Pennsylvania State Budget
Democratic gubernatorial candidate Tom Wolf has proposed several new spending initiatives and tax code changes, though specific details remain lacking. To give Pennsylvanians a better idea of the impact of these proposals, we conducted an analysis of his two major education funding proposals. We also analyze his personal income tax proposal, the increase in the income tax rate required to pay for his spending plans, and the impact on taxpayers.
October 8, 2014, HARRISBURG, Pa.—A new analysis of gubernatorial candidate Tom Wolf’s “Fresh Start” plan reveals that Wolf’s spending and tax proposals—$4.6 billion in new spending on education alone—would result in a potential 121% increase to the state income tax rate, bringing it to a whopping 6.8 percent. That’s almost an additional $600
Today, credit rating agency Moody’s downgraded Pennsylvania’s general obligation bond rating from Aa2 to Aa3, citing the state’s use of one-time budgetary stop-gap measures and the continued underfunding of public pensions. This marks the third credit downgrade from ratings agencies in as many years.
Recent Blog Posts
Unprecedented reductions in the prison population, $69.9 million in taxpayer savings, and lower recidivism rates all indicate that the 2012 corrections reforms are working.
Earlier this month Don Gilliland over at the Tribune Review chronicled some of the big accomplishments of the two-year-old initiative to get smart on crime:
The drop in prison population in 2014 'was the largest one-year drop in our population since 1971, and only the fourth time in the past 40 years that our population has shown an annual decrease, rather than an increase,' said Bret Bucklen, Corrections' director of planning, research and statistics.
The state ended the calendar year with 50,756 inmates. Four years ago, the prison population was expected to top more than 56,000 inmates by the end of 2014.
My colleague Nate Benefield points out that fewer prisoners means no new guards to hire, no new prisons to build and no need to pay other states to board our prisoners (which we did in 2009). All of those developments mean big savings for taxpayers.
The drop in inmates avoided approximately $69.9 million in costs in 2014 alone, and a total of $222 million during Corbett's four-year tenure, according to estimates from the department.
Overall, the corrections budget for 2015-16 is still set to increase, thanks to rising pension costs for corrections officers, but the overall fiscal situation is much more manageable today thanks to the actions taken two years ago.
And the final bit of good news? Governor Wolf's decision to retain Secretary of Corrections John Wetzel indicates the reforms will continue improve both the quality and cost-efficiency of our prison system.
With an estimated $2 billion "planning deficit" announced this week, one might believe crafting a balanced budget that doesn’t raise taxes is impossible. Yet earlier this year, we released a report identifying reforms that could save taxpayers billions of dollars.
There are many areas where state spending isn't helping Pennsylvanians. For example, over the last eight years, the commonwealth has spent more on so-called economic development than any state in the country, according to the Council for Community and Economic Research. However, such spending has been relatively ineffective. States that spent the most on economic development saw their economies grow at a slower rate than states spending the least on such initiatives.
The root of the commonwealth's budget woes are mandated programs with ballooning costs—costs first ignored by Governor Rendell. Chief among those are increases in pension payments—estimated to grow by $1.7 billion over five years—and the enormous Medicaid program (with $5.8 billion just in General Fund costs), which is set to grow by 3.5 percent next year.
Years of overspending, not "right-wing ideology," have resulted in our current fiscal predicament.
The Governor's Mid-Year Budget Briefing shows that mandated spending cost drivers, such as pensions and Medicaid, must be addressed in order to repair the Commonwealth's fiscal balance.
Balancing the budget without tax increases won’t be easy, but it is possible if officials are willing to take on the spending drivers that have been squeezing taxpayers for decades.
Last week, legislation moved out of the Senate Finance Committee that would set guardrails on state government spending, establish a “Rainy Day Fund,” and, potentially, even send rebate checks back to Pennsylvania taxpayers.
Check out our new Taxpayer Protection Act handout for more information.
So, what are some of the benefits of responsible spending limits?
CF’s Nate Benefield answers in a conversation with radio host Gary Sutton. Listen here:
The Gary Sutton Show airs daily on WSBA 910AM in the York area.
Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.