Can Tom Corbett Keep His "No Tax" Pledge?

JULY 27, 2010 | Commentary by MATTHEW BROUILLETTE

Can Tom Corbett keep his no tax pledge?

Attorney General Tom Corbett has taken significant criticism for his pledge to not raise taxes if elected governor.  That was to be expected from his Democrat rival, Allegheny County executive Dan Onorato, who hasn't ruled out raising taxes to fill a budget gap expected to be as high as $5 billion next year.  But it's the friendly fire from Senate Republican Majority Leader Dominic Pileggi that has wounded the AG (aspiring governor).

Speaking just days before he helped Gov. Rendell pass his last budget, Pileggi said of Corbett's no-tax pledge, "It will be an extremely challenging year next year, and...I don't see how he can do it, frankly."

It's unsurprising that Pileggi can't comprehend cutting spending because he, for instance, voted to spend $30 million on an unnecessary soccer stadium in his district.  And despite a $1 billion deficit in this budget, he voted to spend $10 million on the Arlen Specter Library and another $10 million on the John P. Murtha Center for Public Policy.

Of course, eliminating waste only partially answers the question of whether or not Corbett can balance the upcoming budget without raising taxes.  Assuming there's the political leadership and will, the Commonwealth Foundation (CF) has identified a way.

First, it is important to remember that if spending had been held to inflation over the past eight years of Ed Rendell, we'd have ended the fiscal year with a surplus rather than a deficit (even without federal stimulus money).  Since 2003, the state's total operating budget grew from $45 billion to $66 billion, while the General Fund Budget grew from $20 billion to $28 billion.  While inflation was under 20 percent, spending in Harrisburg increased by 47 percent.  This growth is unsustainable.

So where do we cut?  At CF, we have identified over $4 billion in spending that should be cut from state government-$1 billion from the General Fund Budget, $2.21 billion from other operating funds, and $926 million from the capital budget and off-budget programs.  Specifics are available at www.CommonwealthFoundation.org/Budget.

In addition to these cuts, reforms in public education, welfare, corrections, and transportation will add up to billions more in annual savings to the taxpayers. 

For example, we've identified a dozen reforms in corrections that would generate significant savings to the taxpayer, such as privately-run prisons that have proven savings of 5-20 percent in per-prisoner costs.  Our conservative projections are that if Pennsylvania placed just 30 percent of inmates in privately-run prisons we could save $100 million annually.

In education, the K-12 public school system received state funding increases of 46 percent, from $7 billion to $10.3 billion, under Gov. Rendell.  Of course, property taxpayers are also spending another $14 billion on their local public schools.  Today, taxpayers are paying over $13,000 on average per year per student.

Fortunately, significant savings in public education can be found.  For example, giving parents more school choices for their children has proven to lower the cost of public education.  Charter schools cost taxpayers 25 percent less per pupil than traditional public schools, and the Educational Improvement Tax Credit-which provides an average scholarship of $1,100-produces even greater taxpayer savings.  Expanding educational options not only benefits children, but taxpayers.

The elimination of "prevailing wages" for school construction would produce $400 million in annual savings.  Simply allowing taxpayers to pay the average occupational wage in a market rather than arbitrarily inflated union wages on construction projects would significantly lower the need for higher taxes.

In welfare - the single largest portion of the state's budget - Auditor General Jack Wagner projects that eliminating waste and fraud would produce upward of $1 billion in savings. 

Reforms in transportation would save tens, if not hundreds, of millions of dollars annually through public-private partnerships and competitive contracting in mass transit.

Finally, there are actions that would generate not only significant one-time revenues but also ongoing increases in funding for the Commonwealth; these actions include the sale of the state's liquor stores, which would generate $2 billion or more up front, as well as higher annual tax revenues); privatization of the state's student loan giant PHEAA, which would generate $2 billion or more; and the leasing of the Turnpike to a private operator, which would generate $12 billion or more.

To be sure, none of these reforms will come without a fight from entrenched bureaucracies and special interests.  But if Tom Corbett is to keep his pledge not to raise taxes, these are the battles he'll have to fight on behalf of the taxpayers in Pennsylvania.

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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy research and educational institute located in Harrisburg, PA.



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