Five Major Flaws in House Budget
Unsustainable State Spending Threatens Family Budgets
June 28, 2016, HARRISBURG, Pa.—Today, the state House passed a $31.6 billion spending plan, representing a $1.5 billion increase over current-year spending. While the budget avoids sales and personal income tax increases, it contains five major flaws the Senate must address.
House Budget’s Five Flaws:
Unsustainable Spending Growth: The House budget increases spending by five times the rate of inflation and population growth. Meanwhile, the House has not passed a mechanism to fund the spending—essentially taking a "spend now, find revenue later" approach that paves the way for future sales and income tax increases that would hit all Pennsylvanians in years to come.
Biggest Spending Increase in Ten Years: The $1.5 billion spending hike is the largest year-over-year jump since 2006-07. What’s more, if enacted, the budget would mark a $2.4 billion spending increase in Gov. Wolf’s first two years—approaching the $2.85 billion in increases from the previous eight years combined.
More Than $100 Million in Retroactive Spending Increases: Beyond boosting spending by $1.5 billion for 2016-17, the House budget actually increases 2015-16 spending by more than $100 million. These supplemental appropriations include a questionable $8 million more for "House Caucus Operations" in 2015-16. (The proposed 2016-17 budget adds another $8 million on top of this.) Click here to view the supplemental appropriations.
Zero Spending Reforms: The House budget does not address $700 million in corporate welfare the state doles out at taxpayers’ expense—in fact it increases these line items—and does not take steps to slow the unsustainable growth of human services spending.
Leaves the Poor Vulnerable to Tax Hikes: Though the House increased spending without a way to pay for it, a huge $1-per-pack cigarette tax increase will likely be a major source of new revenue. Cigarette taxes infamously hit the poor the hardest: From 2010-11 smokers making under $30,000 annually spent approximately 14 percent of their household income on cigarettes. By the way, Pennsylvania already leads the nation in so-called "sin taxes" collecting $2.7 billion annually.
"The budget now heading to the Senate spends far more than the state can afford while not taking the critical steps needed to address today’s wasteful spending," commented Nathan Benefield, vice president of policy for the Commonwealth Foundation. "Ultimately, these kinds of spending increases will demand more from Pennsylvanians’ paychecks—forcing hardworking taxpayers to sacrifice their family budgets for unnecessary state spending hikes.
"We can do better for Pennsylvania families. Senate lawmakers should address these flaws and prioritize the use of taxpayer dollars before asking for even more from the people they represent."
Nathan Benefield and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or [email protected] to schedule an interview.
# # #
The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.