Tuesday, July 17, 2012

Pennsylvania Legislature's Reserve $184M Last Year

An annual financial audit of the Pennsylvania Legislature expected to be approved next week says lawmakers’ reserve cash cushion was almost $184 million last June 30.

An annual financial audit of the Pennsylvania Legislature expected to be approved next week says lawmakers’ reserve cash cushion was almost $184 million last June 30.

The chairman of the Legislative Audit Advisory Commission, Rep. Gordon Denlinger (R-Lancaster), on Thursday confirmed the figure in a copy of the preliminary financial audit obtained by The Associated Press.

The figure is about $5 million lower than the previous year’s cash reserve, and the Legislature has since committed $50 million to a program that benefits public schools called accountability block grants.

Denlinger and other lawmakers defend the reserve as necessary to defend state government’s balance of power and keep the Legislature — which costs about $300 million a year — operating during a budget stalemate with the governor.

But the Legislature has created no special rules to limit the use of the money, and such a large and unfettered surplus is nearly unheard of in other states. Also, the Legislature does not wall off the money to prevent it from being shifted to another purpose — which can be done by small committees of top lawmakers that meet in secret.

Meanwhile, state government is dealing with an anticipated shortfall of several hundred million dollars in the current fiscal year, which ends June 30.

The Legislature has not passed a law or even created an internal policy that caps the size of the surplus. The surplus has been accumulating since at least the early 1980s, as the Legislature often budgeted more taxpayer money than it actually needed or spent.

The reserve peaked at $215 million on June 30, 2006, and the latest audit shows that for the fifth straight year it shrank.

Denlinger said that, counting the $50 million payout to public schools, the reserve can’t go much lower if the Legislature is to have enough cash to keep it operating for four or five months if the executive branch chokes off the flow of money.

We’re really right at the edge of the ability to take any further reduction in the reserve if, in fact, we’re going to have a reserve in place,” Denlinger said.

Critics of the Legislature’s handling of the surplus charged that approval of the audit was being purposely delayed until after Tuesday’s primary. But Denlinger blamed the later-than-usual approval of the audit over a months-long delay by House and Senate leaders before appointing him as the new commission chairman.

As a result, the commission was late in engaging an outside auditor, he said.

Since at least 2008, the auditor hired to report on the surplus, Ernst & Young, has recommended that the Legislature consider adopting a policy that establishes and monitors the appropriate amount of surplus — recommendations the Legislature has ignored.

The surplus money also has been used in ways over the years that have nothing to do with a budget stalemate.

In 2005, lawmakers underwrote a generous midterm pay raise for themselves. A public outcry prompted them to repeal it four months later. The Legislature also has used the money several times to help fund executive-branch programs that are favored by its members.

Copyright 2012 The Associated Press.