The Truth About Spending Limits
Pennsylvanians want limits placed on the annual increases in state government spending. Despite the strong support of taxpayers, many special interest groups that profit from higher taxes and more government spending are misleading policymakers and citizens about the positive impact of reasonable limits on the annual growth of state government spending.
ECONOMIC GROWTH OR GOVERNMENT GROWTH?
It has been said that you can have economic growth or you can have government growth. But you can’t have both! Since 1970, Pennsylvania’s operating budget increased 168% in inflation-adjusted dollars; state spending as a share of personal income rose from 8.8% in 1970-71 to 12.2% in 2007-08. From 1970-2007 Pennsylvania ranked:
- 49th in job growth,
- 45th in personal income growth, and
- 48th in population growth.
Governor Rendell has continued the government spending trend with increases in General Fund expenditures of nearly 35 percent since 2002. Between 2002 and 2007, Pennsylvania ranked:
- 38th in job growth,
- 40th in personal income growth, and
- 42nd in population growth.
SUPPORT FOR SPENDING LIMITS
In the only statewide poll to date on the issue, Susquehanna Polling & Research, Inc. found overwhelming support for spending limits in May 2005. It found that 69% of citizens “favor” restrictions on increases in state government spending and only 18% “oppose” such limitations. In addition to supporting state government spending limits:
- 55% of Pennsylvanians said they were “more likely” to vote for a candidate who supports such restrictions and only 7% said they would be “less likely.” [31% said “no impact/no difference”]
- 75% of Republicans favored the proposal; 64% of Democrats did. Only 15% of Republicans and 20% of Democrats opposed such limitations. Independents and others favored the measure 59% to 27%.
- Even the least supportive region of the state, Philadelphia, favored the proposal by 51% with only 26% opposed. Strongest support for spending limits came from the Northwest region with 79% in favor and only 9% opposed.
THE TRUTH ABOUT SPENDING LIMITS
Opponents of spending limits perpetuate many myths to argue against reasonable limits on annual increases in General Fund spending. Below are just a few of the myths perpetuated by the spending lobbies in Harrisburg, followed by the facts.
MYTH: Spending is already limited because “our Constitution requires a balanced budget.”
FACTS: A balanced budget only implies that the state must take in as much revenue as it spends.
- Functionally, the balanced budget requirement allows virtually unlimited spending.
- Theoretically, it limits spending to 100% of all income earned by Pennsylvania workers and businesses.
MYTH: A spending limit would require cuts in education, transportation, and criminal justice.
FACTS: A spending limit merely slows the growth in state spending, it does not mandate any cuts.
- Under the proposed spending limit legislation, the FY 2008-09 General Fund spending could increase by 3.29%, or nearly $894 million, and by higher amounts in subsequent years.
- Of the total cost of Pennsylvania state and local governments of over $100 billion, less than one quarter of all state and local spending would be covered under the spending limits bill.
MYTH: Colorado’s tax and spending limitation “failed miserably.”
FACTS: Colorado’s TABOR (Taxpayer Bill of Rights) has provided many positive benefits for the citizens of that state.
- Colorado’s TABOR generated over $3.2 Billion in tax rebates from 1997 to 2001, nearly $3,200 for a family of four.
- According to an analysis of the Tax Foundation, Colorado’s budget deficit in FY 2002 would have been 6 times larger without TABOR.
- Colorado was 43rd among states in median family income growth in the 8 years before TABOR, in the years since, it ranks 7th.
- Colorado was 33rd in job growth before TABOR, but 6th since.
- Colorado was 43rd in economic growth per capita before TABOR, but 7th since.
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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.
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