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Commonwealth Foundation


PA's $400 Million Question

by Matthew Brouillette,
President
 

How will you vote on Tuesday, November 4th?

No, I'm not talking about the race for the White House. Nor am I talking about the
Congressional or state House and Senate races. I'm talking about the "Water and
Sewer Improvements Bond Referendum".

I know, I know, it's not the kind of election stuff you find on the front page of
newspapers, but how you vote will determine whether or not you will put your
children and my children further into debt.

Right now, the average citizen in Pennsylvania has a state and local government debt
burden of nearly $9,000. But our politicians in Harrisburg want to add more to the
$110 billion you already owe. $400 million more.

Here's the question you'll see on the ballot:

Do you favor the incurring of indebtedness by the Commonwealth of $400,000,000 for
grants and loans to municipalities and public utilities for the cost of all labor,
materials, necessary operational machinery and equipment, lands, property, rights
and easements, plans and specifications, surveys, estimates of costs and revenues,
prefeasibility studies, engineering and legal services and all other expenses
necessary or incident to the acquisition, construction, improvement, expansion,
extension, repair or rehabilitation of all or part of drinking water system, storm
water, nonpoint source projects, nutrient credits and wastewater treatment system
projects?

Most likely, voters will overwhelmingly approve this measure, just as they have in
the past. Whether it was the $625 million for Growing Greener II in 2005 or the $20
million bond issue to compensate Persian Gulf veterans in 2006, voters don't seem to
have much trouble allowing lawmakers to put us further into debt.

Of course, Governor Rendell and the General Assembly are OK with asking you for
approval of more spending on questions like "Do you want clean water?" or "Do you
support the troops?" Who can vote against those things?

But those same politicians never ask you if we want to go into massive bonded debt
to pay $45 million for a soccer stadium in Chester, $35 million for a baseball
stadium in Lackawanna County, $250 million for a cargo airport in Hazle Township,
$12.5 million for a 200-room lodge in Tioga County, or a slew of other pork barrel
projects. They just do it, like they did to pay for these projects last July–when
they borrowed over $3 billion on the taxpayers' credit card.

Citizens should rightly wonder why they are not given the opportunity to vote "YES"
or "NO" on bonded debt for corporate welfare and other pork barrel projects, and are
only asked about bonds for municipal water and sewer projects–a generally accepted
responsibility of government. Politicians don't ask because they already know the
answer to the former and they can pass the buck on the latter.

You should also know that there's some fine print that doesn't appear at the bottom
of the ballot question. That $400 million debt is really closer to $621 million.
Just like any other loan, taxpayers will have to pay back both the principal and the
interest over a 20-year period for this new bonded debt.

Our calculations at the Commonwealth Foundation suggest that–after all the debt is
issued ($11.2 million and $23.1 million in 2009-10 and 2010-11, respectively)–the
annual taxpayer costs for the next two decades for just this ballot issue will be
approximately $31 million.

For the average family of four in Pennsylvania, their share will be another $130 in
new debt payments which will be paid back with General Fund revenues (i.e. state
income, sales, and business taxes). That may not sound like a lot, but when you add
in the debt service for the other $110 billion in outstanding debt we're beginning
to talk about some real money. Furthermore, given that Pennsylvania is already
facing a budget shortfall–some lawmakers estimate it to be as high as $3 billion by
the fiscal year's end–is now really the time to be adding another mandated cost to
the taxpayers?

So how will you vote on November 4th? It is unfortunate that you didn't get to vote
on the billions in pork-barrel debt you've already been strapped with, but next
Tuesday you will get to decide if you can afford another spending program. For you,
that's the 400 million dollar question.

# # #

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation
(www.CommonwealthFoundation.org), a public policy research and educational institute
located in Harrisburg.

The Policy Points, Water and Sewer Ballot Question, is available at
www.CommonwealthFoundation.org.

Permission to reprint is hereby granted provided the author and affiliation are cited


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