Tuesday, July 03, 2007

Taxpayer Protection Act -- Fact and Fiction

Fact and Fiction in Controlling State Spending

By Senators Bob Regola and ‘Citizen Mike’ Folmer


At the very start of this legislative session, we introduced tandem plans to control – not cut – state spending.  Senator Regola’s Senate Bill 7, the Taxpayer Protection Amendment, would amend Pennsylvania’s Constitution.  Senator Folmer’s Senate Bill 707, the Taxpayer Protection Act, would do the same thing by statute.  Both would limit state spending to a combination of inflation and population growth.


Unfortunately, there has been a steady stream of misinformation and disinformation about these measures.  We would like to set the record straight.


Over the past decade, state spending has risen faster than people’s income:  spending is up 40% while personal income has risen 25%.  Meanwhile, our population has been flat.  Our Commonwealth simply cannot continue to spend, tax, and borrow.


Contrary to what opponents have said, spending would not merely be capped at the rate of inflation.  Rather, spending would be capped at the combined rates of inflation and population growth.  For example, if Pennsylvania’s population was to grow 25 percent and inflation would also rise by 25 percent, state spending under the Taxpayer Protection Act or Amendment could grow by up to 50 percent.  While every state program could get more, the increase would equal the combined rates of inflation and population growth.


The Taxpayer Protection Amendment and Act have also been disparaged by comparing it to Colorado’s “Taxpayer Bill of Rights “(TABOR).  While there are similarities between TABOR and our measures, there are also profound differences which set the two apart.  Unlike TABOR, our plans would require 25 percent of all state surpluses to be deposited into Pennsylvania’s “Rainy Day Fund”.  Pennsylvania would not – would not – replicate Colorado’s mistake of returning every penny of every surplus to the taxpayers.  Rather, our plans would save moneys for emergencies.  This would ensure significant reserves exist to protect against economic downturns.


The spending cap under both the Taxpayer Protection Amendment and Act is not a “hard cap”; the spending cap can be suspended anytime the President or the Governor declares a state of emergency.  The spending cap can also be suspended anytime 2/3 of both chambers of the General Assembly cast an affirmative vote to override the cap.


From 2001 through 2005 (the most recent five-year period for which data is available) Pennsylvania’s economy grew only 75 percent of the national average.  This “growth gap” is putting us behind our state’s economic competitors:  Virginia’s economy grew twice as fast as ours.


The time has come to close this gap by reining in state spending.  The Taxpayer Protection Amendment and the Taxpayer Protection Act are reasonable, commonsense measures to achieve this important goal.



# # #

No comments: