‘Unusual’ budgetary situation prompts marathon Budget Office hearing

‘Unusual’ budgetary situation prompts marathon Budget Office hearing


By Chris Comisac, Capitolwire


If you want to know how out-of-whack the current budget situation is, the Senate Appropriations Committee, normally fairly economical with its time during state budget hearings, used up all but 15 minutes of the allotted hearing time for the governor’s Budget Office to talk about, for the most part, the 2015-16 budget.


The only problem is the hearing is, ostensibly, supposed to be about Gov. Tom Wolf’s 2016-17 budget proposal. That bit came after the committee bumped the Independent Fiscal Office’s 1 p.m. hearing to 3 p.m., and resumed with the Budget Office at 1:30 p.m. for a second round of questions about the governor’s 2016-17 spending plan.


“We’re going to embark over the next three weeks on somewhat of an unusual and uncustomary process, viewing components of spending plans over, essentially, two fiscal years,” said Senate Appropriations Committee Majority Chairman Pat Browne, R-Lehigh, prior to his committee’s first FY2016-17 budget hearing. “The normal protocol is an annual appropriations review with a proposal on a base of spending that was fully enacted the prior year.”


Illustrating the “unusual” situation confronting lawmakers, a few senators, understandably, had difficulty separating their questions between 2015-16 and 2016-17, driven mostly by the fact Wolf’s $33.3 billion 2016-17 plan is predicated on his winning General Assembly approval for supplemental appropriations to the budget he partially vetoed on Dec. 29. The added funding represents the $30.8 billion budget framework agreement which collapsed prior to Christmas, not the $30.2 billion budget sent to him by legislative Republicans, who maintain the framework became an unviable option once the pension reform, liquor reform and property tax relief components of the agreement failed to win General Assembly approval.


However, Budget Secretary Randy Albright continued Wolf’s budget address theme of “two paths” that could be followed by lawmakers: either agreeing with Wolf the framework should be resurrected and approved (along with about $900 million in new taxes, that translate into about $2.5 billion annualized over a full fiscal year in 2016-17), or disagreeing with Wolf’s plan, prompting a “fiscal catastrophe.”


Albright noted, as he did during a pre-budget address briefing on Feb. 9, that even with additional recurring revenues, more work must be done to control cost growth, otherwise the structural deficit will return.


Near the end of the nearly five-hour marathon budget hearing Browne agreed with Albright’s acknowledgment state government has to get a handle on costs, otherwise any new revenue eventually won’t be enough to cover growing costs.


“We are talking about – it’s been talked about in the [Capitol] building – regarding the need for revenue to fill a structural hole,” said Browne. “That is essentially what it is if we don’t match – at least match – that 3-percent growth in revenue with 3-percent growth in expenses.”


However the state’s costs – be they pension costs, human services costs, debt service or other spending – are growing at a higher rate than revenue, said Browne.


“If we’re talking about revenue to fill that hole and don’t give confidence that we’re able to stay out of the hole … then we’ll be just back again” needing more revenue, said Browne.


“Your comments about where costs are going to go, and the need to bring them into line with revenue is just absolutely necessary,” Browne said to Albright, cautioning him that members of the General Assembly are going to need to have more confidence in the administration’s claims of controlling costs.


“That’s something we’re going to have to collectively work on,” said Browne.


As both he and the governor did on Feb. 9, Albright also argued that without the recurring revenues, the state’s $2 billion structural deficit would require cuts in discretionary funding in 2016-17 and beyond, with education spending offering the most fertile area for such spending reductions.


Senate Majority Leader Jake Corman, R-Centre, took Albright to task early on during the hearing, stating the $30.2 billion budget sent to Wolf, from which he vetoed more than $6 billion, would have increased funding for K-12 education by more than $200 million, which doesn’t seem to equate to Wolf’s budget address claim that thousands of teachers and other school employees would need to be fired.


“The only cuts in education funding were due to the governor’s blue pen,” said Corman, alluding to Wolf’s decision to authorize only half of the basic education funding included in the $30.2 billion budget sent to him.


Albright said the administration’s position “isn’t rhetoric, it’s math,” and argued the budget partially vetoed by Wolf represents an overall cut of $95 million to school districts because it doesn’t include the PlanCon bonding program that was part of the framework agreement, leaving a $300 million hole in the budget that would have otherwise helped school districts’ with their construction costs.


Corman countered that the bonding plan was proposed by the GOP prior to the framework agreement, and could still get done, with or without the revival of the framework, if the administration were willing to do so.


The senator also disputed the governor’s budget address claims about school districts increasingly hiking local taxes to make up for what Wolf and his administration claim has been less-than-appropriate education funding.


Corman said the average increase statewide in local school property taxes during 2011, 2012 and 2013 – the three years Wolf called “Harrisburg’s irresponsibility” with regard to education funding – was 2.2 percent. He said they increased an average of 7 percent during the 1990s, and by 6 percent in the 2000s.


“So property taxes are going up dramatically [less] than the rate that they had in the past … for the governor to incite the public by saying we’re raising the property taxes all over the state, when we are raising them at a much lower rate than we ever have before is just not painting an accurate picture,” said Corman.


With Albright describing Wolf’s plans mostly as “cost-to-carry” budgets with the notable exception being significantly increased education spending, much of the hearing, before and after the early afternoon break, focused on education funding.


Arguing for the need to significantly increase state funding to the Philadelphia School District, Senate Appropriations Committee Minority Chairman Vince Hughes, D-Philadelphia, said 173 district classrooms are without teachers.


“If there are 30 students per classroom, that would make [the overall population] the sixty-sixth largest school district in the state,” without a teacher in any classroom, said Hughes. Later in the hearing he added the district’s schools are short on nurses and counselors, teachers haven’t had a raise in three or four years and the district lacks the necessary funds to support and maintain the school buildings they own.


Senate Education Majority Chairman Lloyd Smucker, R-Lancaster, ran through a list of data regarding Pennsylvania education funding and achievement, which he suggested differ from assertions by the governor and his administration that the state’s schools are poorly funded and that has produced declining student performance.


Smucker noted the federal Department of Education indicates Pennsylvania is near the top in the nation with regard to average dollars spent per student, spending nearly $4,000 more per student than the national average of about $11,300. Smucker added several national organizations show Pennsylvania’s schools, statewide, scoring in the top ten with regard to student performance, and for at least the last seven years.


Albright did not disagree with Smucker’s assertions, but qualified his assessments.


“That’s great news if you’re fortunate enough as a family, as a child, to be in the districts that are among the best performers,” said Albright, arguing there exists a disparity between the top and bottom performing, and spending, districts. “The challenge to us as a state with 500 school districts, for better or for worse, is many school districts, many families, many children aren’t on that end of the spectrum.”


“When we have a funding system that is disproportionately reliant on local revenues, so by design, by definition, if you’re in a relatively wealthy community, you can spend well for your local school district, but if you’re in a poorer community, you cannot – that’s the challenge that we face, that’s what the governor said over and over again,” Albright explained. “We shouldn’t allow the quality of the education a student can receive be determined by the zip code of their address.”


In 2014, Capitolwire took a closer look at state spending per pupil and found that even districts on the lower end of the funding spectrum are likely spending more than the national average per student.


The education disputes kept coming as the hearing wore on into the afternoon.


Sen. Stewart Greenleaf, R-Montgomery, and Albright disagreed about the role of increased education funding in improving achievement a schools, particularly poorly performing schools that already receive well in excess of 50 percent of their overall funding from the state.


Albright took flak from Sen. Randy Vulakovich, R-Allegheny, for his assertion that some school districts – particularly those that ended last year’s school year with a negative fund balance – are at risk of running out of money, even if the $30.2 billion budget were fully enacted, and without any additional funding could run into problems by the end of March or early April. When pressed by Vulakovich, Albright couldn’t offer any additional details about at-risk districts.


Following up on Vulakovich’s questions, Sen. Mario Scavello, R-Monroe, observed that imminent school district funding problems are “kinda self-inflicted” since they’re due to Wolf’s blue-lining of $3.2 billion from basic education.


And Sen. Scott Wagner, R-York, seemed more like a prosecutor dealing with a hostile witness as he peppered Albright with “yes or no” questions about what Wagner cited as inappropriate education spending, unaddressed state fraud and abuse, and government financial mismanagement.


“Until we clean some of this stuff up, I’m not going to support tax increases,” said Wagner, who added he would lobby all of his legislative colleagues to oppose Wolf’s proposed tax hikes.


So, while state officials acknowledge they’re in uncharted budgetary waters, the “unusual” situation doesn’t appear much different from what’s transpired the past year.