The High Cost of Fiscally Responsible Compassion

For the naysayers of disciplined and effective government spending, the Pennsylvania House Appropriations Committee has published “Republican Stewardship of State Government: 1995-2003.” Complete with a tagline, “Meeting the Challenge with Fiscal Responsibility and Compassion,” our Harrisburg politicians want to let you know how good they’ve been to you with your money.

Of the 15 items highlighted by the committee, 11 touted the billions of taxpayer dollars “invested,” “provided,” or “allocated” to a wide variety of big-government spending programs. Two others point to the comparatively miniscule tax reductions (in relation to the aforementioned spending) realized by Pennsylvania’s “working families” and businesses during the same time period. But it is the remaining two points that illustrate the magnitude of the opportunity missed by Pennsylvania policymakers.

The re-election talking points boast that between 1995 and 2003, Republican stewardship of state government “limited the average budget spending to slightly more than inflation” and “built the Rainy Day Fund from $66 million to $1.1 billion.” On the surface, those policies appear to be prudent and reasonable, especially the decision to replenish the “taxes-paid-in-advance” emergency fund, which had been virtually drained under the previous administration. However, appearances can be deceiving.

First of all, it is important to recall that while the Rainy Day Fund did reach a balance of $1.1 billion at one point during the 1995-2003 period, in 2002 the General Assembly voted to deplete much of that reserve in order to close a nearly $1 billion spending deficit. And such a large reserve balance, while prudently accumulated, was only possible and necessary because of the failure to control state spending during those eight years.

Consider the following: From the start of the 1995-96 fiscal year to the end of the 2002-03 fiscal year, the average annual inflation rate was 2.4 percent. During the same time period, Pennsylvania General Fund expenditures increased by an average of 3.4 percent annually, or 42 percent above the concurrent average inflation rate. The difference in dollar terms is staggering.

If General Fund spending growth had simply been limited to the previous year’s inflation rate during each of the eight budgets examined here, Pennsylvanians would have seen nearly $7.3 billion more in their paychecks overall between 1995-96 and 2002-03.

When the analysis is expanded to encompass total state operating expenditures, the lack of fiscal discipline from 1995 to 2003 becomes even more glaring. Total state operating expenditures rose from approximately $31.3 billion in 1995-96 to nearly $46.1 billion in 2002-03—an increase of 47.2 percent, or 176 percent above the concurrent rate of inflation. Again, if spending had been limited to inflation, taxpayers would have been able to keep almost $27.5 billion more of their money to invest, save, and spend between 1995-96 and 2002-03.

It is crucial to understand that legislators and other government officials of both parties are responsible for Pennsylvania’s past and current fiscal woes. But it is just as crucial to understand that the root of most of those woes is the misguided belief that “compassion” should drive government spending decisions. For lost in government officials’ desire to appear compassionate is the fact that government has no money of its own—meaning that whatever Pennsylvania’s government gives to one citizen in the name of compassion it must first forcibly take from another in the form of taxes or fees.

If Pennsylvania is to ever truly practice “fiscal responsibility,” the premise that “compassion” means spending ever-increasing amounts of other people’s money in an attempt to deal with common problems must be challenged and defeated. The failure to limit government spending to its “core functions” makes Pennsylvanians’ quality of life worse by inhibiting and replacing opportunities for true compassion—the use of one’s own time, money, and talents to help fellow citizens.

As the budget season comes to a close in Harrisburg, our politicians can still restore government to its proper constitutional role as the protector of life, liberty, and property for all Pennsylvanians. This is the sum of truly compassionate and fiscally responsible stewardship.


Grant R. Gulibon is senior policy analyst at The Commonwealth Foundation (, a public policy research and educational institute based in Harrisburg, PA. Permission is hereby granted to reprint in whole or in part, provided the author and his affiliation are cited.