Do New Budget Plans Protect Taxpayers?

Details of a proposed budget “framework” are slowly emerging. The Senate has advanced a General Fund spending plan, which seems to have Gov. Wolf’s support, of about $30.79 billion—$600 million more than the budget Gov. Wolf vetoed in June.

In contrast, House Republicans announced they are moving a plan that spends closer to $30.2 billion.

How do these spending plans compare to the Taxpayer Protection Act (TPA), which would limit spending growth to inflation plus population growth?

Over the past three years, inflation and population growth have averaged 1.71 percent. Applying this limit to last year’s budget yields a spending limit of $29.5 billion.

Some argue that last year’s budget doesn’t reflect the true spending level—some Medicaid payments were delayed until the 2015-16 fiscal year, lawmakers used the Tobacco Settlement Fund to pay some pension costs, and there were cost overruns requiring “supplemental appropriations.” Note that if the Taxpayer Protection Act were law, these budgetary shenanigans to shift spending offline would require a two-thirds majority vote.

Nevertheless, including last year’s offline spending into a “Big Baseline” still puts the proposed budget deal significantly above the TPA index—about $518 million more than if spending grew with inflation and population. 

In contrast, the House proposal would spend about $70 million less than TPA limits, using the “Big Baseline.”

Unfortunately for taxpayers, spending growth far above economic growth has been the status quo for decades. Since 1970, total state government spending—in inflation adjusted dollars—grew by $16,172 per family of four.