Lawmakers Approve State Spending Limits

On Monday the state House passed HB 110—one of the most significant changes in how Harrisburg spends your tax dollars. HB 110, also known as the Taxpayer Protection Act (TPA), would amend the constitution to cap government spending increases to a formula set by law.

The TPA was one of several ideas recommended in our latest policy memo: Overhauling Pennsylvania’s Budget Practices

As of now, the legislature operates without any reasonable regulations on its spending power. The TPA addresses this issue by preventing the General Assembly from increasing spending above an index determined by inflation and population growth. Lawmakers can approve spending above this index if three-fourths of the General Assembly votes to exceed the act’s spending limitation.

Additionally, lawmakers cannot ignore the three-fourths requirement by shifting spending to the state’s shadow budget, as the legislation explicitly prohibits such a shift. Given state government’s inclination to shift spending out of the General Fund, this provision is an excellent safeguard for taxpayers. The Commonwealth Financing Authority transfer being a prime example of why taxpayers need such a safeguard.

Overall, the TPA would greatly impact Pennsylvania’s finances. For instance, if the TPA had been in place since 2003, the state’s combined 2016-17 and 2017-18 deficit would have been virtually eliminated. And taxpayers would have saved a cumulative $32.4 billion—or more than $10,000 per family of four. These savings would have meant additional money for families and entrepreneurs, allowing them to meet their own unique needs.

In other words, the TPA isn’t just about dollars and cents. It’s also about improving people’s lives and creating a Pennsylvania where people want to raise a family, earn a living, and enjoy the fruits of their labor.