Your Pain is His Gain

The epic budget battle that began two years ago with the inauguration of Governor Tom Wolf resulted in school children and nonprofits being held hostage for over nine months as legislators battled the massive tax and spending increases advocated by the new chief executive. State employees, however, were spared economic pain.

As the budgeting process for the new fiscal year gets underway the first shots in what is shaping up to be an even more intense struggle between the Democratic governor and a legislature heavily dominated by Republicans clearly will not let state employees off the hook. In fact, some 520 workers in the Pennsylvania Department of Labor & Industry are among the first casualties.

Just as the battles at Lexington and Concord heralded the start of America’s Revolutionary war, the skirmish over funding for Labor & Industry represents the start of what may turn into Pennsylvania’s longest fiscal fracas. Court rulings require state employees to be paid even if there is no budget in place by the constitutionally mandated June 30th deadline. That is one reason why little pressure was applied to the governor and lawmakers during the lengthy budget battle two years ago.

But this is different. At issue is continuing a dedicated funding stream that finances the operations of seven unemployment compensation service centers around the state. As the last hours of the 2015-2016 session of the General Assembly ticked away the House passed a bill reauthorizing the spending. Senate Republicans, however, wanted more information which was not forthcoming from the Wolf Administration in a timely manner and the clock ran out.

Sensing a political opportunity Wolf immediately announced lay-offs and sent a labor union ally out to blame Senator Scott Wagner who plans to challenge the governor’s re-election. This despite the fact senate leaders indicated their willingness to renew the funding when the new session of the General Assembly reconvenes in January.

Senators argue the lay-offs are unnecessary because the administration could merely move funding among budget categories to cover costs until after the New Year. Wolf claims he can’t do that, but during the long budget battle of two years ago he made hundreds of such transfers. It isn’t a matter of can’t – it is a matter of won’t.

So once again Governor Wolf is signaling his willingness to inflict great pain upon innocent parties in his efforts to achieve his spending goals. As 570 families enter the holiday season with paychecks about to end, they are the first of millions who will suffer economic harm in the coming months. Charities and schools are soon to follow.

A representative survey of just 176 nonprofit organizations found that during the last budget battle 68% were adversely affected by the disruption in state reimbursements. Had that fight gone on much longer numerous school districts across the state would have been forced to close. Many kept their doors open only by borrowing. Likewise many counties were forced to cut services and/or borrow money. All of this came at significant cost to taxpayers.

The early signal by Governor Wolf that he plans to continue using fiscal hostage taking as a tactic is ominous. The recent General Election produced a veto-proof Republican majority in the state Senate. And while not holding veto-proof numbers in the state House, Republicans did add to their already substantial majority. Thus the stage is set for a lengthy fight.

Overlay all these factors with the unofficial start of the 2018 gubernatorial election cycle and it becomes quite possible Penn’s Woods may see something it has never seen before: a fiscal year with no official budget. It happens in Washington all the time where so-called continuing resolutions keep the money flowing because congress and the president can’t agree on a spending plan.

But even a state version of a continuing resolution is not possible unless all parties agree that money must continue to flow. At this point it is unlikely Governor Wolf will bow to political reality any time soon. Rather he is doubling down on his policy of your pain is his gain.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected].)

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