A report released this week by the Commonwealth Foundation (CF), a Harrisburg-based think tank, underscores the drawbacks of lavish government spending for ordinary Pennsylvanians.
Inflation and the economic policies that fuel it have already weighed on the minds of Americans for months. Federal spending during the COVID-19 pandemic has skyrocketed to create a debt nearing $30 trillion, equating to 133 percent of the U.S. gross domestic product and amounting to $239,000 per taxpayer.
The Federal Reserve has responded to this eruption of costs by feverishly printing money, resulting in an annual rise in inflation of 7 percent—8.5 percent when shelter costs are excluded for a more accurate measure. That’s the highest year-to-year inflation spike since 1982.
According to the CF backgrounder, “How Government Overspending Hurts Pennsylvania Families,” concerns surrounding high public spending only worsen when Pennsylvania’s own fiscal policies are considered. Out of all 50 states and Washington, D.C., the Keystone State has the fourth-highest overall tax burden, the third-highest gas tax and the second-highest corporate income tax. The state’s general-fund budget (aside from federal stimulus money) expanded by $3.2 billion in the current fiscal year and has enlarged by more than a third ($10.6 billion) since Gov. Tom Wolf’s (D) first budget took effect seven years ago.
CF cites U.S. Census data indicating that Pennsylvania saw 287,401 people leave the state from mid-2020 to mid-2021. The Commonwealth has one of the lowest population growth rates among all states, something the foundation attributes to its high tax burden and fiscal instability.
“Pennsylvania’s high taxes and bad spending habits are making the state unattractive to both current and potential residents,” CF researchers Nathan Benefield and Andrew Holman write in their report.
Benefield and Holman believe Pennsylvania’s economic prospects would improve significantly if lawmakers would constitutionally limit state spending via the Taxpayer Protection Act (TPA). Versions have emerged in both state legislative chambers, sponsored respectively by State Rep. Ryan Warner (R-Perryopolis) and State Sen. Camera Bartolotta (R-Washington). The constitutional amendment would limit state spending growth to the average change in personal income for the three previous years or to inflation plus population growth over the three prior years, whichever figure is lower.
If the TPA went into effect, the Commonwealth could exceed its spending limits if a two-thirds supermajority in both the House of Representatives and the Senate voted for an emergency exception.
Warner’s bill passed the House State Government Committee last January and Bartolotta’s version passed the Senate Finance Committee last March. Both votes occurred along party lines.
But if Republicans pass the amendment this session and—assuming they hold both legislative houses—do so again next session, Democratic politicians cannot block it. A constitutional amendment does not require the governor’s signature. It must instead pass the legislature in two consecutive terms, in turn appearing on the election ballot for voters’ approval or rejection.
Judging by data mentioned in the CF backgrounder, the TPA would stand a promising chance of enactment if Pennsylvania electors had their say. An Americans for Prosperity survey found that 64 percent of registered voters would back the measure while only 23 percent would oppose it. Thirteen percent of respondents said they were unsure.
CF’s report emphasizes that such a policy would have enabled the state to maintain a more substantial rainy-day fund to hedge against revenue shortfalls in low-growth years. The authors note that, after COVID countermeasures led to recession in 2020, the state only had sufficient reserves to fund government activities for about three days. Benefield and Holman believe lawmakers must act to prevent future exigencies from putting Pennsylvania’s finances in jeopardy—and to entice more residents and businesses.
“Pennsylvania can be a destination state again,” they write. “The first step is right-sizing state government.”
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Bradley Vasoli is managing editor of The Pennsylvania Daily Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Camera Bartolotta” by Senator Camera Bartolotta. Photo “Ryan Warner” by Rep. Ryan Warner. Background Photo “Pennsylvania State Capitol” by Kumar Appaiah. CC BY-SA 2.0.