Commonwealth Foundation expresses disappointment in overall budget deal
HARRISBURG, PA — Today, the Commonwealth Foundation provided its perspective on the FY 2008-09 budget agreement making its way to the governor’s desk.
“In Governor Rendell’s first five budgets, General Fund spending increased, on average, nearly 6.2% annually,” said Matthew J. Brouillette, president of the Commonwealth Foundation. “Although this year’s 4.1% increase in spending represents a modest move in the right direction, the overall budget deal falls short of putting Pennsylvania back on the road to fiscal health and economic prosperity.”
The Taxpayer Protection Act/Amendment—which has 30 co-sponsors out of 50 Senators and sits in committee awaiting action—would limit General Fund budget spending increases to 3.29% this year. The proposed budget exceeds that amount by approximately $208 million.
“Given the current economic slowdown and uncertainty about future tax revenue growth, now is the time to exercise serious fiscal restraint,” said Brouillette. “Some lawmakers and appropriations staffers have already suggested this budget deal could easily result in a $1 to $2 billion deficit next year. Increasing spending and debt today puts Pennsylvanians at serious risk of tax increases tomorrow.”
Furthermore, the $28.3 billion budget masks the real cost of government to the taxpayers. State government will spend a total of approximately $61 billion in FY 2008-09—which includes tens of billions of spending from the Motor License Fund, Lottery Fund, Public Transportation Trust Fund, and other state and federal special funds.
The budget agreement also includes almost $2.9 billion in new borrowing plans. “Unfortunately, Governor Rendell and lawmakers have chosen to expand government spending through borrowed funds and off-budget agencies,” noted Brouillette. “In effect, state leaders are burdening the taxpayers of tomorrow with higher costs so they have more money to spend today.” The Commonwealth Foundation noted that the total state and local debt burden for taxpayers already exceeds $110 billion today.
Meaningful spending reforms are also absent from this budget. Few of the $4 billion in wasteful spending identified by the Commonwealth Foundation in a February report, Government on a Diet, were included. While both Governor Rendell and the Senate Republicans offered budget proposals that eliminated hundreds of millions of dollars from the notorious “Walking Around Moneys” (WAMs), almost of that funding was restored in the compromise deal—at a higher level than any caucus had previously proposed.
Another driver behind the increase in total spending is the Governor’s new $650 million alternative energy plan. While the plan’s proponents claim it will make Pennsylvania “energy independent,” it really represents giving away tax dollars to politically-selected firms in what is best described as a “hedge fund for politicians.” A similar “debt for corporate welfare” program, the Redevelopment Assistance Capital Program (RACP), will be increased to give lawmakers more funds for their pork-barrel spending projects—likely including a soccer stadium in Chester and a cargo airport near Hazelton. “These types of so-called economic development spending have failed to deliver the benefits touted by the Rendell Administration in Pennsylvania—or anywhere, for that matter,” noted Brouillette.
The Commonwealth Foundation also expressed disappointment in the delay and lack of transparency in the budget process. “The threat of state worker furloughs was used once again to coerce legislators into backing this fiscally irresponsible plan,” said Brouillette. “And the secretive negotiating process offered little opportunity for rank and file members and the general public to weigh in on the process or even get accurate information. In fact, most lawmakers will have less than twenty-four hours upon getting the final details before voting on the budget.”
The Foundation also provided a “Budget Checklist” to compare and contrast the FY 2008-09 budget proposal with measures of fiscally responsible approaches to spending the taxpayers’ money. The budgetary goals include:
- Keep spending growth within taxpayers’ ability to pay—the average rate of inflation
- Reduce or eliminate corporate welfare and wasteful spending
- Reduce the tax burden on families and job creators
- Protect against the need for future tax increases
- Limit the role of government to its core functions
- Accurately represent the true increase in spending
- Reduce the overall debt burden on taxpayers
The Commonwealth Foundation’s analysis of how the proposed FY 2008-09 Budget measures up to these goals can be found at www.CommonwealthFoundation.org/docs/FY08-09BudgetChecklist.pdf.
More budget spreadsheets and details can be found on PolicyBlog.
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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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