Stop the Borrowing: $110B is Enough!

HARRISBURG, PA — The Commonwealth Foundation sounded an alarm today that both Governor Rendell and state lawmakers are poised to take citizens deeper into debt.
“Putting the people of Pennsylvania into greater debt has become a convenient way for policymakers to buy today with the hope the taxpayers can pay tomorrow,” said Matthew Brouillette, president and CEO of the Commonwealth Foundation.  “What has been deemed unaffordable in a pay-as-you-go manner, is somehow now affordable if we put the purchases on the taxpayers’ credit cards.”
Recently, the state House voted to borrow $980 million for the state FY 2008-09 Capital budget, while also approving a plan to borrow an additional $240 million to pay for projects incurred last year.  The Senate voted for a $400 million borrowing scheme to be placed on the November ballot, while  Governor Rendell continues to push his Energy Independence Fund—which entails an additional $850 million in new borrowing.
To promote additional borrowing, Governor Rendell has misled policymakers and the general public to believe that Pennsylvanians’ debt burden is light.  “In his budget addresses, the Governor has argued that new debt spending is no problem because 23 states have higher debt burdens.  But citizens should not take comfort in looking at how debt-burdened other states are,” said Brouillette. 

The Governor argues that Pennsylvania “only” spends 3.4% of the General Fund on debt services each year, and his Budget Office released a fact sheet reassuring Pennsylvanians that the state debt is “only” $870 per person.  However this number is artificially low, because most taxpayer debt is hidden in off-budget state agencies or local government spending, as the accompanying table shows.  

Pennsylvania State and Local Government Debt
Debtor Debt Outstanding As of: Per Capita
Total State $36,675,811,000 Dec. 2007 $2,950
   State $8,515,511,000 Dec. 2007 $685
   State Agencies and Authorities $28,160,300,000 Dec. 2007 $2,265
Total Local $73,920,320,000 FY 2005-06 $5,946
   School Districts $22,574,468,132 FY 2005-06 $1,816
   County/Municipal Debt (Est) $51,345,851,868 $4,130
Total  $110,596,131,000 $8,896


“Governor Rendell has done an effective job of masking the taxpayers’ true debt-burden by not recognizing the debt in off-budget agencies, school districts, and other levels of government,” said Brouillette.  “But it is the same taxpayer who is on the hook for this more than $110 billion in debt.  And when we look at the true costs of this borrowed money, Pennsylvania taxpayers owe almost $9,000 per person in state and local debt—or $36,000 for the typical family of four.”
Some of the most costly and wasteful off-budget programs include the Commonwealth Financing Authority, the Economic Development Financing Authority, the Energy Development Authority, the Housing Finance Agency, and the Turnpike Commission.  Governor Rendell’s proposed $850 million Energy Independence Fund would also be entirely off-budget debt.  Moreover, programs like the Energy Independence Fund discourage innovation and encourage corporate lobbyists to focus more on fighting for political hand-outs than on providing the best service to consumers.
“Governor Rendell’s defense of more borrowing because ‘everyone else is doing it’ is as foolish as an individual running up credit card debt to keep up with the Joneses,” remarked Brouillette.  “The Governor’s economic logic is questionable—taxpayers pay $935 million annually just on the official state debt on interest alone.  Adding new debt only increases the annual burden on taxpayers and continues to stifle our state economy.”
Debt spending and special off-budget programs have not led to economic development in Pennsylvania.  Since Governor Rendell assumed office, Pennsylvania has ranked 40th in job growth, 42nd in population growth, and 40th in personal income growth.    

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

For more on state debt, spending, and ideas to restore our fiscal and economic health, visit

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