CF Assesses Final Budget: Spending is up, WAMs are in, and the Spin begins

HARRISBURG, PA — Today, the Commonwealth Foundation provided its perspective on the FY 2007-08 General Fund budget making its way to the governor’s desk.

“During Governor Rendell’s first four years in office, the General Fund budget increased, on average, by nearly 6.4% annually,” said Matthew J. Brouillette, president of the Commonwealth Foundation. “So the 5.2% increase in this year’s spending is relatively better than years past. However, this budget falls far short of putting Pennsylvania back on the road to fiscal health and economic prosperity.”

With a $650 million budget surplus from the previous fiscal year, more than $487 million would have been returned to the taxpayers through a reduction in the Personal Income Tax under the Taxpayer Protection Act—which has 30 co-sponsors out of 50 members of the Senate. “Instead, Harrisburg decided to keep all of the money from over-billed taxpayers and continue spending at a rate far above Pennsylvanians’ ability to pay,” said Brouillette.

The Commonwealth Foundation also pointed out the inclusion of hundreds of millions of identifiable pork-barrel spending, also known as “Walking Around Money” or WAMs. Although Gov. Rendell’s budget zeroed-out the General Assembly’s WAMs (while keeping his own at $110 million), the Senate’s June 20 budget (which passed 49-1) eliminated nearly all legislative and gubernatorial WAMs. “Unfortunately, more than $250 million in WAMs have made it back into the final budget.” Some projections put the WAM amount over $360 million.

In addition to the spending increase and the re-emergence of pork-barrel spending, the Commonwealth Foundation criticized what is the beginning of the largest government takeover of preschool education in state history and a transportation bill that will be extremely costly to taxpayers and commuters in Pennsylvania.

“Instead of dramatically expanding the highly successful and far less expensive Preschool Educational Improvement Tax Credit program, Gov. Rendell got $75 million to expand the government’s creation of new taxpayer-funded preschools that will force many privately funded schools out of business,” said Brouillette. “In addition, the eventual expansion of universal preschool throughout Pennsylvania will cost taxpayers billions of dollars in higher property taxes.”

With regard to the pending transportation bill, the Commonwealth Foundation criticized the dramatic increases in taxpayer debt and the expanded authority and control of the patronage-ridden Turnpike Commission. “Pennsylvanians will be paying interest—rather than earning interest from a Turnpike lease—and have lost a great opportunity to bring private-sector capital, incentives, and innovations into Pennsylvania transportation policy,” said Brouillette. “In addition, the entire transportation deal is premised on the tolling I-80 despite clear interpretations of federal law that would prevent such a scheme—with no Plan B if this proposal fails to receive federal approval.”

The Commonwealth Foundation also explained why the real spending increase is 5.2%, rather than the 3.2% increase claimed by Gov. Rendell and General Assembly leadership. The 2006-07 “enacted” budget was $26.114 billion. The soon to be 2007-08 “enacted” budget is $27.162 billion. However, the current fiscal year General Fund budget shifted $317.5 million in mass transit funding out of the General Fund into a separate fund, thereby lowering the General Fund spending level, but not reducing the overall increase in spending. This pushes the total spending increase to $27.479 billion, or 5.2% higher than the “enacted” FY 2006-07General Fund budget.

Governor Rendell and the General Assembly use the “revised” budget of $26.319 billion for 2006-07, which is $26.114 billion + $205 million in “supplemental appropriations.” Yet, last year when the 2006-07 budget was passed the people of Pennsylvania were told the budget was $26.114 billion, not $26.319 billion. By using the “revised” budget of $26.319 billion and comparing it to the “enacted” budget of $27.162 billion (the “revised” budget will not be known until next year after “supplemental appropriations” have been allocated), the governor and General Assembly are not comparing apples to apples. Indeed, if the past four years are a guide—when the average “supplemental appropriation” was $304 million—Pennsylvanians should expect the final “revised” 2007-08 budget to substantially exceed the “enacted” budget.

# # #

The Commonwealth Foundation ( is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.

– 30 –