequences: “That change in state payments would result in the unfunded liability growing to a point about $5 billion higher than it is currently projected to,” reports Harrisburg’s Patriot News. “The unfunded liability is currently $41 billion, projected to grow to about $65 billion in 2019. The proposed additional collar would increase that to $70 billion and result in higher payments for two decades.” Corbett says he will avoid that scenario by enacting benefit-cutting pension reform. But Pennsylvania politicians have been promising pension reform for years, and there’s no evidence an actual plan is any closer to going through now than any other time since the state started collaring its payments in 2003, when the legislature alarmingly voted to take a decade-long “pension holiday.”

The rest of Corbett’s budget is no better. What about the rising healthcare costs Zogby identified? Simple: A scheduled payment of $390 million to eight private healthcare organizations that operate Medicaid in Pennsylvania would be delayed by one month, from June 2015 to July 2015, so they can count as part of the fiscal year 2015-16 budget rather than this one. An additional $75 million of new money in the proposed budget would come from new leases for extracting natural gas from beneath state-owned parks and forests. (The drilling would occur on nearby private land.)

To be clear about what’s going on here: Gov. Corbett is proposing a reasonably nice 2014-15, thanks to various one-time cash infusions and postponing payments, to be followed by an absolute fiscal wreck in the year after his first term ends. If he loses reelection, which seems likely given his abysmal approval ratings, the wreck will become the responsibility of his Democratic successor. But Corbett is hoping general shortsightedness will help get him reelected. If that does happen, he himself would likely have to make another series of deep cuts similar to those he made in his first three years in office or else sharply increase taxes. Of course, at that point he’d be a two-term governor, unaccountable to voters and reasonably secure in his legacy.

The other major problem with the Corbett budget has to do with the new public school money. Corbett wants to leave the basic education funding, the state’s schools’ core source of money, flat at $5.5 billion, while slightly increasing special education funding and launching a new program called Ready to Learn that would provide block grants to districts for programs the Corbett administration approves of. Pennsylvania’s public school underfunding is well documented, but the solution is not some new grants with no guarantee of equitable distribution. And $400 million cannot undo the devastation that Corbett’s previous budget cuts have done to Pennsylvania’s public schools. The School District of Philadelphia alone faced a deficit of over $300 million this year, due almost entirely to state cuts. But it’s not just Philadelphia: equally upsetting are cuts in lower profile cities like Reading and Chester, the abolition of a fair, need-based school funding formula, and cuts to the state higher education system.

Were Corbett serious about improving Pennsylvania’s public schools, he would first and foremost work aggressively to implement a fair funding formula and expand the basic education subsidy. Some of the educational reforms championed by Republicans have been effective, though the state GOP’s faith in for-profit school management in Philadelphia has been more than a little bit disturbing. But the chief problems in Philly no longer have to do with unmoving institutional bureaucracy — with district management less than half the size it was just ten years ago, there’s hardly any bureaucracy left. The chief problems now are huge classes, shuttered libraries, schools without guidance counselors and other key staff, and severely curtailed extracurricular programs, all in a district that serves mostly lower income and minority students. And — at least prior to switching into reelection mode — Corbett made it painfully clear that these devastating cuts simply didn’t bother him very much.

Corbett likes to argue that he didn’t mean to slash funding for public schools: the previous governor, former Philadelphia Mayor Ed Rendell, packed his sizable education budget in his last year in office with one-time federal stimulus money, leaving Corbett with a shortfall he had no way to close other than with severe cutbacks or a serious tax increase. That argument isn’t totally without merit, but it doesn’t excuse poorer districts bearing the brunt of the cuts, and it doesn’t explain why Corbett could find so much money to slash business taxes but none for the schools. In any case, with his new budget, Corbett is proposing to do exactly the same thing as Rendell: kick the can down the road by relying on one-time cash infusions and deferred payments. He may win politically, at least in the short term, but the state and its citizens will lose badly.

Corbett sold himself as a man who would have the discipline to make the tough decisions the state needs. Instead, he’s managed to further defer those decisions while at the same time presiding over devastating cuts to one of the state’s most essential services — all the while failing to kickstart economic growth. It will be up to his Democratic challenger to make the case for a Harrisburg that can be both responsible and humane.


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