Gordon Denlinger: Pa. must stop letting surpluses disappear
It was great to learn in early June that Pennsylvania took in much more revenue than expected a month before the end of the June 30 fiscal year, gathering a surplus of over $900 million. There were concerns during budget negotiations that the state surplus would burn a hole in the pockets of some state lawmakers wanting to spend it on pork-barrel projects, but they never had time to do that before most of the windfall disappeared. That’s because the Wolf administration had already overspent its 2018-19 budget by about $700 million, wiping out most of the surplus.
It is important to note that Pennsylvania is doing better financially but still pales in comparison with the success of many other states. It’s time for Gov. Tom Wolf and lawmakers to stop overspending and begin creating lean and mean budgets. While it is good that about $300 million was put into a rainy day fund, the larger surplus would have created a cushion to protect taxpayers if we run into another recession.
Yes, the American economy is surging. Unemployment is essentially nil. And, on the small business front, business owners report increased capital spending and rising expectations for sales and expansion. Earnings, job creation, and compensation remain strong. Small business optimism appears contagious. It’s been running high since federal tax reform passed and the Trump administration reduced burdensome and unnecessary regulations. Many workers are also enjoying bigger paychecks and paying lower taxes.
It is the success of these national policies that are filling the coffers of states at unexpected levels. But for Pennsylvania to fully benefit, it must take similar steps to improve its own lot. Our state’s unemployment is still above the national average, and economic growth is lagging. Future revenue is tenuous because Pennsylvania’s senior population is growing; at the same time, the number of working age people is waning. Our state’s small businesses are at a disadvantage due to the size and cost of state government and the lack of pro-growth policies needed to alter our future course dramatically.
If Pennsylvania is to join the list of states with a serious economic growth agenda, we need to enact legislation that will truly limit the future tax-and-spend impulses of leaders in Harrisburg. The Taxpayer Protection Act would cap the growth in the state budgets at the rate of inflation with an adjustment for growth in population.
The TPA would be an amendment to our state Constitution and would need to be enacted in two successive sessions of the General Assembly before going on the ballot for a vote by the citizens of Pennsylvania. If the government takes less out of our pockets, the private sector will have greater resources to invest, hire and expand opportunities in the decades to come.
Right now, there are over a million small businesses in Pennsylvania that employ 2.5 million people. If Pennsylvania constrained the size and cost of state government, that would instill confidence, and small business would grow exponentially. It would lead to even larger surpluses of state revenue — which wouldn’t suddenly disappear. Putting reasonable spending limits on Harrisburg will go a long way toward helping Pennsylvania meet current debt and pension challenges. It would also be a giant step toward a brighter economic future.