I am here today to talk with you about the future and how to reach it. The path to that future takes us through a present time fraught with troubles. No other General Assembly or Governor has faced the budget challenges that now lie before us. As we begin the 195th session of the General Assembly, and my first budget, we confront an undeniable reality:
A nation that once produced wealth beyond calculation has now produced debt beyond reckoning. The day of reckoning has come. We have work to do.
Our country has gone through a hard recession. And recessions hit state government hardest. People lose jobs. They go on the unemployment rolls. Or the welfare rolls. Sales tax revenues fall because nobody's buying. Because nobody's buying sales clerks and manufacturing workers lose their jobs. Everything spirals.
State government is the safety net. That's our job. And we have caught so many of the falling that our net is stretched to breaking.
We entered this year more than $4 billion in debt. For the present, I bring you a budget that has two underlying messages:
One: We have to spend less. Because we have less to spend.
Two: We must tax no more. Because the people have no more to give.
As to the future, the message is this:
If we find a way to reinvent ourselves, in how we do business, in how we grow jobs, in how we treat our citizens, in how we spend other people's money, we will - to borrow a phrase from William Faulkner - "not only endure but prevail." We will grow as an economy, as a commonwealth, as a people.
But to do this we have to change the culture of this place. It means we stop the one-time fixes and gimmicks that have barely held the machine of government together. It's time to peel off the duct tape and get to work on what's broken underneath.
The General Assembly has a crucial role to play in this task. We need to share ideas, to build on each other's strengths. This recession isn't going to last forever. If we do the hard things necessary when we are in a windless spot on this ocean the breeze that is sure to follow will move us all the faster. We need to deal with our problems at the same time we plan for success. And we need to do it now.
In many ways what we need to do is the same as reviving an abandoned apple tree. If the tree isn't tended and the branches pruned that tree will grow into a tangle of limbs and leaves. But it will bear no fruit. We need to take this tree, so long overgrown, and cut back what isn't fruitful. And we need to do that essential pruning on all branches of government. We need to do the hard cutting so the tree can once again bear fruit. And that fruit is jobs.
The substance of this budget is built on four core principles: Fiscal Discipline, Limited Government, Free Enterprise, and Reform.
Fiscal discipline means no new spending. It is our road to limited government. It means a return to free enterprise, where business and industry and labor are no longer hobbled by needless restrictions and strangled by reflexive taxation. If we are to create jobs we have to stop looking for reasons not to allow something. We need to find ways to make things work, to make jobs grow. It's easy to find a reason to spend. Now we have a reason to stop.
The substance of the budget is at once sweeping and detailed. This budget sorts the must-haves from the nice-to-haves. Some of the cuts were expenditures in the thousands. Some ran into the millions. Many programs have been combined for greater efficiency.
It preserves the core functions of government while moving to take government out of places it has no business or is not needed or simply fails to perform compared to the efficiencies of the market.
In past years we have seen one-time gimmicks and sleights of hand. Harrisburg raided the rainy day fund. It's gone. And it's still raining. They applied federal stimulus money to the operating budget. The only thing it stimulated was the appetite to spend more. The growth in spending and borrowing surpassed inflation, surpassed economic growth, and long ago surpassed the citizens' ability to pay for it all.
Some have suggested a modest tax increase to fix this quandary. I see three problems with this idea. First, tax increases only seem modest to the people collecting them. The people paying them - the sales clerks and millwrights, the farmers, the moms and pops who run the corner stores - ask them if a tax hike ever seems modest. A one-time tax hike becomes a two time increase, then three, then - somehow - it's permanent. Think of the Johnstown Flood Tax. It was passed to help that city recover from the flood - of nineteen-thirty six. That was 75 years ago. That's what happens to temporary taxes: one-time fixes become permanent burdens.
The second problem is that tax increases choke growth. Every credible study on the subject has taught us this: the states that have grown the fastest, attracted the most jobs, have stayed out of the way. If you tax less, people will see the point in earning more. If you regulate more sensibly, businesses will be able to maneuver in the turns of tight economies.
The third reason not to increase taxes is pretty simple. The voters said no. We are four months out from the election that sent us here. It was run on a three part theme: jobs, jobs and jobs. And every time someone was asked about new taxes they gave a three part answer: no, no and no. It's time to connect the dots. So, to the people of Pennsylvania, the taxpayers who sent us here, I want to say something you haven't heard often enough from this building: We get the picture. It's your money.
The option I have chosen is to reduce the size and cost of state government. I'm proposing something we haven't had in a long time: a reality-based budget. The electorate, its trust scraped to the bone by lies and half-truths, isn't going to stand for another broken promise. I said we'd cut. I'm not asking you to read my lips. I'm asking you to read my budget.
And you can read my budget online, from your home.
My administration created an online budget "dashboard." People can log on and view the entire budget in a reader-friendly form. You'll be able to see for yourself how we propose to spend your money. You can track the revenue source. You can check every department's spending, where it came from, where it's going, and why. There's a reason I call it the "dashboard." It's time the tax-paying citizen felt as if he or she were in the driver's seat.
This marks the year that federal stimulus money ends. Harrisburg used much of that money to patch up the education budget. Now it's gone. Washington gave and Washington took away. Amid cuts and recession we have found a way to keep Basic Education funding at the same level it held before the federal stimulus. Washington might be retreating. We're not. At the same time, I am here to say that education cannot be the only industry exempt from recession. Our public schools do important work and part of that work must include setting an example. I'm calling on the employees of our public schools - administrators, teachers, support workers, everyone - to hold the line. If it means a pay freeze, trust me, they'll have plenty of company out there to keep them warm.
With unemployment running over eight percent working people across the state are going without pay raises. Or they're giving back pay to keep their companies afloat. They are investing their faith and patience in the future of their jobs. We need to ask something of our educators.