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Balancing the Budget: Another Rendell Lie?

The Rendell administration has been saying for weeks that the budget passed by the Senate in May (SB 850) is “$1.5 billion out of balance”.   As John Micek highlights on his blog today, the administration is now saying SB 850 would have to be cut by $1.7 billion.

Now, I don’t want to sound arrogant, and I know this really impresses the ladies, but I was exceptional at math in school.  But even though I could solve complex problems in my head, teachers required me to “show my work”.  Unfortunately, the Rendell administration is not held to the same standard.  My suspicion of why – his numbers are another distortion of the truth.

In simple terms, Rendell says SB 850 needs to be cut by $1.7 billion, but he proposes spending $1.6 billion more. This would thus create a $3.3 billion hole in Rendell’s plan.  The proposal that seems to be sinking him is his PIT increase – which, as harmful as this would be, amounts to only $1.5 billion.  Unless I have grossly overestimated my mathematical ability, he can’t fill a $3.3 billion gap with $1.5 billion in new taxes.

In detailed terms, I believe SB 850 to be about $300 million out of balance, and I will show my math here.  This shows SB 850 and the Gov. plan both to be in balance.  I would caution that a few of these numbers are be a bit off, as detailed below, because the administration has not shown their numbers, and I have had to guess. But if I have made any errors, then I’m sure the administration can let me know where.

  • I estimated June tax refunds to be $108 million to compute net 2008-09 General Fund tax revenue (the 0% growth figure).
  • I don’t believe SB 850 will be able to draw down all the $2.7 billion in stimulus funds.
  • SB 850 will not get the full $250 million from suspending tax credits, as some of these were not fully used.
  • Gov. Rendell will not get as much from natural gas and cigarette taxes as he would like.
  • This does not explain how either budget will fill the shortfall from last year – i.e. money the state has already spent.