Good Wednesday Morning, Fellow Seekers.
Despite making some progress toward saving for a rainy day (fund), Pennsylvania still doesn’t have enough coin tucked away to ride out the next economic downturn. But, if it’s any comfort, it has plenty of company.
Just 16 of these 50 states have the reserves to weather the next downturn, according to a report by Moody’s Analytics. Fifteen states, including the Keystone State, do not, the report concludes.
“An inescapable economic reality is that there will be another recession, regardless of how high-flying the economy may appear,” Dan White, Moody’s head of fiscal policy research, said in a statement “as such, it is only prudent for states to prepare themselves for that recession.”
Moody’s number-crunchers ran stress tests for all 50 states, testing for both a moderate or severe recession. The study took into account the impact of the business cycle on state tax collections and state spending for the last two fiscal years.
The results of that test showed that “a majority of states are relatively prepared for a recession similar in severity to the typical recession in recent decades: 16 states have the reserves they need, while 19 states have most of the funds. Fifteen states currently have significantly fewer funds than they need for the next recession. Meanwhile, only nine states have the funds they need to withstand a more severe economic slump similar to the Great Recession,” Moody’s concluded.
“A lesson of the Great Recession is that states must formulate targeted reserve levels with intentionally crafted policy goals in mind,” White said in the statement. “Planning for the next recession involves the difficult balancing act of putting away enough money today to prepare for a future downturn, without stunting the current economic expansion.”
Pennsylvania ended fiscal 2018-19 with a surplus of more than $800 million — the result, officials say, of strong corporate tax revenues and record-low unemployment.
Some of that money had to cover costs that the state budget hadn’t anticipated. But $317 million went into the state’s Rainy Day Fund, which is used to keep government operations funded in the event of an economic downturn.
Officials in the Democratic Wolf administration — with encouragement from Republican lawmakers — have been working to build up that fund balance after many fallow years.
The 2019 deposit brought the total fund balance to $340 million, the highest it’s been since before the Great Recession hit in 2008, when the fund had a balance $755 million.
In the years after the downturn, lawmakers withdrew all but $60,000 from the fund to patch up budget shortfalls, Wolf said in June.
Last year, the state shored up the account with a $22 million deposit. This year’s contribution is more than 14 times higher, thanks largely to higher than expected corporate tax revenues.
The current balance is enough to keep Pennsylvania powered for just a few days, administration officials said last summer, noting that it provides an essential cushion against economic collapse. They conceded Pennsylvania has to make sustained investments in the fund in years to come.
The Moody’s report should be ample motivation.
Elizabeth Hardison leads our coverage this morning with a look at the state Charter School Appeals Board’s third, unsuccessful attempt to rule on a dispute between the Pittsburgh school district and a Steel City-based charter school network.
Stephen Caruso has the latest in legislative retirement news: Bid adieu to Rep. Marcy Toepel, R-Montgomery, who says she’s not running in for re-election in 2020. And check out our new retirement-tracking map in the story. Because we’re fancy like that.
Associate Editor Cassie Miller gets you smart fast on Human Services Secretary Teresa Miller pushing back against a Trump administration plan to rejigger a program that helps SNAP recipients pay their utility bills. And just in time for Christmas, too.
Miller also has the details on U.S. Rep. Scott Perry’s, R-10th District, claim that the ‘deep state’ is behind the impeachment inquiry. Perry, along with a colleague from Arizona, lodged his allegation in … where else? … a Fox News op-Ed.
Washington reporter Allison Stevens explains how a U.S. House vote on the U.S.-Mexico-Canada trade agreement could end up being a headache for labor Dems such as U.S. Reps. Matt Cartwright and Conor Lamb, of Pennsylvania, who are being targeted by the GOP in 2020.
Our partners at the Philadelphia Tribune bring you this look at a program intended to encourage the hiring of teachers of color in Philadelphia, where there’s a pronounced shortage.
On our Commentary Page, occasional contributors Michael J. Cozzillio and Craig N. Moore wonder when U.S. House Republicans will stop defending the indefensible. And Opinion regular Bruce Ledewitz explains why November was a good month for the rule of law.
Freshman Rep. Movita Johnson-Harrell, D-Philadelphia, expects to be charged with a crime by state Attorney General Josh Shapiro, and may have to resign from office as a consequence, the Inquirer reports.
U.S. Rep. Guy Reschenthaler, R-14th District, has called the House’s impeachment inquiry ‘broken beyond repair,’ the Post-Gazette reports.
Concerns about security are on the rise after a shooting at a magisterial district judge’s office in suburban Harrisburg, PennLive reports.
The Morning Call profiles the Pa. lawmakers who are involved in the impeachment inquiry.
Here’s your #Philadelphia Instagram of the Day:
Philadelphia City Council has voted to shrink the city’s real estate tax abatement, prompting ‘doomsday fears,’ in the real estate industry, WHYY-FM reports.
The Chester County District Attorney’s office has charged Energy Transfer’s security manager, and others, in an alleged scheme to use constables to provide security for the Mariner East pipeline, the PA Post reports.
Dauphin County Controller Timothy L. DeFoor is eyeing up a Democratic bid for Pa. Auditor General in 2020, PoliticsPA reports.
A record Cyber Monday has provided states with a healthy injection of tax revenue this year, Stateline.org reports.
A bipartisan task force in the U.S. House has been convened to deal with MLB’s plan to trim 42 minor league clubs, Roll Call reports.
What Goes On.
11 a.m., Media Center: Pa. Auditor General Eugene DePasquale rolls out an audit of the Pa. Dept. of Revenue and the state Lottery. Hopefully, it will uncover the chemical origin of the stuff on scratch-off cards.
Gov. Tom Wolf has no public schedule today.
You Say It’s Your Birthday Dept.
Best wishes go out to Christopher Latta, of the Legislative Budget & Finance Committee, and to Inquirer columnist Christine Flowers, both of whom celebrate today. Congrats and enjoy the day.
Here’s an absolutely ecstatic and cheesetastic ’80s gem. It’s the 12-inch mix of ‘Tarzan Boy,‘ by Baltimora. We’re grinning ridiculously and singing along right now.
Wednesday’s Gratuitous Hockey Link.
Carolina dropped a 2-0 decision to Boston on Wednesday. Ugh. If you’re going to lose, it might as well be to a team on a streak.
And now you’re up to date.