Total Cost of Pennsylvania Government: 2005 and Beyond

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Executive Summary

The total cost of state and local government in Pennsylvania is projected to exceed $102 billion in FY 2004-05, and will likely reach more than $115 billion by the 2008-09 fiscal year (by conservative projections). The current state and local government levels of spending represent an increase of 93 percent—more than double the combined rates of inflation and population growth—from the FY 1991-92 level of $52.9 billion.

On a per capita basis (meaning for every man, woman and child in the state), Pennsylvania state and local government expenditures rose 86.4 percent from $4,407 in FY 1991-92 to an estimated $8,213 in FY 2004-05—more than double (112.8 percent) the concurrent combined 40.6 percent rate of population growth and inflation. In just the first two years of the Rendell Administration (between FY 2002-03 and FY 2004-05), the per capita cost of state and local government has increased by $803, or 10.8 percent ($452 per capita increase in state government expenditures, 12.1 percent, plus $351 per capita increase in local government expenditures, 9.5 percent).

But if state and local government spending had been limited to the previous year’s combined rate of inflation and population growth between FY 1991-92 and FY 2004-05, the amount each Pennsylvanian paid for state and local government today would be $2,103 less ($6,110 for every man, woman and child rather than the actual government price tag of $8,213 per capita).

The data illustrate why it is crucial for state officials to immediately adopt a “principles-based” approach to future budgets—one that seriously examines what state government does and how it does it, eliminates “non-core” government functions, and spends tax dollars more effectively on the programs that remain. For the sake of Pennsylvania’s future fiscal and economic stability, state lawmakers should begin working on a “spending and tax accountability” amendment to the Pennsylvania Constitution—one that will control future spending by requiring voter approval of increases in state and local spending that exceed the combined rates of inflation (or any other measure of wage or income increases) and population growth.