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Unlike Trump, Biden Delivers on Infrastructure Promise - updated

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Pennsylvania GOP Leaves State in Financial Mess


December 2014 - This article is based on a Reuters story we read earlier this month, which described how defeated Republican Governor Tom Corbett is leaving incoming Democratic Governor Tom Wolf with quite a financial mess to address. This multi-year problem started a few years ago after Corbett reduced corporate taxes by $2.1 billion, resulting in little economic growth and falling tax revenues. Sounds to us like the same problems that Kansas has been facing since their excessive GOP tax cuts were passed in 2012.


The state's budget secretary, Charles Zogby, says Wolf will face a $2 billion budget deficit in fiscal 2016. We understand that Corbett had to close a $1.2 billion shortfall in 2014 to balance the state's $29 billion budget, and decided not to address the issue responsibly, but rather decided to kick the can down the road until after the 2014 elections.


"It's going to be a challenge," Zogby said. "Corbett {the outgoing GOP Governor} said we ought to look at one-time options."


Fitch Ratings agrees with Zogby's assessment of the budget mess being a challenge, as they downgraded Pennsylvania's credit rating in September one notch to AA-minus because of escalating pension liabilities and the nearly 7 percent, or $2 billion, of Corbett's budget that relied on one-time revenue sources.


Reuters reporter David DeKok also reports that the state is struggling with sluggish revenue and job growth, which has lagged the nation. Not a surprise there. We'll all be better off once the conservatives learn that "trickle-down" economics just doesn't work and they start supporting demand-side economic solutions.


In large part because of these economic problems that were of his own doing, Corbett was defeated in his re-election bid this past November. This was the first time an incumbent Pennsylvania governor failed to win re-election since the Commonwealth's gubernatorial term limits were removed in 1968.


Among the initial suggestions to the incoming administration has been talk of implementing a tax on natural gas extraction and Zogby suggested that the state could save some money by consolidating some state departments, particularly with a merger of the corrections department and parole board. But it will take more than a few band-aids to solve this mess. We'll be interested in seeing how newly-elected Governor Wolf proposes to handle the problem. Of course Pennsylvania's GOP legislature will have to pass many of the Governor's proposals and we're not holding our breath on the legislature doing the right thing this time around either.







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