Report: States, including Pa., headed for ‘fiscal cliff’ after COVID aid runs out | Tuesday Coffee

A new report could throw fuel on the budgetary fire this month

May 31, 2022 7:13 am

(Getty Images)

(*This post was updated at 7:26 a.m. on Tuesday, 6/1/22 to add attribution to the Center Square)

Good Tuesday Morning, Fellow Seekers.

If you were wandering around the Capitol last week, then you probably noticed a constellation of interest groups asking the Republican-controlled General Assembly to cut them in on a piece of the fiscal 2022-23 budgetary pie.

With a surplus that’s estimated to be as high as $15.3 billion when the current budget year ends on June 30, advocacy groups say there’s plenty of money to spend on public education, gun violence prevention programs, higher wages for healthcare workers, and a host of other programs.

As we’ve noted in the past, more robust than usual tax collections, coupled with a buffer of unspent federal COVID-19 relief money, both are factors driving the state’s currently rosy financial state.

But even as advocates, the Democratic Wolf administration and its legislative allies have pushed to spend the money, majority Republicans, as is their custom, have rung the caution bell, warning that the state needs to be a responsible steward of all that cash.

new report by the Volcker Alliance, a think-tank founded by Reagan-era Fed Chairman Paul A. Volcker, seemingly buttresses that GOP argument, warning that, if they’re not careful, states, including Pennsylvania, are heading for a “fiscal cliff” when the federal relief money runs out. The details first were noted by the Center Square.

“In particular, the allocation of lump-sum payments for revenue replacement may imperil budgets when federal funding is exhausted. Additionally, reporting on use of these funds is inconsistent,” the report’s author, Beverly S. Bunch, a professor in the School of Public Management and Policy, at the University of Illinois, Springfield, writes.

And, in many states, “the lack of transparency about programs financed by [the federal relief money] will make it more difficult to assess downstream budgetary consequences and hold government officials and agencies appropriately accountable,” Bunch warned.

Gov. Tom Wolf delivers his final budget address to a joint session of the state House and Senate on Tuesday, 2/8/22 (Commonwealth Media Services photo).

If this argument sounds familiar, that’s because it is.

In 2011, the Republican Corbett administration was forced to cut hundreds of millions of dollars from public education when the $1.3 billion in federal stimulus money that districts had previously relief upon ran out.

That policy decision eventually cost former Gov. Tom Corbett his job, and birthed the myth that Corbett cut $1 billion from public schools. Republicans have been dining out on that fiscal fable ever since, as they’ve warned against being overly reliant on federal windfalls.

The new report also refers to the experience of Pennsylvania and other states during the early ‘Aughts, pointing out that states “shed almost 150,000 jobs, and took actions that included Illinois borrowing $7.2 billion to cover government worker pension contributions and California and Florida reducing support for and raising tuitions at public universities,” to close the budget holes created by the end of Obama-era federal stimulus cash.

And just like the early ‘Aughts, the national economy is currently in a tailspin, with experts bracing for something that may not be a recession, but likely will be something pretty unpleasant nonetheless.

So what about Pennsylvania?

Through July 2021, the state had spent 63 percent of the $7.3 billion in direct state aid it had received, according to the report.

While Bunch recommends keeping tabs on how states are spending what’s left of their relief money, she nonetheless warns that “states themselves must ensure that $195.3 billion in emergency aid granted to them by Congress does not set them up for future fiscal shortfalls after the federal largesse ends.”

(Image via Pittsburgh Institute for Nonprofit Journalism).

Our Stuff.

New this morning:

A joint audit of Pittsburgh’s police department has found racial disparities in marijuana charges, and recommends screening officers for affiliations with hate groups, our friends at the Pittsburgh Institute for Nonprofit Journalism report.

On our Commentary Page this morning: Experts from Fordham University and Baruch College CUNY explain why gun violence reform laws don’t pass Congress, despite majority public support.


In this week’s edition of The Numbers RacketCassie Miller runs down the state of abortion, infant, and maternal care in Pennsylvania.

Two state lawmakers are calling on state Attorney General Josh Shapiro to open an investigation into reports of abuse within the Southern Baptist Convention of churches in Pennsylvania, Cassie Miller also reports.

Gift ban advocates are looking to circumvent the Legislature’s GOP leadership, and directly pressure lawmakers for change, Marley Parish reports.

Our partners at City & State Pa. explain how Gov. Tom Wolf’s veto tally is defining his legacy.

State courts could overturn abortion bans in red states, our friends at report.

Russia has said ‘Nyet’ to any more visits from hundreds of members of Congress, including almost all of Pennsylvania’s Capitol Hill delegation, Capital-Star Washington Reporter Ariana Figueroa reports.

En la Estrella-Capital: Los legisladores del Condado de Lancaster y aspirantes se preparan para un nuevo debate sobre los proyectos de ley de reducción de la violencia armada. Y el Proyecto de ley que permite equipos de prueba personales y tiras de análisis de fentanilo es aprobado por el comité de la Cámara de Representantes.

Republican U.S. Senate candidate Mehmet Oz ( photo)

Even though the state is in the midst of a recount, Mehmet Oz is calling himself the ‘presumptive’ GOP nominee for U.S. Senate, the Inquirer reports.

Inflation could put limits on the benefits of federal infrastructure funding, the Post-Gazette reports.

Speaking of inflation, PennLive talks to Pennsylvanians about how they’re dealing with price hikes.

In the hope of averting potential tragedy, police in York have created a registry of local residents living with mental illness, the York Daily Record reports.

The REAL ID enforcement deadline is approachingLancasterOnline runs down what you need to know.

PennDOT removed its database on bridge inspections in the wake of Pittsburgh’s Fern Hollow Bridge collapse, citing security concerns, the Morning Call reports (subscribers-only).

Wilkes-Barre Mayor George Brown switched his Facebook page back to public amid complaints he was stifling free speech, the Citizens’ Voice reports.

Philadelphia needs 60 more lifeguards to open most of its poolsWHYY-FM reports.

With electricity prices set to rise this month, consumer advocates are warning against switching providersStateImpact Pennsylvania reports.

GoErie explains the affordable housing upgrades taking place across the city (subscribers-only).

Well, hey, PoliticsPA. You’ve gotten a redesign.

In one of a series of exit interviewsCity & State Pa. talks to state Senate President Jake Corman, R-Centre, who is not seeking re-election this year.

These two words could sink talks on gun violence reduction legislation, Roll Call reports.

Here’s your #Philadelphia Instagram of the Day:

What Goes On
6 p.m., Harrisburg Hilton & Towers: Pennsylvania Commission on Sentencing

Gov. Tom Wolf does his usual 8:07 a.m. phoner with KDKA-AM in Pittsburgh this morning.

You Say It’s Your Birthday Dept.
Best wishes go out this morning to Gabby Richards, newly installed as director of Federal Advocacy Communications at Planned Parenthood Federation of America, who celebrates today. Congratulations and enjoy the day.

Heavy Rotation
Veteran Chicago rockers, Wilco, who surely must now qualify for National Treasure status, are out with with a new double-LP, Cruel Country, that finds them returning to their twangy roots. Here’s the lead track, ‘Falling Apart (Right Now),’ that will take long-time fans right back to the ‘AM‘ era of the band.

Tuesday’s Gratuitous Hockey Link
Well, it was a good run. The New York Rangers eliminated the Carolina Hurricanes with a pretty comprehensive 6-2 win at PNC Bank Arena on Sunday night. Thanks for some pretty amazing hockey. There’s always next year.

And now you’re up to date.

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John L. Micek
John L. Micek

A 3-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's Editor-in-Chief. An award-winning political reporter, Micek’s career has taken him from small town meetings and Chicago City Hall to Congress and the Pennsylvania Capitol. His weekly column on U.S. politics is syndicated to 800 newspapers nationwide by Cagle Syndicate. He also contributes commentary and analysis to broadcast outlets in the U.S., Canada and the U.K. Micek’s first novel, “Ordinary Angels,” was released in 2019 by Sunbury Press.