NEWS RELEASE from the Commonwealth Foundation
Commonwealth Foundation Applauds Senate Budget
Spending plan represents step toward fiscal responsibility, CF encourages
eliminating wasteful spending, no new taxes
HARRISBURG, PA — The Commonwealth Foundation today applauded the state Senate for passing a General Fund budget that counters Governor Rendell’s proposal to continue along the failed and unsustainable path of economy-crushing spending and tax increases.
Unlike the Governor’s plan, the Senate budget would not raise taxes or dip into the "Rainy Day" Fund. The budget proposed by Gov. Rendell raises taxes by $500 million (not including a tax on health insurance premiums yet to be quantified), and would spend $3 billion more than the state will collect in revenue.
"Everyone—from economists to Presidents Obama and Kennedy—knows that taxes should be cut, not increased, during a recession," said Matthew J. Brouillette, president and CEO of the Commonwealth Foundation. "In fact, Gov. Rendell even stated earlier this week that ‘in bad economic times it’s not a good time to raise taxes.’
"Perhaps more importantly, Rendell’s spending scheme is deceptively unsustainable, relying on one-time and temporary revenue streams to feed his appetite for more spending," added Brouillette. "Increasing spending while revenues are declining is reckless, likely requiring a massive tax increase in a few years—of course, after Rendell has left the Governor’s mansion."
The $27.3 billion Senate budget is a $7.3 billion increase (including $400 million redirected to public transportation) from when Gov. Rendell took office—or a 36% increase. To put that in perspective, the Senate’s spending plan equals the 2002-03 budget increased by the rate of inflation and population growth, plus an additional $3.3 billion, or 13%.
"Those who feed at the trough of government spending are sure to decry the Senate budget as ‘cut to the bone,’" said Nathan Benefield, Director of Policy Research for the Foundation, "but the reality is that the budget represents a step toward fiscal responsibility after years of bloated spending."
In Government on a Diet: Spending Tips 2009, a report released in February, the Commonwealth Foundation identified nearly $5 billion of wasteful state spending that should be eliminated. The Senate budget reduces spending on many wasteful items, though the Commonwealth Foundation encourages lawmakers to go further, removing all wasteful and inappropriate spending, and adopting budgetary reforms—such as spending limits and transparency—that will protect taxpayers.
"We applaud the Senate’s plan to cut many of the most egregious misuses of taxpayer dollars, especially in the category of corporate welfare—money which Rendell uses to reward politically connected businesses, all in the name of economic development," remarked Brouillette. "If Rendell’s economic policies were sound, Pennsylvania’s economy would be thriving."
Instead, Pennsylvania has ranked near the bottom in economic growth under Rendell, ranking 33rd in job growth, 40th in personal income growth, and 43rd in population growth from 2003 to 2008. Independent analyses of Pennsylvania’s economic climate also rank the Commonwealth near the bottom of the 50 states.
"Rendell’s economic policies have been an utter failure. Massive spending and tax increases at the state level, combined with massive spending increases and borrowing at the federal level over the past few years, has undermined the private sector’s ability to rebound from an economic downturn," Brouillette added. "It’s time for a change. The Senate proposal is a step toward putting Pennsylvania back on a path toward fiscal and economic health, and ending the failed policies of the past."
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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.
CONTACT: Matthew J. Brouillette or Joe Sterns at 717.671.1901
Commonwealth Foundation | 225 State Street, Suite 302 | Harrisburg | PA | 17101