The Pot of Debt at the End of Rendell’s Rainbow

This Commentary first appeared in the Allentown Morning Call.

These days it’s hard enough for Pennsylvania families to think about meeting their obligations let alone piling on more debt.  But that’s exactly what outgoing Gov. Ed Rendell did this week, when Pennsylvania State Treasurer Rob McCord signed off on Gov. Rendell’s final $650 million bond issue, after Auditor General Jack Wagner refused to do so. 

This is a borrowing scheme Pennsylvania’s families can ill-afford.

State general obligation debt rose by almost $2 billion, or 28 percent, under Gov. Rendell.  Payments on the debt tripled under Gov. Rendell, from $350 million to $975 million in the current budget.  And that is but the tip of the iceberg, as Gov. Rendell increased debt held by state agencies like the Turnpike Commission and the Commonwealth Financing Authority by a whopping $16 billion, or 93 percent. 

As of 2009, Pennsylvania taxpayers owed $3,313 per person in state debt alone.  Add in local governments, and every resident of the state owes more than $9,600 in state and local debt.  And these totals don’t even include the $3 billion deficit in unemployment compensation or the billions in unfunded pension obligations for public employees.

What should frustrate taxpayers most is that this growth in debt isn’t even to support infrastructure, but to reward political allies.   

Like a family borrowing to buy a home or going into debt to expand a business, government can appropriately issue bonds to build new facilities, schools and roads.  But unlike our families, state government continues to borrow on the backs of our children and grandchildren to hand out billions in pork projects and corporate welfare through the Redevelopment Assistance Capital Program

RACP, aka R-Cap, was created in 1986 with a debt limit of $400 million.  This debt ceiling has been increased regularly, mostly under Gov. Rendell’s watch, with the latest $600 million hike increasing the limit to more than $4 billion. Projects funded via RACP include numerous sports stadiums, resort spas, offices for big corporations and monuments to Arlen Specter and Jack Murtha. 

This use of taxpayer debt is sold as “economic development.”   Yet while RACP has been in existence for over two decades, and Pennsylvanians go further into debt each year, the promised economic growth has not materialized.   The harsh reality is Pennsylvania ranks near the bottom in state business climate indices and remains an “outbound” state, with more residents leaving  than coming in.

It is only fitting Gov. Rendell’s parting gift will be to add another deficit-funded handout to his allies, while leaving a legacy of debt to his successor and generations of taxpayers to foot the bill. 

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Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (, an independent, nonprofit public policy research and educational institute based in Harrisburg.