How much does government cost Pennsylvanians?

Sticker Shock: The Price Tag of Government In Pennsylvania

By Grant Gulibon

COMMONWEALTH COMMENTARY

February 12, 2001

Savvy shoppers always closely examine the total price tag of an item – and the bang they’ll get for the buck – before handing over their hard-earned money.  Yet taxpayers rarely get to examine the total price tag of government, and are sure to get sticker shock when they learn that it’s more than $61 billion per year in Pennsylvania.

Revealing this huge investment in government, which adds up to more than $5,000 for every man, woman and child in the state, is at the core of a Commonwealth Foundation study that analyzes the spending practices of Pennsylvania’s school districts, municipalities, municipal authorities, counties and the state itself.

As important as it is to focus on the total $61 billion price tag, it is the growth of government spending, at a rate that outdistances inflation, that proves to be detrimental to taxpayers and economic growth.  Between 1993 and 1997, the total cost of government increased 30 percent faster than inflation, rising from $4,453 per citizen to $5,098.

Breaking down this $61 billion price tag into its component parts paints a dramatic picture of how each level of government (except municipal authorities) spent tax dollars at a rate well ahead of inflation.  Not surprisingly, looking back over the past three decades shows state government spending soaring 820 percent, or 114 percent after adjusting for inflation.  But once Pennsylvanians are finished paying for state government’s direct spending, they’ve only paid about half their total bill – and the numbers on the invoice for local government have been rapidly rising as well.

The heavyweight title for local spending increases goes to the state’s 66 counties (excluding Philadelphia, which is counted in the municipal totals).  From 1986 to 1997, county government spending increased 120.4 percent, or 50.5 percent after inflation.  Following close behind were Pennsylvania’s 501 public school districts, whose 1986-1998 spending levels rose 107 percent in nominal terms, or nearly 39 percent after inflation, with the vast majority of increased dollars earmarked for instructional costs, including teacher salaries.  Next to these two, Pennsylvania’s 2,568 municipalities seem almost stingy, since they increased spending "only" 59 percent in nominal terms, or 8.6 percent after inflation, between 1986 and 1997.  Finally, between 1993 and 1997, total expenditures for the state’s municipal authorities actually declined 3.9 percent, or 13.5 percent after inflation.

Once taxpayers see how the invoice they receive from government keeps growing, they naturally want to know what benefits are being returned for this annual megabuck investment.  While each layer of government can point to direct benefits that it provides to its taxpayers, it is also worth examining overall statewide indicators of economic health.  The facts show that taxpayers have been consistently shortchanged in the areas of economic and population growth.  According to the latest census figures, the Keystone State’s population grew just 4.1 percent over the past three decades—compared with a national rate of 36 percent during the same time period.  The most recent data on job growth show that while the United States gained jobs at a rate of 21.2 percent between January 1991 and December 2000, Pennsylvania’s job growth rate was less than half as large, at 9.3 percent. And between 1992 and 1998, Pennsylvania’s gross state product growth rate of 2.7 percent was barely more than two-thirds of the national rate of 3.9 percent—ranking 45th among the 50 states.

It is clear that continuing the policies of Pennsylvania’s past is not the way to confront the challenges the state now faces. It is time for Pennsylvania officials—at all levels—to cut government’s price tag and free the state’s job creators to provide opportunities for current and future generations of Pennsylvanians.  Only then will the Keystone State be known once again for economic—not government—growth.

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Grant Gulibon is Senior Policy Analyst at The Commonwealth Foundation, a free-market public policy research and educational institute based in Harrisburg, Pa.  For more information, visit www.CommonwealthFoundation.org.