Loan Reduction

Gov. Arnold Schwarzenegger of California was in the national spotlight again last week. Californians voted to strike down a proposition that would have, among other things, given sweeping budget powers to the state government.

What Americans didn’t hear about last week was that Senate and House Republicans here in Pennsylvania quietly proposed and passed similar legislation. Senate Bill 4, also known as the “Taxpayer’s Bill of Rights” would make it illegal for the state’s yearly increase in spending to exceed the rate inflation. Another measure, Senate Bill 884, would make the spending cap a constitutional amendment.

If the bills are signed by Gov. Ed Rendell, it would be a huge victory for fiscally conservative Republicans in Harrisburg.

The money-saving measure could directly affect the state’s ability to carry out many of its normal functions, including funding the Pennsylvania Higher Education Assistance Agency, which provides 80 percent of financial aid in the state. There have been calls to reform PHEAA lately, mainly because of questions about money mismanagement.

Although financial responsibility is important, the state’s first responsibility should be to the people.

Not only does the proposed bill endanger future expansion of the budget to help students and the rest of Pennsylvania’s 12 million residents, but it would also entail some substantial cuts now.

The state’s rate of increase for spending is usually less than the rate of inflation, but the measure would tie the state’s hands in crisis situations.

With a budget cap in place, last-minute maneuvers like last year’s $700 million SEPTA budget-boost would be impossible. The only additional funds available to the government for times of need would be a “Rainy Day Fund,” making up half of the state’s budget surplus for a given year. The other half of the surplus would attempt to lower individual income taxes, a small reward for a great sacrifice.

Many states have spending limits, but they have not been effective in all states. In 1992, the Colorado state legislature passed a bill similar to the “Taxpayer’s Bill of Rights.” The state scaled back that bill earlier this month because of bottom five rankings nationally for education and health care.

It’s long been the goal of conservatives in Harrisburg to curb the state’s spending. With another gubernatorial election next year, the bill’s passage would be a feather in the cap of many prominent conservatives.

Gov. Rendell has not commented on the potential budget limit, but said he would not endorse it without some important exceptions. The bill will still be subject to a referendum after the governor passes it. Are we ready to have the people of Pennsylvania make a choice between our loans and their taxes?