February Fiscal Facts: Pennsylvania General Fund Spending Lower than National Average

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There has been a lot of talk about Pennsylvania’s high rate of spending over the past few years. The facts tell a different story. General Fund spending in Pennsylvania is below the national average and has been for 18 of the last 20 years.

Measured as a share of personal income, Pennsylvania state General Fund spending has ranged between 4.9% and 5.6%, which has been at or below the national average in all but two years. In 2009-10, Pennsylvania spending was 4.9% of personal income, while the national average was 5.0%.

Following the Great Recession, states like Pennsylvania have done more than tighten their belts; they have slashed spending on education, colleges and even senior citizens. But even in the recession, Pennsylvania spending has been lower than average.

General Fund Spending as a Share of State Personal Income
Sources. National Association of State Budget Officers and U.S. Bureau of Economic Analysis.

Pennsylvania exceeded the U.S. average in 2003-04 and 2004-05. Why? One reason is that in the aftermath of the Recession of 2001, Pennsylvania, like 30 other states, took a balanced approach, cutting spending and increasing revenue to prevent deeper cuts. Even with the increase in spending, Pennsylvania fell back below the national average when the economy rebounded.

State

2009-10 General Fund Spending as Share of Personal Income Rank
(Highest to Lowest)
Delaware 8.6% 6
New Jersey 6.8% 9
West Virginia 6.4% 11
Average of Neighboring States 6.0% NA
New York 5.9% 17
Ohio 5.8% 18
Pennsylvania 4.9% 24
Maryland 4.8% 27

 

 

Pennsylvania spends less than its neighbors.

In 2009-10, Pennsylvania ranked 24th, lower than five of our six neighboring states.

On average, Pennsylvania spends one-sixth less than its neighbors on the General Fund.

 

Sources. National Association of State Budget Officers and U.S. Bureau of Economic Analysis.


General Fund spending includes most core government services. Spending as a share of personal income measures the share of economic activity accounted for by public sector spending. The measure allows for comparisons across states and across time.

Why compare General Fund spending to personal income? In nominal terms, state General Fund spending ranges dramatically – from $1.4 billion in tiny New Hampshire to $86 billion in giant California (Pennsylvania came in at $25 billion). It is hard to compare budgets in these terms as land area, population, demographics, and wealth vary so widely. The U.S. Bureau of Economic Analysis compiles estimates of income generated by economic activity by state. Comparing state General Fund spending to total activity shows what share of the state’s economy is used to pay for services, providing better comparisons over time and between states.