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State lawmakers face challenges earning credibility in budget crisis

Given the state's projected $3.2 billion budget deficit, a temporary tax hike might be a reasonable solution to a temporary fiscal crisis caused by the national recession. But state officials have little credibility when it comes to cost-cutting or passing a tax hike that is actually temporary.

The first reaction to the budget gap by most Democrats in Harrisburg has been to push for higher taxes. They claim that cutting state spending is not the answer. They say there is no waste or fat in state government to trim and that budget cuts will hurt people.

But this argument doesn't hold up given the recent history in which former state Sen. Vincent Fumo, D-Philadephia, was convicted in a federal corruption trial for misusing more than $2 million in state funds for his personal benefit. Further evidence of how lawmakers treat state taxpayers' money is being revealed in the ongoing Bonusgate investigation, which has produced evidence that state lawmakers, especially Democrats in the House, spent nearly $4 million in taxpayer funds to reward staffers for campaign and re-election work, which is illegal.

An editorial in the Philadelphia Inquirer referred to that wasteful spending and said, "Legislators can't waste tax money to that degree, and then turn around and tell taxpayers with a straight face that state government has been cut to the bone."

Even if a tax increase eventually is needed, state lawmakers have a long way to go before any broad-based tax hike can be justified.

Though cuts in the operation of the Legislature might not erase the budget gap, it would demonstrate some sensitivity to taxpayers who have had to make adjustments to their own budgets in this recession.

It's well-known that Pennsylvania has the most expensive state legislature in the nation. In New York, the state legislature operates for about $100 million less a year than the General Assembly in Harrisburg.

Not only does this state spend more on its lawmakers than any other state, but lawmakers in Harrisburg have more staffers than lawmakers in any other state.

By any measure, Harrisburg is bloated, inefficient and too costly.

To start solving the budget crisis, lawmakers should be expected to trim about $100 million from the cost of their annual operations.

And while it would be mostly symbolic, lawmakers also should start contributing to the cost of their health care. Most Pennsylvanians have seen increases in their contributions to their employer-provided health care in recent years, but state lawmakers still contribute nothing toward their lifetime health care coverage. That needs to change.

Another way for state lawmakers to better relate to the financial struggles of millions of Pennsylvanians would be to give up, for a year or two, their annual cost-of-living increases. Only then can they begin to appreciate the stagnant wage environment experienced by millions of working Pennsylvanians.

Beyond that, lawmakers should transfer much of the $200 million or so in the so-called leadership accounts of the four caucuses, often referred to as slush funds, to the state treasury. State lawmakers have managed to build up these slush funds to an indefensible level, and using most of that money to help plug the budget gap is appropriate.

Only after state lawmakers find substantial cost savings, reduce wasteful spending and agree to reduced benefits should any tax increase be discussed.

And when talk does turn to a tax increase, the time frame should be limited to one year. If the budget faces a shortfall again next year, another one-year tax hike could be approved.

Gov. Ed Rendell is starting to talk about a temporary tax to solve this year's budget crisis. But critics are quick to point to the "temporary" Johnstown Flood Tax that was a 10 percent levy on alcohol sold in the state. That tax was approved by the Legislature in 1936 to help fund the rebuilding of Johnstown after it was devastated by floodwaters. But, the tax never was repealed. It has, in fact, survived more than 70 years and over those years grown to 18 percent.

Rendell points to several tax hikes that were billed as temporary and were scaled back some years after passage. But even those rolled-back tax hikes never came back down to their original rates. The governor and the Legislature have not earned the public's trust on this issue. Any tax bill must be clearly worded as a one-year tax.

A reasonable approach to solving the state's $3.2 billion budget crisis would be to break the deficit into thirds. State lawmakers should contribute something close to $1 billion through General Assembly cost savings, trimmed benefits and contributions from the slush funds managed by the four caucuses as well as the state's Rainy Day fund. Another third should come from broader budget cuts that lawmakers work out with Rendell. Then the final third could be raised by tax increases, including the increased taxes on tobacco and other products Rendell is pushing, as well as a clearly worded, one-year temporary increase to the state income tax.

The next few weeks should reveal whether lawmakers are serious about cutting costs and making reasonable changes in their own operations to reduce the impact on state taxpayers. People in most other organizations are making sacrifices, why should lawmakers be exempt?

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