Federal tax cuts made Pennsylvania’s current economic growth possible, but state reform could make it sustainable. Today Pennsylvanians are enjoying $866 million in surplus state revenue, an all-time low unemployment rate, and rising wages—but this rosy picture will quickly fade unless Pa. addresses its spending problem.
Governor Wolf is asking for $85.8 billion in total spending for 2019-20—the latest in a long line of Wolf spending increases. The budget will exceed taxpayers’ ability to support it, as it increases faster than both GDP and population from 1970 till present. To match pace with population and inflation growth, next year’s General Fund should only increase by roughly $700 million—2.1 percent higher than 2018-19 approved spending.
Controlling spending during economic slumps has proven hard enough. Doing it when the economy is booming is even more difficult—but lawmakers are rising to the challenge.
The State House Committee recently acted to address this challenge, voting to advance the Taxpayer Protection Act (House Bill 1316). The TPA ties the state spending increases to the growth of inflation and population.
This isn’t the first time lawmakers have considered a check on state spending. Two weeks ago, the Senate advanced a different version of TPA (Senate Bill 116) out of committee. And in 2017 a TPA-linked bill (HB 110) passed through the House.
As a constitutional amendment, the current TPA bill does not need the Governor’s signature, but will need to pass through both the House and the Senate twice before appearing on a ballot referendum.
The TPA was a good idea back in 2017, and it’s still a good idea today. Spending limits have majority support from across the political spectrum as more people realize that when the government consistently overspends, tax increases inevitably follow. Maybe that’s why Pennsylvania has raised taxes in five of the last ten years.
The House has passed TPA-linked bills before, and now it’s time for the House—and Senate—to do it again. We won’t maintain our current growth unless we actively pursue policies that will sustain it. That means passing the TPA spending limits and beginning to build a fiscally secure state.