Are Pennsylvania Taxes “Money Well Spent?”

Gov. Rendell proposes balancing the state budget with a combination of new and higher taxes, another federal bailout, and additional state borrowing.  When confronted by opposition to additional taxes on working Pennsylvanians, Gov. Rendell and the special interests who feed on tax dollars frequently ask, "What key services should we cut?"

But the burden should be on those who demand more from workers and businesses to demonstrate that all current expenditures are an effective and appropriate use of taxpayer money.

For starters, state government should provide greater spending transparency.   The budget debate often centers on the $29 billion General Fund budget. However, state government has hundreds of funds and accounts and actually spends $66 billion annually, with taxpayers not privy to where any of the money is actually going.  Lawmakers need to put all state spending online in a searchable "checkbook" database, as 30 other states have done (in fact, separate bills to do just that have passed both the PA Senate and House).

Tax-hikers would then have to justify all state expenditures, such as the $750 million the Commonwealth spends each year on "economic development," i.e. corporate welfare.   Despite these nation-leading subsidies, Pennsylvania lags the country in economic growth.  One illustrative example is the $15 million Gov. Rendell awarded to Harley Davidson to keep the company in Pennsylvania, while it laid off half its payroll.  Yet Gov. Ridge also awarded millions to Harley less than 10 years ago.  Taxpayers are not saving these jobs, only temporarily renting them.

Curiously, those calling for higher taxes on some businesses defend loopholes for others.  Indeed, the $75 million Film Tax Credit (FTC) exempts "Big Hollywood" from the taxes "Big Oil" and "Big Tobacco" already pay.  Moreover, the FTC has failed to bolster Pennsylvania's film industry, and hurts our overall economic standing by precluding the ability to lower taxes across the board.

Gov. Rendell should tell voters why he is dedicated to raising taxes rather than tackling issues like fraud and abuse in the Department of Public Welfare.  Indeed, Auditor General Jack Wagner (a fellow Democrat) has identified fraud, payments to ineligible recipients, and even outright theft in welfare programs that cost taxpayers upward of $1 billion.

Those arguing that government is "cut to the bone" need to explain how it has the money for a $9 million project to make the park next to the state capitol look pretty, why it spent $24 million for consultants on I-80 tolling (a project everyone knew would never be implemented),  and why it refused to make money, as states like Arizona are doing, by privatizing state parks.

Education spending advocates should tell voters why Pennsylvania continues to impose prevailing wage mandates that drive up the cost of construction by 20-30 percent, taking dollars out of the classroom and resulting in higher property taxes.   Likewise, Gov. Rendell - who has previously said that we need to focus on "the core functions of government" - should explain why the state continues to stay in the business of running liquor stores.

Before attacking businesses that are "avoiding taxes," certain lobbying groups should be forced to defend how much the state spends subsidizing other special interests.   Claims that a tax on natural gas producers would have generated over $50 million to the state coffers is moot, given that taxpayers have funded $1.3 billion in handouts for alternative energy under Gov. Rendell.

And most recently Gov. Rendell nixed a contract with a public relations consultant hired to hype his legacy, saying it was not an appropriate use of taxpayer funds.  Yet taxpayer-funded lobbying, public relations efforts, and advertising are rampant throughout the state budget.

Until the Governor, lawmakers, and special interests clamoring for more taxes justify how they spend the billions of dollars already at their disposal-and prove themselves to be faithful stewards of taxpayer money-they cannot ask for more from struggling Pennsylvania workers and businesses.

# # #

Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.