Cut the Fat

While Gov. Ed Rendell claims that his administration is “squeezing every nickel out of government,” an analysis of state spending released by the Commonwealth Foundation and Citizens Against Government Waste (CAGW) suggests otherwise.

The Pennsylvania Piglet Book 2006 identified $8 billion in waste, “walking around money,” and corporate welfare in state government spending over a two year period. The analysis found $3.7 billion in unnecessary spending in the current FY 2005-2006 state budget, and $4.3 billion in wasteful expenditures in Gov. Rendell’s proposed FY 2006-2007 budget, which is being debated in Harrisburg this month.

The report categorized wasteful government spending into four areas. These programs should be eliminated because they exceed the core functions of government, serve special interests at the expense of the general public, and unnecessarily extend government into the private sector economy and the daily lives of citizens.

In the current fiscal year, state government handed out nearly $900 million in “Corporate Welfare” to politically chosen projects and businesses. Of course, this redistribution of wealth from all of Pennsylvania’s citizens and job providers is given only to the select few that can access these government giveaways.

For example, last year Gov. Rendell announced the state would give $30 million of taxpayer money to PNC bank to build a new office and condominiums in Pittsburgh. In other words, taxpayers subsidized a corporation that had a net profit of $1.4 billion in 2005. Why are hard-working citizens—and even PNC’s competitors— forced to contribute $30 million to this corporation’s bottom line?

Nearly $50 million was spent through “Walking Around Money” (WAMs), through grants awarded at legislators’ discretion. Although many lawmakers will argue the merits of giving a few thousand here and there for various projects, handing out state taxpayer dollars for local benefits is not justifiable. Instead of laundering taxpayers money through various state agencies only to return a portion of it back to their district, lawmakers would be better stewards if they never extracted the money from their constituents in the first place.

More than $1.7 billion of taxpayer money was spent in providing “private goods”—state government programs which compete with the private sector. The largest of these government-run enterprises are the State Liquor Stores and the Pennsylvania Higher Education Assistance Agency (PHEAA), which if privatized, would provide greater benefits at a lower costs to the citizens of Pennsylvania.

State programs extending from a paternalistic mindset—believing that government must care for a childlike public—wasted $227 million in FY 2005-2006. Marketing programs to remind citizens to turn off their lights to save energy and the over-regulation of professions such as auctioneers, barbers, cosmetologists and funeral directors should be reduced.

Finally, state government wasted nearly $800 million in gratuitous spending and perverse incentives. Over $19 million was spent on expenses for state lawmakers and judges for things such as fine dining, leasing of cars, and public relations spending occurring right before elections. Programs such as the MCARE Fund and the Municipal Pension Aid Fund are examples of well-intentioned, but harmful programs that fail to discourage frivolous lawsuits or discourage cities from under-funding their pensions for civil servants.

All of the programs identified in the Pennsylvania Piglet Book 2006 represent a mindset and faith in Big, Intrusive Government. Unfortunately, most of these programs discourage personal responsibility, self-reliance, and voluntary association, while encouraging dependence on government (and the taxes of others).

The good news is that lawmakers can reduce state spending and begin to restore state government to proper role in our lives and the economy. The Pennsylvania Piglet Book 2006 provides the General Assembly a menu of options from which to cut the fat in the forthcoming state budget.

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Jennifer A. Snyder is a Research Intern with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, non-profit public policy research and educational institute located in Harrisburg, PA.