IFO Makes Gov Acknowledge Revenue Reality

OFF THE FLOOR

A Capitolwire Column

By Peter L. DeCoursey
Bureau Chief
Capitolwire

HARRISBURG (May 14) – A stunning percentage of progress in government – or anything else – comes when everyone is forced to acknowledge the obvious and act as if the facts are what they are.

The Independent Fiscal Office is the latest example of that.

Up until this year, revenue projections, until mid- to late-June, were whatever the governor said they were.

That meant that initial budget bills passed by the House and Senate in May or June only spent what the governor said there was enough money to afford.

It didn’t matter that the professional staffs of the House and Senate Appropriations Committees are about as good as the revenue department at estimating this stuff from revenues.

It didn’t matter that everyone got the revenue reports every month -and toward the end of the fiscal year, every day – and was looking at the same numbers the governor was.

Everyone knew the facts, but as long as the governor and his staff publicly pretended the numbers didn’t say what they clearly said, governors could estimate revenues to achieve their goals: Republicans would underestimate them to spend less, Democrats would estimate them accurately or over-estimate them to spend more.

It happened under Democrats. It happened under Republicans. The sole right to estimate revenues was a significant gubernatorial power, based on concealing knowable facts from the public.

It also was a huge demonstration of the power of publicity. The real revenues were still known every year to any lawmaker who really wanted to know them, as well as all the top staff and maybe 250 lobbyists, lawyers, journalists, etc.

They were not secret in the sense that no one knew about them.

But because governors are the key to budget approval, and nowadays the Legislature passes most of its major initiatives along with the budget, no one wants to pick a fight about revenues with the guy who will be deciding whether their bills, WAMs, or local projects pass that year.

And governors have that power, which meant that it was impossible for anyone who had the information to use it very effectively.

Some tried as House and Senate Democrats did last year, when Gov. Tom Corbett tried to whistle past the fact that the state was going to have nearly $800 million more than projected to spend.

But the fact is and was, the state spent only about half of that sum in the budget last year because (1) Corbett made cutting state spending not only his top but nearly his only priority; and (2) He got to ignore the revenues and pretend they didn’t exist.

And no one could make him act as if they did.

Which is why the IFO was created during the Rendell administration: so the annual shadow dance over revenues would end.

Sen. Pat Browne, R-Lehigh, and the Senate GOP leaders who spent a long time, essentially three budget seasons, creating the office, let the debate become about a fight with former Gov. Ed Rendell, a Democrat.

But it was really about the public and lawmakers against the governor, any governor, and not against him in the sense that they were revealing something new.

But the governor used to have the power to deny revenue reality.

Now he doesn’t. When the Senate based its budget on the IFO initial estimate that there were about $800 million in revenues that could fund the forthcoming state budget, nobody really quarreled with it.

Corbett’s main response was, yeah, we got it, but we shouldn’t spend it because we will need it in the following budget and the one after that. That is an argument governors didn’t used to have to make because they could pretend the revenue wasn’t there.

The governor and his team acknowledged revenue reality in May. That has only happened in the past when they passed the budget in April or early May.

They did that because not only did the Senate GOP create the IFO, but all of a sudden, the House Democrats and Republicans, who did everything they could for years to make sure it wasn’t born, love it now.

They love it as much as the Senate GOP does, and the Senate GOP and Democrats have wanted it for years.

It is crucial that Matt Knittel, the IFO’s first boss, and Mark Ryan, the long-time House GOP aide who is his sidekick, ensured the administration and caucus staffs agreed with them, by doing a good job. It will be harder some year when the revenue prediction and estimation is trickier.

But the IFO did its job, so the Senate budget passed last week contains roughly what they want to fund. In the past, the Senate or House had to pretend the revenue was what the governor said it was and cut things that were not going to be cut once the revenues were acknowledged.

That made supporters of those programs “cut” crazy and added more tempest to the budget teacup.

So the IFO has brought reality and transparency to a key part of the budget process. Now anyone, hundreds of thousands of people who care – not just 200 insiders – can have a pretty good idea what the state has to spend a month before the budget is finished.

Senate Appropriations Committee Chairman Jake Corman, R-Centre, last week said of the IFO projection: “We had it, so we used it. I thought we should use it, since we created them.”

He said that proudly.

The bad part? It took three years to get the House and governor to be willing to acknowledge revenue reality to the public.

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