I have my API friend Jane Van Ryan to thank for alerting me to a news item from just up the road in Pennsylvania as part of another update she sent me. Apparently the Commonwealth is allowing oil and gas companies to take advantage of the Keystone State’s natural resources for a price set by the market, and Governor Rendell is taking advantage of the unexpected windfall to help plug his own state’s $1.6 billion budget deficit.
Not surprisingly, the green lobby is up in arms about this transfer idea, at least according to this article by Robert Swift in the Hazleton Standard-Speaker. Swift is correct in that this is one of the oldest accounting tricks in the book, and the $190 million would apparently be many times the amount of money normally found in the fund.
The first question I have though is whether there’s any such prospect of this happening in Maryland. Earlier this year a number of private owners out on the western edge of Maryland in Garrett County were fortunate enough to take advantage of the opportunity to lease their properties for natural gas drilling rights, and while it’s not quite money for nothing (let alone chicks for free) it might be worth checking out that option on the vast swaths on land in that region the state controls.
Rendell’s situation also brings up a budgeting question common in Maryland, where money is subdivided into numerous smaller pots in addition to the state’s General Fund. Each year, there seems to be a new crop of specificially-devoted funds added by the General Assembly for a myriad of purposes; for example a new Education Trust Fund was set up by the legislation (SB3) which was passed for video slot machines in 2007 for the 48.5% of eventual slots revenue committed to education. A similar shell game was played by Martin O’Malley (with the help of the General Assembly) in balancing the FY2009 budget and the extreme situation Pennsylvania finds itself in points out the weakness in having that sheer number of funds rather than allowing money to go where it’s most useful. In particular, environmental programs benefit greatly from having dedicated funds created by the General Assembly when the money could be better used in other areas. (Program Open Space is one example which truly frosts me.)
Similarly, in Pennsylvania Governor Rendell seems to have the sensible idea that reallocating money to where it would do the most good is a better alternative than “monitoring the impact of gas development, improving park and forest hiking trails, acid mine drainage cleanup, buying sub-surface mineral rights in state forest areas and buying heavy equipment for park operations” that environmental activists wish to spend the $190 million windfall on. Certainly the situation creates a good argument for streamlining the budget and eliminating those dedicated funds.
It’s a question of how to spend the money most wisely, and if using the money from the Marcellus Shale rights can allow Governor Rendell to avoid taking more out of the pockets of Pennsylvanians that’s the wisest way to spend it. (Considering Rendell is a Democrat, I’m not even going to hold my breath on him cutting the fat out of the budget – I’ll just assume he spends every nickel he can get.)
When there’s a private-sector industry out there willing to spend money to create jobs and not looking for a handout or a subsidy to put people to work, that’s something responsible governance needs to explore further. If the resources in Maryland are there and the charge is to create a highest and best use, it’s only right that we should take advantage of opportunities where we can.