Legislators do exactly the wrong thing
in adopting foolish spending caps

November 4, 2005

Without hearings, members of the state House joined the Senate in passing legislation late Tuesday night to cap state budget spending. The 110-87 vote came on the same day voters in Colorado agreed to suspend a similar law there that threatens that state with a fiscal crisis.

Fiscal responsibility is a good thing. However, it's not something that happens mechanically. It's something the public expects lawmakers to exercise after careful consideration of all that goes into funding things such as public schools and colleges, paving roads and caring for the elderly and less fortunate.

The two bills passed by the House and Senate don't do that. They are hypocritical bills aimed, in part, at deflecting public anger over lawmakers' 16-to-54 percent pay grab back in July. The bills' Republican supporters claim they will help control increases in state spending and reduce taxes. In all likelihood, though, if the spending caps become law, they'll increase taxes for school districts and local government.

The bills ignore the realities of state spending and its dependency on federal revenue that too often is insufficient. Just as the federal government requires the states to administer programs like medical assistance or No Child Left Behind school achievements, the state requires counties, municipalities and school districts to do things, too. When one level of government doesn't adequately fund its mandates, there's a cascading effect that either results in taxes going up somewhere or programs being cut. That's what voters in Colorado faced with their Taxpayers Bill of Rights. That's why voters there decided to suspend the law to avoid draconian budget cuts in education and other programs.

Yet, Pennsylvania lawmakers want an easy way to control the growth of the state's $24 billion budget, 78 percent of which is spent on education, medical assistance and welfare. The House and Senate bills both would cap budget growth to formulas based on inflation. Both allow the caps to be ignored in emergencies if there are super majority votes to do so. They both ignore the experience of other states and research by organizations such as the nonpartisan Center for Budget & Policy Priorities in Washington, D.C.

Earlier this year, the center did a study analyzing factors causing problems for state budgets. It determined that there were 10 factors making it hard for states to deal with budget challenges — things like not including services in the sales tax, too heavy a reliance on corporate taxes or having limited progressivity in the state income tax. Pennsylvania was among 11 states with nine or 10 of the risk factors. The only risk factor Pennsylvania didn't have was a spending cap.

Gov. Rendell should veto any spending cap. State lawmakers should read the national study and get serious about meaningful tax reform in Pennsylvania.