Why the large surplus?

The Pennsylvania Legislature has been wringing its hands for the past several years trying to figure out where to come up with the cash to fund the annual budgets.

While the legislators passed a spending bill just before the June 30 deadline, the wrangling over how to pay for these expenses went on for an additional four months.

This was not a case of no-harm, no-foul, because we taxpayers were left holding the bag for interest payments for the money that had to be borrowed during the stalemate to keep the state running.

The results were not pretty, as we noted in this column before. Several no-tax-increase alternatives were flown up as trial balloons only to see them pop and flutter back to earth as debris.

Finally, the Legislature turned to expanded gambling and a potpourri of other less-than-desirable, plug-the-dike approaches to balance the 2017-18 budget. (And we use the word "balanced” advisedly.) Rather than prolong the agony, Gov. Tom Wolf signed off on the revenue measure while holding his nose.

Now comes word that the annual audit of the state House, Senate and internal departments showed a $95 million surplus as of the end of the fiscal year, June 30. To no one’s surprise, the Legislative Audit Advisory Commission gave its blessing to the report at a recent meeting.

The immediate question that comes to mind is: Why are our lawmakers sitting on this enormous surplus while the state is scrounging around to find revenue to fund the budget?

The reason, according to some legislators, is to have this slush fund in the event of a prolonged budget stalemate that might leave the Legislature without funding.

The Republican-controlled House and Senate have been at odds with Wolf since 2015 when he took office. At first, Wolf tried to push through some broad-based tax increases (state income and sales taxes), but these efforts went nowhere in the hostile political environment that permeates Harrisburg.

This year, Wolf wised up and largely let the legislative leaders tussle over how to fund the budget. Even when it came to the revenue side, Wolf did not sign the document as a tacit protest to the process. Still, it took effect after 10 days.

The $95 million represents a smaller surplus from 2016’s $118 million. While the chair of the audit process, Rep. Mark Keller, R-Cumberland, said there was some “belt-tightening” during the year, the biggest difference came from a new reporting requirement of including pension and other post-employment payments.

Eric Epstein, who represents a watchdog group called Rock the Capital, once again criticized the Legislature for keeping this enormous amount of cash in what he also calls a “slush fund.” He suggests that the practice be scrapped or at least cap the amount reserved.

Epstein also criticized the audit committee for not releasing the audit before its presentation in public. Unfortunately, this is an unsavory practice when legislators in either party are in control. Transparency is rarely their priority, despite what they tell us.

Some legislators defended the surplus practice, pointing out that when there is a budget stalemate where staff is not paid, the Legislature must borrow money to keep government going during budget negotiations. This past year, the Legislature had this surplus but still borrowed money. It makes no sense.

Unlike school districts, which have restrictions on how much cash they can stash away for a rainy day, for the Legislature the sky’s the limit, despite repeated recommendations by independent auditors to have a surplus limit.

And, oh, yes, we don’t want to forget to give you the good news: For all of their outstanding work this past year, legislators will be getting a salary increase in early December, compliments of you and me.

It’s not a merit raise, God forbid, but a cost-of-living adjustment that this year is worth 0.81 percent, which means an increase of $700 for the rank-and-file legislator to $87,180. Legislators in leadership positions, such as Sen. Pat Browne, R-Lehigh, chair of the appropriations committee, make about $140,000 with the increase.

Because these automatic pay increases are so unpopular, some give the extra money to charity or return it to the state treasury. Pennsylvania legislators are the second highest paid in the nation next only to California’s.

By Bruce Frassinelli | tneditor@tnonline.com