Pennsylvania’s Spending Problem

Member Group : Commonwealth Foundation

Imagine our economy is a pond. In the name of "economic stimulation," Gov. Ed Rendell goes to one side of the pond, dips in a bucket, pulls it out and starts to walk to the other side.

While on his way—spilling and wasting water—his press office calls the media to a news conference announcing his plan to raise the water level of the pond (revitalize the economy).

Once at the other side—with less water than when he began—Rendell empties the bucket back in the pond, as cameras flash in front of oversized cardboard checks for "shovel-ready" projects.

This doesn’t truly stimulate economic growth, of course; government has no money of its own to spend—it only has what it takes from Peter to give back to Peter, and to Paul. Indeed, if such government spending created prosperity, Pennsylvania would be thriving rather than merely surviving.

Gov. Rendell has tried to stimulate our economy for the past six years by increasing government spending a whopping 36 percent (more than double the rate of inflation). Billions of dollars have been borrowed and spent on "economic development" in Pennsylvania—more than that of 48 states. Yet during Rendell’s tenure, we rank 40th in job growth, 40th in income growth, and 42nd in population growth in the nation.

High-tax, high-spending states like Pennsylvania have been consistently outperformed by those that have reduced their tax burden on job creators and spent less on government-directed "economic development." So do we really think doing more of it in Harrisburg and Washington will somehow work this time?

Gov. Rendell and his allies think so, and actually argue that Pennsylvanians pay too little in taxes, and that more government spending will solve our state’s economic woes. Rendell uses selective evidence to claim that Pennsylvania ranks 32nd in state taxes. To get there, however, he omits nearly half of state government spending in his calculations. He also conveniently ignores Pennsylvania’s local tax burden. According to the Tax Foundation, Pennsylvania has the 11th-highest state and local tax burden in the country. What’s worse is that our state has gone from the middle of the pack (26th) in 1991 to near the top.

Yet, Rendell believes Pennsylvania actually should be spending more, not less, to jump-start the ailing economy. This is akin to prescribing whiskey for a hangover.

Pennsylvania has a spending problem, not a revenue problem. Had Gov. Rendell and the General Assembly simply held spending growth over the last six years to inflation and population growth (19.8%), Pennsylvania would be looking at a surplus of $3.8 billion rather than $2.3 billion deficit. Additionally, $15.9 billion could have been returned to taxpayers—that is more than $5,000 for every family of four.

So instead of raising taxes and spending to stimulate our economy, legislators must eliminate non-core government spending. The Commonwealth Foundation has identified nearly $5 billion worth of such spending. Here are a few examples of the waste in Harrisburg:

• $75 million in tax credits for Hollywood executives to produce films, including $5.7 million for "Zach & Miri Make A Porno," a comedy so raunchy that the City of Philadelphia refused to advertise it on its buses.
• A $95,000-a-year patronage job from Gov. Rendell for ousted lawmaker Dan Surra.
• $100,000 to the Pennsylvania Golf Course Owners Association to promote golfing in Pennsylvania.
• $100,000 to the Pennsylvania Ski Areas Association to develop and promote
• $4.6 million to the multi-billion dollar Archer Daniels Midland Company (ADM).

The General Assembly can make significant cuts without harming our most vulnerable citizens.

The remedy for Pennsylvania’s struggling economy and budget shortfall is to eliminate wasteful spending, rather than continuing Gov. Rendell’s failed tax-spend-and-borrow approach.

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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (, a public policy education and research institute located in Harrisburg.

Permission to reprint is hereby granted provided the author and affiliation are cited.
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