The House Finance Committee voted Monday to send House Bill 2419 (Turzai-R-Allegheny), a strategic debt reduction program, to the House floor for a vote later this week, House Majority Leader Mike Turzai announced.
“Taxpayers deserve fiscal responsibility for all state-funded projects and this legislation will make it happen,” Rep. Turzai said. “This bill continues our aggressive agenda over the past four years to reduce the financial burden placed on Pennsylvania families while bringing openness and accountability to the process of investing their dollars wisely.”
State and local debt burden now exceeds $10,000 per resident as debt payments have become one of the fastest-growing areas of state spending, exceeding $1 billion per year, which is triple the repayment rate in just 12 years.
House Bill 2419, authored by Rep. Turzai, reduces taxpayers overall general obligation debt by nearly $4 billion in just 20 years and amends the Capital Facilities Debt Enabling Act to establish limitations on how much an administration may spend in new projects in a given year while allowing annual investments in our Commonwealth’s infrastructure and economy through strategic, responsible spending.
“Most Pennsylvanians know the squeeze that personal debt, such as mortgages, credit cards, and car and student loans, can place on a family budget,” said Rep. Eli Evankovich (R-Westmoreland), a House Finance Committee member. “This plan allows our state government to control that debt payment permanently.”
Committee members also voted to the House floor companion legislation, House Bill 2420, sponsored by the committee’s chairman, Rep. Kerry Benninghoff (R-Mifflin), that would reduce the Commonwealth’s debt ceiling on the Redevelopment Assistance Capital Project (RACP) borrowing system by an additional $500 million over 10 years, until it reaches $2.95 billion. The current RACP debt ceiling is $3.45 billion.
“A recent study completed by Truth in Accounting revealed that in order for Pennsylvania to pay off its more than $62 billion in total debt obligations, each taxpayer would have to individually contribute no less than $14,500,” said Rep. George Dunbar (R-Westmoreland). “As a member of the House Finance Committee, I was pleased to vote for the advancement of both of these proposals that will substantially lessen the ever-increasing debt burden on hard-working Pennsylvania taxpayers, rather than increasing it. Reducing government debt in this manner is a proven commodity when it comes to facilitating job creation and establishing a real pathway to sustained economic growth.”
Decreasing the Commonwealth’s debt load and the way governors spend are critical to Pennsylvania’s fiscal health and credit rating. The Commonwealth’s general obligation debt –debt paid back with taxpayer dollars – has grown by more than 42 percent in a short 12-year period, from $6.57 billion to $10.73 billion. This debt, along with the growing public pension crisis that finds taxpayers saddled with more than $50 billion in unfunded liabilities, were major factors in Moody’s July 21 downgrade to Pennsylvania’s general obligation credit rating.“Debt reduction is a critical keystone in our strategy to lessen the burden on taxpayers and bring integrity and transparency to the way Pennsylvania does business,” Rep. Turzai noted. “These limitations will allow this Commonwealth to pay down the excesses in spending we have seen in past years, and restore our credit rating while continuing to make meaningful investments in our state’s future.”
In a related action, House Bill 2478 (Adolph-R-Delaware) Capital Budget Project Itemization Act of 2014-15 was introduced Monday and was referred to the House Appropriations Committee.