#PABudget: Subtraction’s Revenge on Republican Budget Math

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Cut $1.2 billion in taxes, have $1.2 billion less revenue. Republicans are constantly getting surprised by this, but why? It literally happens every time they pass a tax cut without one-for-one spending cuts.

You could see this coming back in February:

In 2011, Corbett backed cuts to the state’s capital stock and franchise tax that cost the state almost $600 million a year.

The state also made changes to its bank shares tax, which, though billed as revenue-neutral, has cost about $25 million. That’s a small amount on its face, but over time, that money adds up. All told, Corbett has signed legislation cutting taxes on businesses by about $1.2 billion since taking office.

Republicans have a religious belief that tax cuts increase revenue, so they predicted a 4% revenue growth rate back February when they rolled out the budget. Even though revenue had been growing at just 1.1% on average. What a surprise this must be, I guess.

So having cut $1.2 billion in taxes, and discovering they have $1.2 billion less revenue, the Republicans are now scrambling to make $1.2 billion in cuts to this year’s budget. Steve Esack reports:

Gov. Tom Corbett is looking to cut $1.2 billion from his proposed $29.4 billion election-year budget to make up for a growing revenue shortfall, according to sources.

He and Republican leaders of the Legislature met Tuesday to go over details of his new plan at the governor’s mansion, sources said. Corbett and top members of his staff told lawmakers the administration could cut $800 million and asked the Legislature to come up with another $400 million in reductions, the sources said.

But no one in the Republican administration and GOP-controlled House and Senate is saying where those cuts could come from, as state agencies and public schools continue to reel from steep cuts made in 2011-12.

That more than wipes out the extra $1 billion Corbett proposed (paid for by gimmicks, one-time revenues, and unjustifiably rosy revenue projects, natch) to put toward restoring some of the Republicans’ education cuts.

This entry was posted in Budget, Governor.

3 Responses to #PABudget: Subtraction’s Revenge on Republican Budget Math

  1. What would the governor and our elected officials care about details like this as long as they appeased their donor base and their 50 per cent pension hike continues on course.

  2. Gdub says:

    I wonder how many budgets nationwide are “balanced” by impossible projections? I don’t know how to solve it (maybe limit it to last year +.5 percent), but its an issue that causes a lot of problems for states and cities.

  3. Dudley Dooright says:

    Actually it’s very easy to understand. You cut $1.2 billion but suggesting revenues will grow by 4%, so that when it turns out you do not get the revenue, you must by necessity cut even more, which leads to smaller government, less in taxes paid, and hopefully a more robust state economy, more jobs and more businesses wanting to move here rather than New York or New Jersey.

    That’s what SMART people want for their state! The Democrats – on the other hand – simply can’t keep up with the logic.