Budget process reforms can prevent a budget impasse

With just 30 days until the June 30th State Constitutional deadline, PA lawmakers are no closer to a budget agreement than they were at this time last year. Read the latest news article on the PA budget: Revenue shortfalls hold up budget, by Jan Murphy, Sunday Patriot-News (Harrisburg, PA) 5/30/10.
Last year’s 101 day PA budget impasse devastated hundreds if not thousands of 501(c)(3) nonprofits that contracted with State and County agencies to provide crucial community services. Without a state budget this year, these same nonprofit contractors will again not receive timely payment for services rendered. On October 8, 2009, David Ross (PANO), Sharon Ward (PA Budget and Policy Center) and others held a press conference in the Capitol Rotunda. We said “we can never let this happen again”.  Now a budget impasse could be happening again, because nothing has changed since last year.  A solution does exist though.  It’s called Budget Process Reforms.  All it needs is public support.  Some of our proposals are listed below.  You decide…

What really happened in 2009?

In 2009 the Pennsylvania General Assembly failed to pass state budget legislation to authorize taxing and spending for Fiscal Year 2009-2010 until 101 days after its June 30 Constitutional deadline. For three and a half months, State Government in Pennsylvania operated without a taxing and spending plan, asserting that it lacked the authority to pay on its contracts and grants.

While the debate centered on spending priorities, thousands of organizations that relied on billions of dollars in state funding to serve their communities were forced to make the impossible choice of cutting services to the needy, laying off staff, or closing their doors altogether. Nonprofits, counties, and schools continued to provide vital services in the absence of funding– often at their own expense.

The Budget impasse devastated many of Pennsylvania’s nonprofit service providers. Bridge loans must be paid back with interest; furloughed workers may never return; and late fees and business interruption costs deplete scarce charitable resources. The vast majority of nonprofits lack the reserves to absorb the cost of late government payments. The 2009 Budget Impasse demonstrated that the budget process must be reformed if nonprofits are to continue serving State funded contracts or grants- and survive.

What has happened since then?

Since October 2009, a group of dedicated nonprofit professionals have worked tirelessly to compile the many bills and proposals that would reform the State budget process. Our goal was to propose recommendations for discussion, research, and introduce several bills that would reform the state budget process to prevent an impasse in the first place. We believed — and still do — that we can improve the Commonwealth’s budget process through legislation without requiring a Constitutional Amendment.

What are the proposals?

1. Common Cause of PA Proposal: Provides standing committees with authority to determine spending levels for Departments, and provides for input from rank and file legislators. It also includes a series of interim budget deadlines and fines legislators $100 per day that these interim deadlines are not met. Furthermore, if the budget is not approved by June 30, all members of the General Assembly, the Governor and Cabinet forfeit their salaries and as of July 1, their per diems are suspended until the new budget is enacted.

2. Interim Deadlines and Penalties: (SB1068)(Sen. Mike Brubaker) Imposes a protocol of interim deadlines on the budget process, as well as placing penalties on legislators for failure to pass a budget. Legislators would be required to forfeit their pay check and per diem for not meeting deadlines. In addition, a physical presence would be required in the Capitol until the deadlines are met.

3. Last Budget Governs Until New Budget Passes: Based on Joint Resolution (HB1952)(Rep. Bryan Barbin). Seeks to Amending the State Constitution to ensure that if a budget is not approved by June 30, then government agencies and contractors will operate on the prior fiscal year’s appropriation until the new budget is enacted.

4. Emergency Essential Services Fund: (Sen. Kim Ward) Provides that if the State budget is not enacted by July 15, the State Treasurer must periodically transfer unappropriated, unrestricted available General Fund moneys, to a newly created “Emergency Essential Social Services Fund” administered by the Treasury Department.  The Treasury would then transfer the funds bi-weekly to designated nonprofit institutions and agencies at a level not to exceed eighty five percent (85%) of the level at which those operations were authorized in the prior year’s budget. The Secretary of Revenue would determine if sufficient revenues have been received to cover the disbursements. Once the budget passes, payments would be adjusted pursuant to the program’s appropriation in the enacted budget.

5. Prompt Payment Resolution: (SR 200)(Sen. Mike Brubaker/David Ross) In the event of a budget impasse, this Resolution requests that once a budget does pass the State Treasure release funding for nonprofit organizations as quickly as possible to ensure the continued operation of and the least possible injury to nonprofit and charitable organizations.

I thank all who contributed to the research and writing the proposals.  For more information contact David A. Ross, J.D. at dross001@yahoo.com or at (717) 576-3689.

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HB2279 (PN3277) State Budget bill for FY2010-2011 Referred to Appropriations, March 24, 2010

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