Pennsylvania Department of Revenue Report Brings More Bad News

Posted by Patrick M. Gleason on Tuesday, May 4th, 2010, 9:42 AM PERMALINK

The Commonwealth Foundation has published their monthly deficit watch following the release of the Pennsylvania Department of Revenue’s April collections report and the bottom line is the fiscal situation in the Key Stone State continues to look bleak.

In contradiction to recent assertions from the Rendell administration, revenue came in under below estimates in April, as it has for all 10 months of the current fiscal year. The state now finds itself $1 billion in the hole for the current budget and facing ballooning deficits into the future.

Gov. Rendell’s solution, as was the case last year, remains a combination of higher taxes and higher spending. Despite the fact that state revenue continues to decline, Rendell’s new budget calls for a more than billion dollar increase in general fund spending. While there is much disagreement as to whether the economy is on the mend, even assuming the most optimistic of scenarios, Rendell’s spending plan ignores the fact that recovery in state tax collections tends to lag behind that of the economy.

Rendell’s budget includes a $1.3 billion sales tax increase over the next two years through base expansion. Additionally, Rendell, is continuing his push for tax on natural gas production, which, as ATR has pointed out since last year, will dampen the economic potential of the Marcellus Shale.

The Governor’s budget, as with his previous budgets, continues to spend too much, tax too much, and appears to have been crafted ignorant of the fact that tax revenue continues to decline, the state’s current tax climate is hostile to employers, and unemployment is nearing double digits. MSNBC likes to trot Gov. Rendell out from time to time to criticize the GOP and it’s entertaining to watch because he always just mumbles incoherently about how Republicans are “out of touch.” Yet, looking at Rendell’s budget, one would be hard pressed to find a state with a more economically out of touch chief executive at the helm (OK David Paterson might give him a run for his money). Furthermore, an administration has to be pretty out of touch to not understand how this Orwellian ad would creep out most Americans:

As Rendell concludes his final year in office – leaving the state rainy day fund depleted, massive projected deficits well into the future, and an impending pension bomb to deal with – he follows in a tradition epitomized by his Democratic counterparts such as Janet Napolitano and John Corzine of leaving the state in fiscal shambles.