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    The First Rule of Budget Holes: Stop Digging

    06/24/2009

    In a familiar storyline, Pennsylvania lawmakers are seeking to close a budget gap of some $3.2 billion by—you guessed it—raising taxes. To that end, Governor Ed Rendell has called for a “modest” hike of 16 percent in the state income tax rate from 3.07 to 3.57 percent for the next three years. Similar “temporary” tax hikes, implemented in 1983 and 1991, have yet to be fully repealed.

    To the governor’s credit, he also proposed a modest spending cut of $500 million. But rather than trying to tax and spend his way out of the current budget hole, perhaps Rendell should just stop digging.

    In May, Reason magazine noted that a good way to measure fiscal discipline is to calculate the rate of government spending growth versus the rate of population growth plus inflation. According to the U.S. Census Bureau, between 2000 and 2008, the population of Pennsylvania grew by 1.4 percent, meanwhile the average annual inflation rate was 2.89. Together, those figures suggest that a state budget expansion of about 4.2 percent could be considered reasonable. Yet during that same period, the annual amount spent by Pennsylvania lawmakers ballooned from $41.4 billion (inflation adjusted) to $61.3 billion. An increase of more than 48 percent!

    Why the enormously disproportionate growth in spending? It might have something to do with what state representative and House Speaker, Keith McCall (D-Carbon County), told the Pittsburgh-Tribune Review on June 23rd. When asked why deeper cuts were not being considered to make up the budget shortfall, he reportedly said that “doing so would be unrealistic because school districts have contractual obligations, such as labor agreements with teachers.”

    Nice work if you can get it. From the United Auto Workers to the Pennsylvania public school system, it’s a great time to have a government-subsidized union contract with guaranteed raises and benefits. Being an average taxpayer, however, looks like more and more of a raw deal.

    The debate on this proposed tax hike is far from over. There is still time to make your voice heard! To help put a stop to the fiscal recklessness in Harrisburg, contact Governor Ed Rendell at (717) 787-2500. Also call Sen. Pileggi
    (9th Senatorial District - Chester and Delaware Counties)
    Capital: 717-787-4712
    District Office 1: 610-358-5183
    District Office 2: 610-345-1084
    District Office 3: 310-447-5845