More than two weeks past the legal deadline, Pennsylvania finally has a budget. And, after rancorous bargaining and the political gamesmanship of a one-day furlough of state workers by Gov. Ed Rendell, both Democrats and Republicans are claiming victory.

The 2007-08 projected annual increase of 4.4 percent, or 3.2 percent when additional mass transit funding is removed, is the first budget under Rendell in which increases in state spending are even close to the rate of inflation. Starting with his first budget in fiscal year 2003-04, Rendell's budgets have increased state spending 5.8 percent, 5.4 percent, 6.8 percent and 6.6 percent.

To fund his big initiatives in energy, transportation and health care, Rendell wanted more spending (and much more borrowing) than what appears in the approved $27.2 billion package. As part of the budget negotiations, lawmakers agreed to consider the energy initiative and a few other issues during a special session in September.

Rendell's initiatives deserve further debate as well as broader understanding by both lawmakers and the public. But also deserving some debate in Harrisburg is the notion of a mandated limit on state spending — a formula-based cap that would force lawmakers to live within state taxpayers' means.

A number of other states have implemented or are considering what is generally called a taxpayers bill of rights (TABOR), which generally limits increases in state spending to the rate of inflation and population growth.

This entirely reasonable formula suggests that state spending should grow only as much as inflation plus the demands contributed by a growing population. Considering Pennsylvania's near stagnation on the population front, a TABORlaw in Pennsylvania would essentially limit state spending to the rate of inflation.

It's a concept most taxpayers embrace — and most politicians dismiss as unreasonable.

At about the same time that lawmakers in Harrisburg were fighting over the budget, Forbes magazine released its second annual listing of the best states for business. Despite Rendell's perennial boasts about job creation and spending constraint, the news for Pennsylvania was not good — nor was it very surprising.

Pennsylvania ranked 39th, ahead of Mississippi, Wisconsin, Michigan, Maine and a few other states. Of the six categories used in the Forbes ranking, Pennsylvania's best showing was a 7th place in the quality-of-life category. Without that well-above-average grade, the state's business climate score would have fallen even closer to the bottom of the barrel.

Among the six broad grading categories, Pennsylvania's lowest score (46th) came in the area of "projected job growth, income and state product growth as well as venture capital investments." This is clearly a discouraging outlook for the future, and something that should be a subject of debate in Harrisburg. September would be a good time to start. The Rendell administration and leadership of both parties in the legislature should look closely at what is working for the states leading the Forbes listing.

Virginia topped the Forbes ranking and its low business costs and strong economic growth. Washington State made news on the Forbes listing by jumping to fifth place from 12th the prior year. In Washington's favor was a successful effort to reduce red tape with its Office of Regulatory Assistance, which offers one-stop shopping to individuals and businesses working their way through government regulation.

Rendell might choose to argue that more state spending and more tax-funded support for business is necessary, while Republicans might prefer to see taxes reduced and a more business-friendly environment created, along with limits to the growth of government, including state, local and school district spending.

Rendell, like any politician, puts a positive spin on any economic news regarding Pennsylvania. But he cannot deny that this state lags most others when it comes to business development, job growth and economic opportunity. In the Forbes rankings, Pennsylvania did move up a few notches from 41, its prior year position. But for whatever reason, Pennsylvania does not stack up well against other states.

Instead of slapping himself on the back for finally getting a budget passed (after an unnecessary furlough and various veiled threats), Rendell should be promoting ways to move Pennsylvania toward the top (or, at least, the middle) of the Forbes ranking of states. Reducing the burden of regulation and bureaucracy, lowering taxes and controlling government spending should be part of that plan.

When the legislature finally passed a budget, Rendell said, "It's a spending plan that moves Pennsylvania forward." Citizens can only wonder how.

This state appears to have a very long way to go to catch up to other states — or even get to the middle of the pack — in terms of economic growth, job creation and efficient, cost-effective government.