Time for a Real Economic Stimulus Plan: Cut Taxes, Control Spending
As we enter into state budget negotiations, we need to make clear that the top priority for the 2008-2009 budget must be economic stimulus tax cuts. Furthermore, we must insist on controlled spending and no more borrowing from Gov. Ed Rendell.
Earlier this year, I, along with my House colleagues, introduced House Bill 2270, a $500 million tax cut package for 2008-2009 directed toward helping Pennsylvania’s middle class families and employers. Taxpayers would get even higher tax relief in each of the succeeding budget years.
We want to roll back the personal income tax, to reduce business taxes by enacting the “CompetePA” proposals and to ultimately phase-out the tax on Pennsylvanians’ electric bills.
Tax cuts return money to the folks who earned that money, to spend as they see fit – not as the Governor sees fit. A tax cut for businesses allows employers to invest capital into personnel and infrastructure.
Let’s look at the budget history under Gov. Ed Rendell. In his first four years in office, he increased General Fund spending by almost $6 billion or 29 percent – from $20.4 billion at the end of the Schweiker administration in 2002-2003 to $26.3 billion at the end of 2006-2007. The rate of inflation for those same four years was 12 percent.
This exorbitant spending increase does not take into account budgeting gimmicks that shifted items from general fund spending to offline accounts, such as the Tobacco Settlement Fund.
But that’s not the end of the story.
The Governor has not been content just spending today’s taxpayer’s hard-earned dollars, he has been spending tomorrow’s hard-earned dollars as well. In his first four years, this administration borrowed and spent $3.15 billion that has to be paid back over the next 25 years to the tune of $4.8 billion in principal, interest and fees. That borrowed money has to be paid back with taxes from the hard-earned dollars of your kids and grandkids. (This does not include the authorized $12 billion Interstate 80-Turnpike fare increase borrowing scheme relegated to the Turnpike Commission).
And yet, the Governor has had the audacity to propose additional borrowing of $4.37 billion for his second term that has to be paid back in the amount of $6.8 billion over 30 years. This administration wants to borrow money because it wants, for political expediency, to spend public tax dollars today but leave the tax increase to the next generation.
Not that this administration is afraid of raising your taxes. In 2003, the Governor increased the personal income tax from 2.8 percent annually to 3.07 percent. This tax increase extracts up to $900 million annually from the pockets of middle class families and small businesses. And for what?
Each year over the past six years, Pennsylvania has had a budget surplus. Clearly this Governor has been overtaxing the people of Pennsylvania. It’s time to return that hard-earned money back to the taxpayers, where it belongs.
The increased taxes, increased spending and excessive borrowing have certainly not improved Pennsylvania’s economic climate. From October 2000 to October 2007, Pennsylvania’s job growth was 1.9 percent. During that same period of time, North Carolina’s job growth was 4.4 percent and Virginia’s was 6.6 percent.
Furthermore, since Rendell took office, Pennsylvania has lost almost 80,000 manufacturing jobs. The manufacturing sector provides jobs with average salaries that are 20 percent higher than the average state wage. As the Commonwealth Foundation recently pointed out, Pennsylvania ranked an unhealthy 38th in job growth, 40th in personal income growth and 42nd in population growth among the 50 states during Gov. Ed Rendell’s first term in office.
We’ve had more than our fair share of spending. Let’s eliminate handouts like the Opportunity Grant program that the state Auditor General recently criticized and put that savings toward tax cuts. There’s plenty of other savings that can be found in the budget too.
As we near a recession, let’s focus on tax cuts and letting our citizens spend their hard-earned money as they see fit.
  • Roll back the personal income tax. 
  • Provide business tax relief. 
  • Phase out the tax on Pennsylvanians’ electric bills. 

What Pennsylvania needs are tax cuts, controlled spending and a borrowing moratorium.


Rep. Mike Turzai
28th District
Pennsylvania House of Representatives

(412) 369-2230
Contact: Tricia Graham
House Republican Public Relations
(717) 260-6296
June 19, 2008