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Paying the piper: budget solutions come at a cost

“You’ve got to spend money to make money,” the saying goes. But is the same true of saving money?

Gov. Tom Wolf thinks so. Late last year he hired McKinsey & Company — a global consulting firm — to help the state identify not only cost savings, but new revenue.

The problems here are obvious. First, it’s simply undesirable to go out and unilaterally gamble $1.8 million (the size of the contract that went to McKinsey & Company) on consultants when the state is facing lagging revenue collections and a growing structural budget deficit. What if Pennsylvania’s General Assembly doesn’t like the firm’s ideas? Taxpayers will have shelled out money for a binder that will collect dust somewhere.

Second, hiring an outside consultant sends a very clear signal that state officials and employees aren’t up to the task of formulating a balanced budget for the coming fiscal year. Fiscal policy is one of their most basic recurring duties. If they’re not up to the task, Pennsylvania’s problems amount to more than dollars and cents.

Given the size of the projected deficit (nearly $3 billion for this year and next) wanting a fresh set of eyes on the problem might be understandable. And if, as administration officials say, the firm has identified more than $1 billion in potential savings, then the tactic apparently worked. But it didn’t have to be done this way.

The company was awarded the contract on an emergency basis in late December, circumventing the state’s usual competitive bidding process. The administration says it decided to seek the firm’s help only after “the full extent of the structural deficit was becoming more clear.”

It’s hard to believe that the extent of the problem wasn’t clear to Wolf before now. He’s spoken about it specifically. In a caustic budget address last year the governor blamed “dime store magic tricks” by the legislature for creating a looming $2 billion structural budget deficit. The only difference from then to now is that Wolf’s upcoming proposal will reportedly eschew the sharp tax increases he proposed in each of his first two years in office, and instead pursue cost-saving measures.

There’s nothing wrong with changing direction and abandoning proposals that didn’t work in the past. And there’s nothing wrong with bringing in outside help to make that happen. But the size and scope of this problem has been apparent for some time now. There is no reason this contract should not have been bid out, and taxpayers gotten the best deal possible. Instead, Wolf got to handpick a third party to help him put together the most consequential budget of his term as governor.

Thus far, what little we’ve seen of the administration’s budget process smacks of politicking and positioning for the state’s gubernatorial election in 2018. Earlier this week Wolf announced that a longtime staffer and his chief of staff, Mary Isenhour, was stepping down to work on his reelection bid.

If the specter of 2018 produces a workable budget document and a negotiation process that’s more open to compromise and constructive collaboration than the previous two years, so be it.

But the bitter and uncompromising budget seasons of the last two years are the symptom, not the underlying problem. And the state can’t farm out a long-term solution to its broken and divided government.

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