Next stop - Budget Canyon

It is said the only thing guaranteed in life are taxes and death. Provided you call Penn's Woods home, you may want to include on that infamous list state lawmakers failing to come up with an annual budget by the statutory deadline of July 1. The budget "deadline" is, of course, nothing of the kind. If anything, the inability to timely pass a budget is governance at its worst, and for the seventh year in a row, the legislature and the Rendell administration failed to meet that deadline in yet another state budget fiasco that lasted 101 days - the longest to date.

All of us in some capacity are bound by a particular form of budgeting - from our time to balancing our check-books. Budgets are a necessary component of doing business. Try not budgeting at home for three months and see where it gets you.

Since the budget has finally been passed, don't think for a Harrisburg minute that the commonwealth's problems are solved. Quicker than Ed Rendell can get a mike-check in a Philadelphia NFL TV studio, another state budget will soon be upon us. If you thought it was a drawn-out process this time, next year's budget's horizon is nothing but red. In the next three years, many more arduous decisions will have to be made regarding overall state spending.

According to the Commonwealth Foundation, an independent, nonprofit, watchdog group based in Harrisburg, even if the state's economy recovered to an unprecedented level in the next two years, there is no way it could possibly produce enough tax revenue to bridge the budgetary canyon that will emerge when federal stimulus money is reduced in 2010 and is history by 2011. Much of that stimulus money was supposed to stimulate the economy, but instead will fill budget holes. What happens when the federal money runs out?

A projected $460 million budget shortage will likely emerge next year, a $4.3 billion budget shortfall in 2011 and a $12.8 billion budget canyon in 2012. Even in the best-case scenario, a projected $4.2 billion budget deficit will emerge in 2012, while pension obligations for Pennsylvania's School Employees' Retirement System (PSERS) and the State Employees' Retirement system (SERS) come due, says the Commonwealth Foundation.

In a published interview, state Rep. Russell H. Fairchild, of Lewisburg, said on Oct. 12, "This budget is based on last year's income level, and after three months, we're already $100 million behind and unless there is a spectacular recovery in the economic situation both in Pennsylvania and the country, I feel we'll be right back in the same boat we were in this year."

If the state legislature's history tells us one thing, it is that even with increased taxes, it won't be enough to quench their thirst for spending. What most tax-and-spend lawmakers will never admit to is that budget deficits are the result of too much spending, not too few taxes. It has long been said that government doesn't have a revenue problem, it has a spending problem. The present budget does cut spending by a reported 1.8 percent, but such spending is only window-dressing and doesn't go far enough. Holding spending growth to the rate of inflation or below is only common sense, and restraining spending will lower the compounding deficit. The Nobel Prize in Economics notwithstanding, there is no other way around it.

The thing about cutting deficits is that there are only two choices: one hard for politicians, the other hard for Americans. Government can reduce spending, or government can raise taxes.

In the words of economist Brad Delong of Cal-Berkeley, "We want to run a budget that is in surplus during boom, in deficit during recession, that borrows in order to fund investments that benefit the future and that runs surpluses and pays down debt in order to fund future expenditures that benefit today's taxpayers." Straightforward advice, and from a professor on the Left Coast, which begs the question, why can't Democrats far and wide come to the same conclusion?

It is scandalous the way politicians on both the state and federal level continue to compromise the state and nation's fiscal health.

The little Grand Canyon may be in Pine Creek Gorge, but a growing canyon of debt is already mining its way from New Jersey to Ohio, and unless a vein of gold ore is miraculously uncovered along the way, the next three years' worth of budget woes will be worse. Guaranteed.

(Maresca, a local freelance writer, composes "Talking Points" for each Sunday edition.)