A FEW words about the push for a national “balanced budget” amendment: Psst, it’s a joke, pass it on …

Not that I’m against a balanced budget. Far from it. I’ve been a proponent of curbing deficit spending and reducing the national debt since Ronald Reagan decided to set deficit records.

I’m no Washington “expert” and won’t pretend to speak with authority on the machinations of the world’s biggest (and currently most dysfunctional) sausage grinder. But I’ve spent 17 years covering local municipalities and school districts that, by law, must have “balanced budgets” every year. And I can tell you from experience: Mandate a balanced budget and you end up with juggled books.

If mandating a balanced budget really works, how did Luzerne County end up with a nearly half-a-billion-dollar debt that causes annual budget trauma? How did the county’s 11 school districts amass a combined debt of nearly $371 million? How did so many of our municipalities end up on the brink of bankruptcy?

After all, each of these entities must, by law, pass annual “balanced budgets.”

Part of the fiscal woes stem from the severe economic downturn. But most come from a simple fact: These local governments borrowed money, lots of it, and then borrowed more. They kept presenting “balanced budgets” by calculating the debt payments into those annual budgets; but looking at the single-year budgets told you nothing of the real financial underpinnings (or lack thereof).

Local and state governments forced to keep balanced budgets kept figuring ways to borrow more and more money before the first loans were repaid. Here’s a purely hypothetical scenario:

Let’s say Luzerne County needs $50 million quickly. The county borrows the amount over 20 years and comfortably works out debt payments that will keep the impact to a minimum for taxpayers.

Five years later, the county needs another $50 million. It borrows the money but structures a balloon payment schedule for the new debt. Interest and payments are low until the old debt is paid off, then climb sharply. You technically keep the budget balanced, even as you’ve doubled debt.

A few years later, county officials need another $50 million. They can’t use the balloon payment trick again, so they “refinance” the two older debts while borrowing the new money, creating a new payment schedule that will last for 30 years. Now we’re $150 million in debt, paying far more in interest on the earlier debt than if we had stuck to the original repayment schedule. But, dang it, we have a “balanced budget!”

There are lots of other gimmicks: Under-fund pension portfolios (harder under new federal accounting standards); raid pension funds (as Hazleton did in 2006) to pay other costs; create a “municipal authority” or private, nonprofit partner that can borrow money for (and even from) you, such as CityVest and the $6 million in county money that apparently failed to save the Hotel Sterling in Wilkes-Barre.

The list is long, and as a former editor once said to me years ago after we unearthed some legally suspect finagling in Hazleton city budgets, if it’s this bad locally, think how much worse it can be in Washington.

Any national balanced budget amendment either will be written with loopholes big enough for the U.S. Navy to sail through or will be quickly perforated with exceptions and work-arounds.

The real solution is much tougher; that’s why you don’t hear anyone proposing it.

Make the unpopular choices every year.

And actually balance the budget.

About the Author

Mark Guydish covers education for the Times Leader. Reach him at (570) 970-7161 or mguydish@timesleader.com.

A West Hazleton native, I worked as a service technician repairing electronic mailing and shipping systems, a bike shop owner and an Emergency Medical Technician (among other jobs) before landing a reporter job at the Times Leader Hazleton Bureau in 1995. I started by covering primarily politics in Hazleton City and outlying municipalities, eventually became "social issues" team leader in the Wilkes-Barre office with the accent on education, and headed the Hazleton Bureau for a spell before returning to full-time reporting, my preferred position. I'm an avid cyclist and rode across the country in 1990, a trip of more than 5,000 miles from New Jersey to Seattle and down the coast to San Francisco. Years in the Boy Scouts made me a life long backpacker and camper, and I've yet to find a better way to enjoy the quiet lure of winter snow than cross country skiing.

Mark also writes a regular blog for timesleader.com.

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