Advertisement

Editorial: Surplus use plan needed

July 07, 1998

What's the best use of a state government surplus? That question is fueling political debates in Harrisburg, Pa. as Republicans and Democrats contend for voters' favor in the upcoming elections. In our view, the details can be argued, but surpluses are temporary and shouldn't be used to create new programs.

Seven months ago, state Sen. Vincent Fumo, D-Philadelphia, estimated that surplus would be $380 million, more than twice what the Republican administration of Gov. Tom Ridge was predicting at the time. Four months later, the administration and lawmakers agreed on a projected surplus of $562 million, but when the fiscal year ended last week, the final figure was a record $673 million!

Democrats would like to see the extra cash used to roll back local property taxes, while the Ridge administration favors using the cash to beef up the state's "rainy day fund" and the account used to pay state-income tax refunds.

Advertisement

Tim Reeves, the governor's press secretary, told the Harrisburg bureau of The Associated Press that bolstering the rainy day fund and the income-tax refund account will do two things - prevent future tax increases when the inevitable economic downturn comes and allow the state to catch up on refunds it didn't make in previous years.

The first priority for any surplus funds ought to be making good on any previous obligations, like overdue tax refunds. Once that's done, however, two things are necessary.

The first is for legislators and the administration to agree that if surpluses at these levels recur, the state will ease the tax burden on citizens. Most likely they will not, since those who swelled them by paying taxes this year figure out ways to reduce their liabilities in the future.

The second and more important priority is to analyze whether investing the bulk of these funds could provide an endowment of sorts that would keep the tax burden lower for the long run.

If citizens could be spared the bust-and-boom cycle of tax hikes and cuts we've seen in the past, that truly would be a worthwhile investment.

The Herald-Mail Articles
|
|
|