DePasquale: Budget impasse means ‘backdoor’ taxes

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HARRISBURG, Pa. -- Pennsylvania's Auditor General had a stern message for Gov. Tom Wolf and the state legislature on Thursday.

"Let me be very blunt about this," Eugene DePasquale said. "If the structural deficit is not dealt with this year, and we have another budget impasse, the rating agencies will downgrade Pennsylvania again."

DePasquale unveiled his department's audit of the commonwealth's $25.5 billion dollars of state spending of federal funds at a press conference inside the state Capitol. The Auditor General used the opportunity to discuss the state's previous 9-month budget impasse which ended on Monday when Gov. Wolf allowed the fiscal code for 2015-16 go into law.

Wolf's budget team estimates Pennsylvania is facing a $2 billion structural deficit. Wolf wants to address the deficit with revenue generating tax increases, which many Republican colleagues are steadfast in not allowing. Should state lawmakers and the governor showdown in another lengthy impasse, DePasquale says Pennsylvania's credit rating will fall again, and a "backdoor tax increase" will ensue on state citizens.

"Every road project, every school construction project, every time a school district or the state wants to take out a loan to do something proactive, that money will not go as far," DePasquale says.

The auditor general compares it to families looking to buy a home. One family has a credit score of 600, and the other has a credit score of 800. The family with a credit score of 600 will have a higher interest rate from the bank, and will have a tougher time borrowing money, DePasquale says.

"For Pennsylvania purposes, this current situation is getting down to score of 600," he says. "So every time we borrow money, it will get more expensive."

Unlike last year, when the Department of the Auditor General began to monitor the cost of the 2015-16 budget impasse in September, DePasquale says he will not be as patient this coming fiscal year.

"I will begin to monitor this on day one," DePasquale said, noting his department will begin to watch the effect of the impasse, from a week-to-week basis, the day it begins July 1. "It is not acceptable to have what happened last year to happen again. It was embarrassing for the state of Pennsylvania and should be embarrassing for every elected official in this Capitol."