Rightsizing State Government: Solutions to Pennsylvanias Fiscal and Economic Challenges

Executive Summary

“[W]e must find a way to make government live within its means. That is my first priority as governor. We must act now, and we cannot fail. We must find new sources of revenue, and at the same time make tough decisions to reduce spending and cut waste in government. We simply have no other choice.”

– Pennsylvania Governor Edward G. Rendell

Inaugural Address (January 21, 2003)

Governor Rendell’s fiscally conservative public commitment to “reduce spending and cut waste in government” will most certainly be put to the test when he delivers his FY 2003-04 budget address in March 2003. The reality facing the new governor is that decades of spending that outpaced inflation and population growth by Pennsylvania state government—along with a series of one-time budget “fixes” last year—have resulted in a budget deficit estimated at amounts, depending upon the source, ranging from $635 million to more than $2 billion.

Pennsylvanians can only hope that Governor Rendell’s inaugural speech represents a departure from the failed policies of trying to spend Pennsylvania into prosperity. However, in order to create a leaner and more efficient government, the governor and members of the General Assembly should be guided by a set of specific expenditure principles, including:

  • Spending should be limited to core government functions.
  • Spending decisions should promote “neutrality” among individuals and groups.
  • Spending decisions should be fair and equitable.
  • Spending administration should be simple and economical.
  • Spending should be accountable to taxpayers.

A serious examination of what state government does and why it does it—beginning with the expenditure principles set forth in this analysis—is the solution to Pennsylvania’s economic and fiscal challenges. By following the above principles, this policy brief identifies more than $2 billion in potential spending reductions for the 2003-04 General Fund budget. The recommendations contained in this analysis of state spending provide the foundation upon which Governor Rendell and the General Assembly can begin to “reduce spending and cut waste in government.”

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The Commonwealth Foundation is a nonpartisan, nonprofit, public policy research and educational institute based in Harrisburg, Pa.