Sep 11, 201211:01 AMCity Beat
Capital Opinion by Michael A. Sand, Jacqueline G. Goodwin and others.
What Happens When You Kick the Can Down the Road?
People who live or work in Harrisburg watch the goings on in City Hall with a kind of morbid fascination. It would be entertaining if the cost of a spectator seat weren’t so high. We suggest that if Gen. William Lynch should ever throw in the towel as the state-appointed fiscal czar for the city that Gov. Tom Corbett appoint TV’s Jerry Springer to replace him.
The City is functionally bankrupt. But the Commonwealth doesn’t want the City to file for bankruptcy – mainly because of the precedent it would set.
So the battle lines are drawn. You won’t let us file for bankruptcy, says city council, so you can’t make us raise taxes to help pay the bills.
Nyah, nyah, nyah.
Their reticence is understandable but their obligations are clear.
The longer they delay, the more cost the taxpayers will have to absorb. Right now, the debt is compounding at a cost of about $1 million a month. Thus, with every passing month, they are, in effect, handing every man, woman and child a bill for $20 to cover the cost of Council’s inaction.
In a way, you have to sympathize with Council’s plight. They have no real role models at the state or federal level where real procrastination is practiced as a high art – usually under the guise of partisan politics.
In Washington, we face the “fiscal cliff” when the government runs out of borrowing authority. We need to raise taxes and cut costs but compromise – deciding what taxes to raise and what programs to cut – eludes Congress to the detriment of every American. In Harrisburg, you don’t have to look far for examples of the cost of “kicking the can down the road.”
We have a public employee pension gap between future benefit costs and project income and earnings. Hearings have been held but all the talk was about changing over to a system to lower costs in the distant future by lowering pension benefits.
No discussion was held about where to find the $40 billion or more to fund benefits for current state workers who might retire under the current pension scheme.
The front pages of Pennsylvania newspapers a few days back were filled with stories about the ballooning debt at the Pennsylvania Turnpike -- $7 billion and growing. It’s due not to current turnpike operations or improvement costs but, rather, the need for the turnpike to pay something short of $500 billion a year to cover part of the state Department of Transportation budget.
Why? Because under Act 44, the turnpike was supposed to toll Interstate 80 and use the profits from that enterprise to generate the $500 million. When the federal government said no to tolling I-80 specifically because funds were going to be siphoned off for other roads, nobody had the strength of character to repeal Act 44’s financial burden to the turnpike.
As a matter of fact, the Transportation Funding Advisory Committee commissioned by Governor Corbett has estimated that real costs to maintain the status quo for transportation in Pennsylvania will require about $3.5 to 4 billion in new funds yearly but the General Assembly has declined to deal with the need – or even part of the need – because the Governor took a Grover Nor Quist “no new taxes” pledge. Meanwhile the turnpike is headed for fiscal disaster and roads and bridges in Pennsylvania continue to decay back to the state they were in the latter days of the last century.
Oh, well, at least the Commonwealth addressed the state’s debt to the federal government that it has incurred by borrowing from Washington to pay unemployment benefits during our protracted economic slowdown. How could this happen and is there a model for the state to follow to address other financial needs? Actually, no. The state floated bonds to raise the cash to pay back the feds.
To be fair, the interest rate is lower – but the debt is still there.