Our state and country face enormous fiscal challenges because the economy is badly broken and for the last four years has not provided family supporting jobs at anywhere near the necessary level. Taxpayers are hurting. They are still repairing the damage from the financial collapse. And so they need government to step to the plate. That is why business as usual is not good enough. Government leaders like myself must responsibly cut government and create jobs with the private sector.

What is apparent to anyone who takes a hard look at our challenges is this: Those challenges are enormous but they are not impossible. For example, the Department of the Auditor General has 18 percent fewer employees today in comparison with the day I took office in January 2005. In addition, our budget is 4 percent less than it was six years ago, while the state budget has grown by 34 percent over the last eight years. Costs can and must be reduced while maintaining quality service to Pennsylvania taxpayers. That is why the Department of the Auditor General has been recommending ways to reduce the budget with a scalpel and not a hacksaw.

Earlier this month, Pennsylvania state government began the fiscal year 2011-12 budget season. More than five months ago, I kicked off an ongoing series of cost-saving proposals by sounding the alarm on the $5 billion budget gap the commonwealth would be facing in the upcoming fiscal year. I cautioned that the commonwealth could no longer rely on federal stimulus funds and accounting tricks to balance the budget.

Taxpayers will watch this budget process closely to determine how they personally will be affected. They want to know what programs and services that they rely upon will be cut and if their taxes will be increased.

Fortunately, there are tremendous opportunities for the commonwealth to realize real, sustainable savings without having to cut programs or raise taxes. Since that first press conference five months ago, I have offered seven tangible, common-sense proposals to accomplish this goal. The best part about these ideas is that implementing them requires minimal legislative or regulatory action. What their implementation does require is strong leadership from the governor and General Assembly and the will to serve the taxpayers’ best interests.

The most important suggestion was my call in November 2010 for a moratorium on cost-of-living increases for public officials. I urged the then-governor-elect and General Assembly to make their first order of business initiating a moratorium on the scheduled 1.7 percent cost-of-living increase for approximately 1,500 government leadership positions in state government.

Enacting a moratorium would have saved taxpayers approximately $12 million over four fiscal years. More importantly, a moratorium would symbolize state government’s commitment to fiscal prudence at a time of unprecedented fiscal peril. While a handful of public officials have returned their increases, most of the 1,500 have not. Furthermore, no steps have been taken toward a moratorium.

Three of our ideas for sustainable savings address the three major cost drivers in state government: education, public welfare and corrections. The proposals collectively could save commonwealth taxpayers $3.2 billion over the next four fiscal years.

In October 2010, I called on the governor and General Assembly to fix the flawed funding formula to bring equity to school districts, charter and cyber-charter schools, and to taxpayers who paid an additional $225 million in tax dollars to school districts that lost students to charter and cyber-charter schools. This proposal could result in $900 million in savings to taxpayers over the next four fiscal years.

In November 2010, I urged the Department of Public Welfare to implement the Department of the Auditor General’s audit recommendations and significantly reduce its 15.5 percent error rate in determining Medicaid eligibility. Many of the improper eligibility determinations were the result of DPW’s failure to verify basic information about recipients, such as their age or income. Of the improper payments uncovered in our audits, 90 percent were payments made to managed-care organizations. Reducing the error rate by 10 percent would save taxpayers $1.9 million over four fiscal years.

A month ago, I called for the Department of Corrections to stop building new prisons, better utilize existing alternative-sentencing programs, and enact sentencing reforms to curb the commonwealth’s unsustainable increases in prison population and costs. Conservatively, the commonwealth could save $350 million over the next four fiscal years. Halting prison construction could save hundreds of millions of additional tax dollars.

My other three ideas could provide an additional $3.2 billion in sustainable savings over the next four years, bringing the total savings to $6.4 billion. Structurally reforming the commonwealth’s $4 billion-a-year contracting process by making it more competitive and transparent could result in savings of $800 million. Consolidation of the commonwealth’s 17 separate prescription drug purchases at both the intrastate and interstate level could save another $1 billion. Offering all commonwealth employees a voluntary retirement incentive package similar to the successful program I offered my own employees this past summer could save taxpayers $1.4 billion.

The Department of the Auditor General’s work is not complete. I will continue to offer cost-savings suggestions that I believe would best serve Pennsylvania taxpayers.

State government owes taxpayers a budget that is fiscally responsible and contains real, meaningful and sustainable savings.

Jack Wagner is Pennsylvania auditor general.