Report

Government on a Diet: Spending Tips 2009

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Executive Summary

Government on a Diet: Spending Tips 2009 identifies $5 billion in unhealthy state spending in FY 2008-09 and offers a series of recommendations to both resolve the current revenue shortfall and reduce the size and burden of government on Pennsylvanians by $1,600 annually for each family of four.

State government consumption and spending of taxpayer money have grown dramatically in recent years.  Since 1970, Pennsylvania’s total operating budget has increased from $4.2 billion to $61 billion in FY 2008-09, an inflation-adjusted increase of over 167 percent.  As a share of personal income, the state’s operating budget rose from 8.8 percent in FY 1970-71 to an estimated 12.2 percent in FY 2008-09—an increase of more than 39 percent.

The effect of these tax-borrow-and-spend policies has not led to a revitalization of Pennsylvania’s economy, but to stagnation. Since Governor Ed Rendell took office in January 2003, Pennsylvania’s ranking among the 50 states in job, personal income, and population growth has been 40th, 40th, and 42nd, respectively.

On July 4, 2008, the Pennsylvania General Assembly approved, and Governor Ed Rendell signed, a $28.3 billion General Fund Budget.  Since then, a revenue shortfall has emerged, and politicians are scrambling to fill a multi-billion dollar budget gap.

While Governor Rendell has proposed $500 million in spending reductions, Government on a Diet: Spending Tips 2009 identifies $1.41 billion in wasteful spending in Governor Rendell’s revised FY 2008-09 General Fund Budget.  In his 2009-10 budget address, Rendell remarked that he would implement cuts to programs which “fall outside the core functions of state government.” Based on the items identified in Spending Tips 2009, his proposed budget still includes $1.03 billion in program spending beyond the core functions of state government.

In addition to identifying wasteful and unnecessary state government programs, Spending Tips 2009 offers recommendations for improving government services and making them more efficient through reforms of the budget process. 

Spending reductions and reforms are organized into three sections:

  • Eliminate Wasteful Spending: Spending Tips 2009 identifies $4.94 billion in spending cuts—$1.41 billion from the state General Fund Budget, $2.11 billion from other operating funds, and $1.41 billion from the capital budget and off-budget programs.
  • Adopt Market-Based Delivery of Government Services: Spending on public education, benefits for state workers, and Medicaid is growing far beyond taxpayers’ ability to finance it.  By adopting market-based reforms in the delivery of these services, state government can not only reduce costs, but provide higher quality service.
  • Adopt Spending and Budgetary Reforms: Transparency in government spending and instituting performance-based budgeting would help rein in wasteful expenditures.

Harrisburg policymakers need to reprioritize spending and cut waste from state government to avoid a tax increase on working Pennsylvanians and job creators.  In short, they need to put Pennsylvania government on a diet and back on a path to fiscal and economic health.

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The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.