Is State Government Ready for a Spending Diet?
Taxpayer Protection bills sent to Senate floor
HARRISBURG, PA — Today, the State Senate Finance Committee voted to send the Taxpayer Protection Act (SB 707) and the Taxpayer Protection Amendment (SB 7) to the full Senate for consideration. The bills would limit the annual growth in state government General Funding spending.
“The Senate Finance Committee moved Pennsylvania one step closer toward getting back on the road to fiscal and economic health by placing reasonable limits on the annual growth in spending,” said Matthew J. Brouillette, president and CEO of the Commonwealth Foundation. “The Taxpayer Protection Act and Amendment will finally force policymakers in Harrisburg to begin to prioritize their spending choices and start reducing and eliminating wasteful and harmful government programs.”
Senate Bills 7 and 707 would limit the increases in General Fund spending by the lesser of the average change in personal income or inflation plus population growth for the three preceding years. The spending limit for the FY 2007-08 General Fund Budget would permit spending to increase by more than $823 million, or 3.2% higher than the current fiscal year budget (less than the average increase of 7% over the past four years).
When taxes paid to the Commonwealth exceed the spending limit, the measures would return 75% of all state surpluses directly to taxpayers through a reduction in the Personal Income Tax rate. The other 25% of surpluses would be deposited in the state’s Rainy Day Fund for future economic downturns.
The Taxpayer Protection bills—sponsored by Sen. Mike Folmer of Lebanon and Sen. Bob Regola of Westmoreland—were improved by an amendment from Sen. John Eichelberger of Blair that would prevent state government from reducing funding to local governments (including school districts, counties, and other municipalities) for services mandated by the state. Brouillette noted that this amendment will further force fiscal restraint and encourage budget prioritization.
The Taxpayer Protection Act and Amendment are part of the Commonwealth Foundation’s “Pennsylvania Diet Plan: Three Steps to Fiscal and Economic Health” (www.PADietPlan.com). In addition to limiting the annual growth in state government spending, the Pennsylvania Diet Plan calls for empowering citizens with the ability to accept or reject any and all tax increases, and reducing the tax burden on Pennsylvania’s families and job creators.
Although much remains to be done before either of these bills become binding on the budgeting process, Brouillette said the passage of Senate Bills 7 and 707 out of committee bodes well for the future of Pennsylvania. “Legislators are faced with the decision to either go on a spending diet or to continue engorging themselves on more taxes from working Pennsylvanians. The good news is that the Senate Finance Committee has begun the process of getting state government up off the tax-borrow-and-spend couch. It remains to be seen, of course, if Gov. Rendell and the rest of the General Assembly is interested in exercising ourselves back into fiscal and economic health.”
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The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.
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