Governor Wolf’s 2016-2017 Budget Address
February 09, 2016
I. A Commonwealth in crisis
Lieutenant Governor Stack, Speaker Turzai, President Scarnati. . .
Leader Corman, Leader Costa, Leader Reed, Leader Dermody, members of the General Assembly…
Members of the judiciary, members of the cabinet, the auditor general, the attorney general, the treasurer, and my wife, Frances…
Most importantly, my fellow Pennsylvanians:
This will not be an ordinary Governor’s budget address.
Usually, this speech is an opportunity to lay out an ambitious agenda for the year ahead.
Under ordinary circumstances, I would outline my 2016-17 budget proposal, a proposal full of ideas to move our Commonwealth forward.
I would talk about new measures I’m proposing to ensure that every child in Pennsylvania has a world-class education that starts before kindergarten and goes all the way through college.
I would talk about the new partnerships we can create between the public and private sectors to help create jobs and grow our economy.
I would talk about new innovations that can build on the progress we’ve already made in modernizing our state government so that it costs less and works better.
And I would talk about some long-overdue steps we can take to help our Commonwealth fulfill the promise of equal opportunity and economic security for all: including protections for the LGBT community in housing and the workplace, the legalization of medical marijuana, a raise in the minimum wage, and criminal justice reform that will bring fairness back to our system and save tax dollars.
But I can’t give that speech. Not under these circumstances.
My fellow Pennsylvanians: Our Commonwealth is in crisis. A crisis that threatens our future.
And today, I want to be clear – with each member of the General Assembly, and with every Pennsylvanian – about the actions we must take to resolve this crisis, and the consequences we will all face if we don’t.
II. This is about math
First, let’s be very clear about the nature of the problem.
The problem is not that Republicans in the General Assembly and I don’t see eye-to-eye.
After all, Pennsylvanians are used to seeing political leaders disagree, even strongly. And in the 2014 election, they chose divided government: a Democratic Governor, a Republican legislature. I doubt anyone was surprised when it turned out that we had different priorities.
No, this crisis is not about politics at all.
This is about math.
Pennsylvania now faces a $2 billion budget deficit.
That’s not a Democratic fact or a Republican fact. It’s just a fact.
It’s a fact supported by Standard and Poor’s – an independent rating agency. They have done the math. And they agree: Pennsylvania faces a massive structural deficit that will only continue to grow if we fail to address it responsibly.
This deficit isn’t just a cloud hanging over Pennsylvania’s long-term future. It is a time bomb, ticking away, right now, even as I speak.
If it explodes – if the people in this chamber allow it to explode – then Pennsylvania will experience a fiscal catastrophe the likes of which we have never seen.
Please understand: We are not talking about a long-term budget projection. We are talking about Pennsylvania failing to meet its basic obligations – this year. We are talking about pain that will be felt across our Commonwealth. This year.
If the General Assembly does not approve a responsible plan to solve this crisis, every Pennsylvanian will suffer the consequences. Those consequences will be real. They will be immediate. They will be severe.
Nearly three-quarters of Pennsylvania homeowners will see their already-too-high property taxes skyrocket even further.
If a member of this body were to stand up and propose a massive property tax increase, he or she would be booed off the floor by Democrats and Republicans alike.
But in fact, that is exactly what will happen if we do not act.
We have seen this play out over the last four years. Since 2011, school districts have been forced to increase local property taxes by $1.2 billion, and all because of Harrisburg’s irresponsibility.
In the last year alone, 83 school districts increased property taxes above the index because Harrisburg didn’t produce a responsible budget, and another 175 school districts are contemplating additional tax increases this year – for the same reason.
This tax shifting is not sustainable, and it will only continue to squeeze families and seniors if we do not stop passing the buck on to local communities.
Meanwhile, even as Pennsylvanians will pay more, they will get less from their state government. Far less.
For example: Our education system, already threadbare after years of underfunding at the state level, will take a ruinous hit.
· Thousands of teachers will be laid off. Guidance and career counselors will be handed pink slips, as well. In all, more than 23,000 education professionals will be immediately yanked out of Pennsylvania schools.
· Across Pennsylvania, already-crowded classrooms will become even more so. Class sizes will balloon by 30 percent to account for all those teacher layoffs. Worse, the consequences will not be evenly distributed – classroom crowding will be more severe in the schools that can least afford it. But all across our Commonwealth, our children will receive less attention, less instructional time, less opportunity to gain the skills we need them to have in the 21st century.
· Technical education programs will be cut. Special education programs will be cut. Head Start programs will be cut.
· And tens of thousands of Pennsylvania children will lose access to pre-kindergarten, depriving them of early childhood education that we know is key to their future success.
This is not a threat. This is not political posturing. This is simply what the math tells us will happen if this crisis is not resolved. This is the reality that teachers, and parents, and children in our Commonwealth will face if the General Assembly does not act.
And the damage will not be limited to our schools. Basic state services will also face devastating cuts.
· We will lose nearly $200 million in services to Pennsylvania seniors including prescription drug assistance and home and community based services. Pennsylvania seniors who depend on that assistance will be forced to pay more out of pocket. Some will have to choose between paying for groceries and paying for the medicine that keeps them alive. These are our elderly parents and neighbors, and they are counting on this funding to pay for the medicine they need. But if we don’t have a budget, we can’t help.
· We will lose $180 million in assistance for people living with mental illness or intellectual disabilities. These Pennsylvanians are the most vulnerable among us, and they are counting on our help to live a full life and contribute to their communities. But if we don’t have a budget, they will be denied significant opportunities to improve their lives.
· We will lose $40 million in state funding for child care, and thus forfeit nearly $50 million in federal matching funds, for a total cut of nearly $90 million. Hundreds of thousands of working parents are counting on our help to have some peace of mind and the ability to earn the living upon which they raise their families. But if we don’t have a budget, 211,000 Pennsylvania children will have nowhere to go.
· We will lose $11.5 million in funding for domestic violence shelters and rape crisis centers. Survivors of domestic violence and sexual assault rely on these safe havens to have somewhere to go in the midst of unthinkable pain and unspeakable terror. But if we don’t have a budget, those shelters and crisis centers will have to shut their doors to the people who need them.
Critical programs such as these make up nearly three-quarters of our human services budget.
Simply put: the Commonwealth of Pennsylvania cannot meet its obligations to its citizens if the General Assembly does not meet its obligation to pass a responsible budget.
And while my Administration will always strive to tackle fraud and be as efficient as possible, even these harsh new cuts – cuts that will harm single mothers, seniors on fixed incomes, and those who are down on their luck – will not solve our crisis.
Indeed, anyone in this Chamber who claims we can simply cut our way out of this mess without also increasing revenue is just ignoring the math. They’re also ignoring history. If we don’t have sustainable revenue sources in our budget, the result will be billions of dollars in new property tax hikes.
Pennsylvanians need to prepare for these consequences. And I do not say this with any joy whatsoever.
But someone in Harrisburg has to start telling the people of Pennsylvania the truth about the mess we’re in.
III. What hasn’t worked
Before I ran for Governor, I ran a business. And in challenging times, I know that you can be fiscally responsible while still looking out for the people you serve. These values are not mutually exclusive; they are closely linked.
And if you’re in business, and the numbers don’t add up, you can’t ignore the problem, or spin it, or wish it away.
You have to take a clear-eyed look at how the problem arose, and then you have to solve it. And fast. Or you won’t be in business very long.
Pennsylvania businesses don’t have the luxury of pretending their problems don’t exist. Neither do Pennsylvania families sitting around the kitchen table trying to make ends meet.
And the truth is, neither do we here in Harrisburg.
So let’s be honest about where we are and how we got here. After all, this fiscal crisis didn’t appear from out of nowhere. This was no act of God. We are in a hole we dug ourselves, right here in Harrisburg. And if the consequences I’m describing sound familiar, it’s because Pennsylvania has been building up to this moment for years.
For years, our leaders tried to balance our state budget on the backs of our children and our schools. When I took office, Pennsylvania ranked near the bottom of the country in the percentage of state-level K-12 investment. The burden of funding our schools fell on our local communities. And that, in turn, meant huge spikes in property taxes for Pennsylvania homeowners.
That’s a bad way to solve a budget problem. But it’s a great way to create an education problem.
We were left with tens of thousands of teachers laid off and crowded classrooms across most of our school districts.
And that was just part of the problem. You see, even these huge cuts to education weren’t enough to balance the budget. But instead of finding a sustainable way to deal with our deficit, Harrisburg chose to paper over the problem with a series of budgetary gimmicks and quick fixes.
Maybe you can get away with that for a little while. But sooner or later, the rent is due.
And if folks here in Harrisburg thought this sleight of hand was a real solution to our budget problem, then the only people they were fooling were themselves. Because nobody else bought it.
The three major ratings agencies – Fitch, Moody’s, and Standard and Poor’s – have each downgraded our credit, a total of five times over the last five years. Our credit has actually been downgraded three times in the last two years alone.
And each time, the ratings agencies have explained that the downgrades are a direct result of these little tricks Pennsylvania has employed to avoid facing up to the reality of its fiscal situation.
When Harrisburg doesn’t take our budget problem seriously, the folks who rate our credit stop taking Harrisburg seriously.
Today, because of years of budgetary irresponsibility, the Commonwealth of Pennsylvania is considered to be among the least creditworthy states in America. This is embarrassing. But embarrassment isn’t the point.
You see, because our credit has been downgraded so much, we are forced to pay a higher rate of interest on our $17 billion in debt. That will eventually cost us an extra $139 million a year.
That’s $139 million that doesn’t go to improving our schools, or making our business environment more competitive, or lowering our taxes. It’s a $139 million penalty that the people of Pennsylvania pay for Harrisburg’s fiscal irresponsibility.
IV. We had a deal
That’s how we got here. And it’s why, when I took office last year, I proposed a different kind of budget.
Instead of shortchanging our schools, I proposed a historic commitment to education – beginning to restore the $1 billion that had been cut from our schools under the previous administration, making new investments in early childhood education and community colleges, increasing our state’s share of funding for public schools, and directing more of that funding to districts that needed it the most.
And instead of using sleight of hand to avoid dealing with our deficit, I proposed a serious plan to balance our budget and set us on a more sustainable course.
No more gimmicks. No more quick fixes. A new approach in Harrisburg. A fresh start for Pennsylvania.
Now, I expected that Republicans wouldn’t agree with everything in my proposed budget.
What I didn’t expect was what I got: a budget that didn’t even balance.
Incredibly, the budget they sent me relied on the same gimmicks and quick fixes that had gotten us in trouble in the first place – $1.5 billion worth of optical illusions that would have made our actual budget problem even worse.
If you were running a business, and you took a budget like this to your banker, you would be laughed out of the room. But Pennsylvania’s creditors don’t have a sense of humor about this sort of thing. And neither should we.
While I was disappointed by the Republicans’ proposal, I wasn’t discouraged.
So I came to the table ready to talk. Ready to negotiate. Ready to compromise.
It took months of bargaining. It took some painful sacrifices from both sides. But in the end, all that hard work paid off. We had a deal.
The compromise budget I worked out with members of this legislature last year included some of what I wanted – including a historic investment in our schools – but not everything. It included some of what Republicans wanted – including historic changes to our pension and liquor systems – but not everything.
And I continue to believe we should solve these decades old problems.
We still need changes that provide taxpayers savings and stability in our pension plans, and we need to bring our liquor system into the 21st century.
However, these improvements by themselves are not magic bullets, and changes in these two programs will not alone mitigate the consequences of a continued failure to acknowledge the basic math problem we face.
Again, the compromise budget included these Republican priorities. But most important of all, the compromise budget was balanced. It solved the financial problem. Passing it into law would defuse the fiscal time bomb and set us on a more sustainable course.
It passed the Senate with a majority of both Democrats and Republicans, and had bipartisan support in the House.
All that remained was a final vote before I could sign it into law and we could finally move forward.
I was ready, pen in hand.
And then House Republican leaders just…walked away.
They walked away from the table and went home for the holidays without holding that final vote. They still have not held that final vote. And because of that, we still don’t have a budget.
But we still have a budget crisis. That fiscal time bomb is still ticking.
Our teachers hear it. Our parents hear it. Our seniors hear it. Our creditors certainly hear it.
But the time for games is over. And now it’s time to finish the job we should have finished last year.
V. We can’t keep digging
Now, look. Arguments over policy priorities are healthy. Democracy entails disagreement. Compromise is hard.
But we had those arguments. We worked out our disagreements. We reached a compromise. Republicans and Democrats sitting in this chamber right now sat at a table with me and did the hard work to find common ground.
We had a deal. And then the House Republican leaders walked away.
Only in Harrisburg could that be seen as an acceptable way to do business.
But you know what? I’m not interested in the inner workings of the Republican caucus. I’m not interested in the politics of any of this.
This isn’t about politics.
Once again, this is about math.
And so here’s what’s really frustrating: When some Republican leaders bailed on our agreement, I was handed yet another budget where the numbers didn’t add up – a budget that would cut another $95 million from our schools, a budget that would zero out funding increases for our institutions of higher education, and, worst of all, a budget that still didn’t balance.
We are sitting at the bottom of a $2 billion hole. It is simply unbelievable that some folks in this chamber want to keep digging.
I can accept that we disagree about the importance of education. I can accept that we disagree about the proper role of government in securing a more prosperous future for our Commonwealth. And I can accept that I won’t get my way on everything.
But I can’t accept – Pennsylvania can’t afford – another irresponsible budget that ignores the fact of this fiscal crisis and pretends our problems don’t exist.
I didn’t run for this office to be party to the corner-cutting and budget gimmickry that got us into this mess. We can’t afford to play political games while this crisis is casting a dark shadow on our future. There is simply too much at stake.
The train has been careening down the tracks for years. Now the moment of impact has arrived. And whether or not we crash is up to the people in this chamber.
It’s up to the people in this chamber to save our children, our seniors, our most vulnerable populations from bearing the brunt of devastating cuts.
It’s up to the people in this chamber to save our taxpayers from getting handed the bills Harrisburg wasn’t responsible enough to pay.
It’s up to the people in this chamber to save Pennsylvania’s future.
It’s time for the people in this chamber to get back to work.
VI. The path forward
The good news is that I still have my pen. And we still have a budget that reflects months of hard work and honest negotiation, a budget that has been approved by bipartisan majorities in both chambers of our legislature, a budget that averts this fiscal catastrophe and gives us a chance at a fresh start.
We can get it done. Send that compromise budget to my desk, and we can put our Commonwealth on more secure footing than it has been in years.
But let me be very, very clear with each of you in this chamber: We are going to have to stop playing games with our fiscal future. We are going to have to stop closing our eyes and hoping our problems go away. We are going to have to face facts.
So do not send me another budget full of gimmicks that are too cute by half. Do not send me another budget where the numbers simply don’t add up.
I will not be amused. I will not be fooled. I will not be convinced that dime-store magic tricks are a substitute for a real, responsible budget.
And, more importantly, neither will our creditors. Nor the people of Pennsylvania.
If you can’t agree to the budget reforms I’ve proposed, then help me find a sustainable alternative.
But if you won’t face up to the reality of the situation we’re in. . . if you ignore that time bomb ticking. . . if you won’t take seriously your responsibility to the people of Pennsylvania – then find another job.
Because this is not the time for denial, this is not the time for obstruction. This is the time for leaders to come together and honestly, and sincerely, take on the crisis we are facing.
Because if we do not solve this crisis, whatever partisan gain you think you may win will be dwarfed by the enormous losses our state will suffer. Nobody in Pennsylvania will care one iota about the politics of a disaster that costs our Commonwealth so much.
I refuse to let that happen. But I cannot stop this catastrophe alone. The people of Pennsylvania need you to do the right thing.
I am not asking people in this chamber to give up their political beliefs. I am asking that they join me in mustering the political courage to meet this crisis head-on.
I am asking that they do their job – and live up to their promise to uphold the constitution made when they were elected to serve in the General Assembly.
This doesn’t require anyone to walk away from his or her principles. It merely requires that we each declare that our highest principle is the responsibility each of us has to the people of Pennsylvania.
The people of Pennsylvania deserve schools that teach, jobs that pay, and a government that works for them.
They deserve leaders who are willing to work hard and sacrifice to build a better Commonwealth – because that’s what the people of Pennsylvania do every day to build a better life for their families.
Their strength, their resilience, their spirit illuminates our path forward, and gives me hope that when I stand in this chamber to give my budget address next year, it will be under happier circumstances.
After all, I ran for this office because I believed deeply in our Commonwealth; in our spirit of innovation and entrepreneurship; in our longstanding tradition of tackling our challenges and seizing our opportunities with boldness and courage; integrity and honesty; in our potential to build a future as bright and prosperous as our past.
I know that many of you entered public service for the same reasons. And last December, a number of Republicans and Democrats came together to prove that there are leaders in this body who can put their differences aside and get things done.
After a year as Governor, despite the overwhelming challenge we now face, I still believe in Pennsylvania. The possibilities before us are still limitless. A bright future is still within our grasp.
I still believe in the enormous potential of our Commonwealth.
And I’m counting on everyone in this chamber to do the right thing so we can fulfill that potential.
I’m ready to do the hard work to build a brighter future for Pennsylvania. I hope you’re ready to join me.
Thank you and God Bless the Commonwealth of Pennsylvania.
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