Sunday, December 28, 2008

DR News: Up Close With the Legislature's Surplus

A Closer Look at the Legislative Surplus

One of our faithful correspondents concludes his emails with a quote attributed to Thomas Pynchon: "If they can keep you asking the wrong questions, they never have to worry about the right answers."

This insight is bound to arise when talking about the recently released audit of the General Assembly. Without question, lawmakers have amassed a huge, ongoing surplus. Depending on how you calculate it, the surplus on June 30 was either $237.4 million (down $5 million from the previous year's surplus) or $200.5 million (down $11 million).

The reason for the difference is that last year the Legislative Audit Advisory Commission changed its accounting practices. The change subtracts funds committed but not paid at the end of the year from the surplus on hand at the end of the year, thereby reducing the surplus shown on the books.

This does not tell the full story, though, because there are "benefits accounts" that also have growing surpluses. Last year, those House and Senate accounts grew a combined 23% to an additional $6.9 million.

Click here for the "Statement of Financial Affairs."

For lawmakers, too much is never enough.
If the legislature were a school district, its operating surplus would be capped at 8% of its budget, or about $26 million last year. But lawmakers place no limit on themselves, so their surpluses - their excesses - at the end of the year were 62% of their budget. The goal, according to House Republican Leader Sam Smith, R-Jefferson, is to have a full year's budget in reserve.

Some lawmaker accounts have already met the goal of having a full year's funding in reserve, including Smith's "special leadership account." As of June 30, the $21.5 million surplus of our taxes in his account was 118% of his expenditures for the year. That is, after spending $18.2 million last year, Smith still had $21.5 million left over in his largest account. By comparison, the House Democrats' mere 85% surplus looks downright frugal.

Other significant budget items with surpluses greater than expenditures include:
• House Republican Committee on Appropriations: 527%
• House Democratic Committee on Appropriations: 522%
• Legislative Audit Advisory Commission Salaries, Wages & Expenses: 395%
• Senate Legislative Printing & Expenses: 333%
• House Postage for Chief Clerk and Legislative Journal: 263%
• Senate Democratic Floor Leader Committee & Contingent Expenses: 248%
• Senators' Expenses: 221%
• Senate Republican Floor Leader Committee & Contingent Expenses: 200%
• Senate PA and National Flags for Residents: 194%
• Senate Democratic Floor Leader Computer Services: 136%
• Legislative Data Processing Salaries, Wages & Expenses: 129%
• Capitol Preservation Committee Restoration of the Capitol: 126%

Looking at the top of the list, we have to note that Appropriation Committees do a great deal of heavy lifting throughout the year, analyzing both individual bills and the greater economic circumstance of the Commonwealth. Staff are among the hardest-working, most knowledgeable and most dedicated employees on the hill. They are essential to concluding any budget agreement, whether or not there's an impasse. So there's some sense to keeping the committees well-tended.

• Why do the House appropriation committees have reserves that are five times as large as their actual expenditures? Is there a plan for that money?
• Why does the Legislative Audit Advisory Commission have nearly four times as much in reserves as it spent last year? Will they finally get the forensic audit that integrity advocates have been requesting for years?
• What contingency could require the Senate Rs and Ds both to have such large excesses?

A rare united front.
In unusual bi-partisan, bi-cameral unanimity, the reason given for hoarding such funds is to protect the legislature from having to shut down (as the legislature forces the rest of the state to do) during a budget impasse. This is a clear statement of priorities that it is more important to keep money flowing to lawmakers than for people with mental illness, children in summer school, job creation programs, law enforcement and such trifles.

Newspapers around the state have trashed this rationale for the surplus, pointing out that having a large surplus makes a budget impasse more likely because the legislature won't feel the pain. Click here for a recent editorial in the Harrisburg Patriot.

Also, if this rationale were true, the audit shows surpluses that are inconsistent with achieving the purpose. Surplus funds for staff salaries are small, ranging as low as 9%.

• If the surplus is supposed to pay for operating expenses during a budget impasse, why are the smallest surpluses in the accounts that pay salaries of House employees?
• Are these the right questions?

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Tim Potts, Co-Founder of Democracy Rising



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