TABOR is Wrong for Pennsylvania

EPLC Finance Conference,

November 15-16, 2007

Sharon Ward

Pennsylvania Budget and Policy Center

WHAT IS TABOR?

A state constitutional amendment that limits the growth of state revenues and expenditures. 

Requires voter approval to override the limit.

Based on a funding formula . . .

= +

Population Growth

Inflation RateGovernment

Spending

TABOR FORMULATABOR FORMULA

TABOR’S FLAWED FORMULA

CONSUMER PRICE INDEX (CPI)

DOES NOT Reflect WHAT the State Buys HEALTH CARE CLOTHING EDUCATION VERSUS FOOD PUBLIC SAFETY HOUSING 2. DOES NOT reflect HOW FAST public sector

goods and service costs INCREASE over time

POPULATION GROWTH Pennsylvania: Total Population versus Specific Sub-Population

(1990 to 2006)

Avg. Change

TOTAL POPULATION 4.7%

K-12 Enrollment 9.9%

Disabled Population 18.4%

State Prison Population

15.0%

Medicaid Enrollment 41.4%

In 1991-92, CO ranked 35th in state and local spending for K-12 as a share of personal income. In 2000, it fell to 49th

In 1991-92, CO ranked 30th when comparing the average salary of teachers to annual earnings in the private sector. In 2002, CO fell to 50th

In 1991-92, CO ranked 35th in state spending for higher education as a share of personal income. In 2004, it fell to 48th

In 2004, CO ranked 44th in the number of children receiving scheduled immunizations

In 1992, CO ranked 23rd in adequacy of pre-natal care. In 2002, it ranked 48th

In 1992, CO ranked 33rd in percentage of low-income children lacking health insurance. In 2004, it ranked 50th

Consequences in Colorado

TABOR Did Not Improve TABOR Did Not Improve Colorado’s Economy, as Colorado’s Economy, as Proponents ClaimProponents ClaimAverage Annual Employment Change

Before and After TABOR

1980-19921992-2004Colorado 2.1% 2.6%Mountain States(median) 2.1% 2.8%

REALITY CHECK

State Spending is Constant Relative to the Size of PA Economy

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Fiscal Year

Ge

ne

ral F

un

d A

pp

rop

ria

tio

ns

as

% o

f P

A P

ers

on

al I

nc

om

e

100

200

300

400

500

600

700

800

900

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Fiscal Year

1986

=10

0

Personal Income GF Approps "Runaway" Spending

PA General Fund Spending is Not Out of Control

Taxes and Spending Stable Over Time

Pennsylvania: 2005

6th largest state 6th in total state revenue 5th in total state

expenditures 22nd in state revenue per

capita 24th in state expenditures per capita 32nd in state taxes as a

share of personal income

Total Pennsylvania State and Local Taxes as a Share of

Personal Income By Decade

Decade1980-1989

1990-1999

2000-2005

Taxes as Share of Personal Income

9.9% 10.3% 10.4%

Rank 27 31 29

PA Spending Increases Generally Lag the National

AverageGeneral Fund Increases 1994-2007

0

1

2

3

4

5

6

7

8

9

10

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Per

cen

t In

crea

se

PA

US

What Would a TABOR Mean for Pennsylvania? (Actual PA General Fund Appropriations Compared to a TABOR-Based

Funding Formula Beginning 1986)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Fiscal Year

GF

Ap

pro

pri

atio

ns,

$ m

illi

on

s

Actual GF Appropriations GF Appropriations with TABOR

$7.9 billion gap in 2007

Pre K-12, $8,753

Funds for Other State Programs,

$51

Medicaid and Public Health,

$9,643

Other State Programs Include:CorrectionsHigher EducationLibrariesCommunity & Economic DevelopmentEnvironmental ProtectionJudiciaryLegislatureMilitary & Veterans AffairsRevenue DepartmentState Police

What Could Pennsylvania Fund Under TABOR?

(FY 2007, in $ millions)

NOW is the Time to ActNOW is the Time to Act

Fight the good fight now to avoid having to change it later.

Why start digging a hole even if you know you can stop digging?

Consequences for families is too high.