Does Pennsylvania spend too much, tax too little? We crunch the numbers

HARRISBURG, Pa. (WHTM) – “I hope people that are listening hear me loud and clear,” Republican gubernatorial candidate and state Sen. Scott Wagner said.

And then he recited a mantra that numerous conservatives at the Capitol have adopted:

“We don’t have a revenue problem, we have a spending problem.”

State Sen. John DiSanto (R-Dauphin/Perry) stuck to the script during last week’s “This Week in Pennsylvania.”

“It’s a spending problem. It’s not a revenue problem,” DiSanto said.

This year’s $32 billion budget overwhelmingly passed in the legislature.

Is $32 billion too much? Do we spend too much?

“We absolutely have a spending problem,” said Nate Benefield of the conservative Commonwealth Foundation.

He, apparently, got the memo.

“We are not under-taxing our citizens. We are spending more than we should be,” he said.

But are we? ABC27 compiled the state budgets of Pennsylvania’s neighbors for comparison.

In terms of land mass, Pennsylvania is bigger than every border state except New York. In terms of population, Pennsylvania is bigger than every border state except New York.

But in terms of its state budget, Pennsylvania’s $32 billion is lower than every border state except West Virginia and Delaware. Ohio and Maryland spend more. Tiny New Jersey spends more. New York spends a lot more.

It’s a Eureka moment for many liberals.

“We don’t have a spending problem,” said Marc Stier of the left-leaning Budget and Policy Center. “We have a problem of taxing too little and from the wrong people.”

Stier’s conclusion: Pennsylvania spends too little on schools, social programs, and the environment because it taxes its highest earners too little.

“The problem is the rich don’t pay enough in taxes. The rate on the top one percent in New York and New Jersey is 6.6 percent, the effective rate,” Stier said. “Ours is three percent.”

Stier thinks those making more than $500,000 should be taxed at a higher rate than Pennsylvania’s flat 3.07 percent.

“I fully disagree with that,” said Benefield, who rejects the entire premise of comparing Pennsylvania’s spend number to neighboring states. He says it is not an apples-to-apples comparison.

“We’ve been calling it the shadow budget,” Benefield explained. “We talk about the $32 billion general fund, not the $80 billion total operating budget.”

Most of that extra money Benefield’s referring to is federal dollars and therefore not applicable for this comparison. But there are funds like the Motor License Fund with just under $3 billion in state dollars and the Pennsylvania Lottery Fund with just under $2 billion. There are also several other funds with billions of dollars collected and spent but not counted in that official $32 billion spend number.

Benefield suggests it’s a shell game.

“In some cases, they’ve moved it out of the General Fund to make it look like we’re spending less in one year, and that adds up,” he said.

According to the Independent Fiscal Office, Pennsylvania is tied with Ohio but otherwise spends less on state and local taxes as a share of income than every one of its neighbors.

In state spending per-capita, Pennsylvania ranks 23rd in the nation, roughly middle of the pack.

Those are numbers and statistics. In Harrisburg, those are frequently overshadowed by politics.

“The rich should pay more in taxes like they do in every state around us, and that’s how every state around us spends more without taxing working people more,” Stier said.

Benefield counters, “You do compare us to New York and New Jersey. Those are higher taxed states, I will admit that. People move from New York and New Jersey to Pennsylvania, but people move from Pennsylvania to Delaware, Florida, North Carolina and Texas because they have lower taxes and better economic growth there.”

With budget numbers, hard truths are hard to find, but two things seem certain. First, the state is spending more state money than the $32 billion it’s listing on the bottom line of its budget. Secondly, for years, it has not raised enough money to fairly and honestly balance the books. The math has been fuzzy. Which is why the Senate says it had no choice but to raise taxes.

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