Month: September 2017

Lowman Henry Budget Glossary

By Lowman S. Henry

Lawmakers returned to Sept. 11 to finish work on a state budget which was due at the end of June. Late budgets have become a hallmark of the Tom Wolf Administration as the governor habitually proposes spending that vastly exceeds available projected revenue.

The governor and legislators are in somewhat uncharted waters as they approved a spending plan by the budget deadline, but have yet to reach agreement on how to fund that spending. Governor Wolf, of course, is advocating for higher taxes and 14 compliant Republican senators joined with Democrats to grant his wish. However, the Senate plan to place yet another tax on the natural gas industry, raise a wide range of consumer taxes and borrow money from future revenue landed with a thud in the state House.

In the weeks since the Senate vote, conservative Republicans in the state House have been working on an alternative that would fund the budget without raising taxes and borrowing from future revenue sources. They say they have found enough dollars squirreled away in difference agency accounts to accomplish that goal.

The budget will be a top priority when the House returns to session. Since budget terms can be confusing follows is a glossary that will serve as your guide to what various terms tossed around in the budget debate actually mean:

State Constitution – A dusty old document used for decoration on state capitol coffee tables, but which is never actually referred to when making laws.

Budget Deadline – A relic of bygone times when the governor and the legislature actually fulfilled their duties by enacting a balanced state budget by the date specified in the state constitution.

Budget – A document that includes a plan for spending and for the revenue to pay for that spending. This term has been redefined as a spending plan that we’ll somehow figure out how to pay for down the road.

Structural Deficit – This refers to the difference between what the state actually has to spend and what the governor and many lawmakers want to spend. It is viewed as something to be funded with higher taxes, rather than being cut to fit available revenue.

Projected Revenue – The amount of money reasonably expected to be collected from existing taxes and tax rates. This number will fall far short of desired spending and therefore is often adjusted upward to meet that target.

Severance Tax – This is a proposed fourth layer of taxation on gas produced in Pennsylvania’s Marcellus shale region. Since the impact tax was labeled a fee, some lawmakers perpetrate the myth of an industry getting away tax free.

Tobacco Settlement Fund – An annual revenue source generated by proceeds of a lawsuit against big tobacco companies that now is seen as a way to borrow from the future to plug the current year’s budget deficit.

Borrowing from the State Treasury – A process whereby we borrow our own money and charge ourselves interest in an effort to make it look like the state is facing fiscal Armageddon.

Gambling Expansion – Refers to various plans to allow for on-line gaming, the placement of video gaming terminals in bars and restaurants and other expected new sources of gambling revenue. Projected funds from these non-existent sources are often included in the state budget.

Senate Republican Leadership – Senators who abandon their party’s principles upon acquiring fancy titles.

Veto-Proof Majority – Refers to having two-thirds of the seats in a chamber, of which a substantial number will side with the minority on important issues.

House Republicans – Lawmakers blamed for the budget impasse because they are opposed to raising taxes on working families, senior citizens and small businesses.

Reverse Appropriation – This is a new term referring to efforts to cut the approved spending plan to fit available projected revenue. It is not something ever likely to be used.

Taxpayers – The only group of people in Penn’s Woods who don’t have a high priced lobbyist working on their behalf in Harrisburg. They are also viewed as an endless source of revenue by spending interests.

And so, as you hear the governor and lawmakers debate how to fund the state budget, keep in mind that what terms mean in the public sector are often very different than what they mean to everyone else.

Mr. Henry is chairman and CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.

Lowman Henry Budget Glossary