Pennsylvania Governor Ed Rendell sees a federal stimulus package and bailout of the states as both a fix to Pennsylvania’s current budget crunch and as a tool to revitalize the economy. Pennsylvania faces a revenue shortfall of $2.3 billion, according to Rendell’s latest guestimate. His proposed fix relies on $450 million from a federal stimulus package. However, a look at recent Pennsylvania spending shows why a federal bailout of the states is bad policy.
Under Governor Rendell, Pennsylvania state spending increased 35.8%, well exceeding the rate of inflation of 17.4%. In Government on a Diet: Spending Tips 2008, a report released last year, the Commonwealth Foundation identified billions in potential spending reductions.
While Governor Rendell has cut $500 million from the current state budget through freezing new hires and other measures, the revised budget still represents a 2.3% increase over 2007-08. It would be hard to argue he has “cut spending to the bone.” In fact, even after these cuts, the Commonwealth Foundation found about $1.4 billion in wasteful spending.
While Governor Rendell is now encouraging spending restraint and threatening layoffs for state workers, he continues to practice “do as I say, not as I do” politics. Rendell recently created a new position for a former lawmaker and political ally, and continues to celebrate pork projects like grants to snowmobile clubs, a tourism website about a groundhog in a car accident, and millions in grants for agriculture and tourism and for the “President’s House” project.
A federal bailout of the states only rewards the misuse of taxpayers’ money in states like Pennsylvania.
Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation.