A Budget of Contradictions
When Gov. Wolf presented his budget proposals for 2018-19 on February 6, his plan was not the one Pennsylvanians needed to hear. Instead, he offered more of the same: a dramatic increase in the size and scope of government.
A review of both his rhetoric and policy proposals reveal glaring contradictions that call into question his vision for Pennsylvania. On the one hand, the governor touts spending restraint and proposes lower taxes to make the commonwealth more competitive. On the other, he proposes a multi-million-dollar new tax and a dramatic spending increase. Let’s look at spending first.
In its budget summary, the administration claims Gov. Wolf has “fundamentally changed” the approach to budgeting. As an example, he points to holding spending below $2.85 billion over the prior three years. In reality, however, the governor’s fiscal record is better characterized as a spending surge, not restraint. Spending over the last three years has exceeded all combined increases over the prior eight years.
His claim about budget restraint is even more unbelievable when the governor’s prior and current budget proposals are considered. His first budget alone would have increased General Fund spending by $2.5 billion. As for his most recent proposal, General Fund spending would rise by approximately $1 billion, for a total of $33 billion. This figure is likely understated, as his plan would shift some General Fund spending to the shadow budget, “off-book” accounts that include a variety of federal and state funds totaling another $51.7 billion over and above the General Fund, bringing the state’s total operating budget to $84.7 billion.
On the tax front, the governor’s budget would impose a levy on the natural gas industry in addition to all the other taxes they pay, including a unique “impact fee” that has raised $1.5 billion in revenue since 2011. Gov. Wolf apparently believes this additional burden won’t harm the industry’s competitiveness. Yet, in the same proposal, he wants to lower the corporate net income tax to “create a more competitive business climate.”
If reducing the tax burden on companies will foster a more competitive environment and maximize new business investment, why would Gov. Wolf want to impose yet another tax on the natural gas industry? This inconsistency makes no sense and would harm thousands of Pennsylvanians who depend on the industry for their livelihoods.
If the governor believes in spending restraint and lower taxes, then his budget should have reflected this vision. But to use the rhetoric of fiscal responsibility and free markets while advocating for just the opposite is misleading and counterproductive.
Real spending restraint is possible, and one way to achieve that is to enact the Taxpayer Protection Act (TPA). Passed in the state House last year, the TPA would limit spending increases to the combined rate of inflation and population growth over a three-year period.
In addition to spending limits, lawmakers should pursue meaningful reforms to address the state’s largest expenses—human services, education, corrections, and debt service. These programs are growing at an unsustainable pace yet often fail the very people they're intended to help. Here are a few solutions to meet the twin goals of improving outcomes and reducing taxpayer burdens:
- Enact reasonable work/community service requirements for healthy adults in Medicaid and food stamps
- Expand school choice
- Cut corporate welfare
- Implement additional criminal justice reforms
- Use the shadow budget’s surplus funds
In response to Gov. Wolf’s budget proposal, legislative leaders have emphasized the need to control spending, which is a promising first step. The next step is to ensure lawmakers follow through on their promises and pass a prudent state budget.