Senate Committees Pass State Spending Limits & School Choice Bills

June 5, 2019, Harrisburg, Pa.—Today, the state Senate advanced two transformative bills: SB 116, known as the Taxpayer Protection Act, limits state spending growth to a rate Pennsylvanians can afford, and HB 800 expands the state’s immensely popular tax credit scholarship program, the Educational Improvement Tax Credit (EITC).

“It’s exciting to see the Senate act on issues that will foster opportunity and prosperity across our state,” commented Nathan Benefield, vice president & COO for the Commonwealth Foundation. “The Taxpayer Protection Act promises an end to the overspending and high taxes that are pushing people and the businesses to other states and will help turn Pennsylvania back into a destination state for families and jobs creators.

“Expanding tax credit scholarships will help meet overwhelming student demand for education options beyond their zip-code assigned public school. We urge the Senate to brings these bills to a floor vote in the coming weeks.”

SB 116: Taxpayer Protection Act

Senate Bill 116, which was passed out of the Senate Finance Committee, would amend the state constitution to limit the growth of government spending limited to the average combined rate of inflation and population growth over a three-year period.

Absent reasonable limits, state spending growth has skyrocketed 74 percent since 2000, far outpacing economic growth. Because we lack spending discipline, Pennsylvania has the smallest rainy day fund in the country, holding enough reserves to run state government for just six hours.

Graph: State Spending Outpaces the Economy

The TPA would allow for responsible spending increases while protecting Pennsylvanians from overspending and the borrowing and tax increases needed to pay for it. If TPA limits had been followed since 2003, Pennsylvanians would have $11,000 more per family of four in their pockets today.

Because the bill amends the state constitution, it must be passed in two consecutive legislative sessions, then put before voters in a referendum before it becomes law.

For more detailed information on the Taxpayer Protection Act please read our updated legislator’s guide.

HB 800: Tax Credit Scholarship Expansion

House Bill 800, sponsored by House Speaker Mike Turzai, was passed by the Senate Education Committee. It would increase the cap on the state’s Educational Improvement Tax Credit (EITC) K-12 scholarship program by $100 million next year and further raise the cap by 10 percent when 90 percent of tax credits are used in the prior year. The bill was passed by the House last month in a bipartisan vote.

Tax credit scholarships allow businesses and individuals to fund private school scholarships in return for a state tax credit of a lesser amount. These scholarships are privately funded and do not take away from public education spending.

Expanding them is vital: Half of tax credit scholarship applications are rejected due to caps on available tax credits. Meanwhile, the programs turned away $180 million in private donations due to program limits.

“To bring choice and opportunity to thousands more students, all government has to do is get out of the way by raising the limits on these programs,” said Benefield.

For more information and analysis see our fact sheet Expand Educational Choice with Tax Credit Scholarships.

Commonwealth Foundation experts are available for comment. Please contact Michael Torres at 850-619-2737 or [email protected] to schedule an interview.

# # #

The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.