Fears of flying off a fiscal cliff dominated Harrisburg’s budget talk four months ago.
But one month out from the deadline to approve Pennsylvania’s next state budget, lawmakers have found themselves flush with cash.
For one, they’re buoyed by strong sales tax receipts, and overall state revenues are already more than $1 billion ahead of projections, and could climb higher by the time the 2021-22 budget is due on June 30.
On top of that, lawmakers have $7.3 billion in federal stimulus funds that can be spent over the next three years.
However, the question of how to spend these dollars has quickly, and predictably, cleaved along party lines. The Republican legislative majority wants to save the money for projected future revenue shortfalls. Democratic Gov. Tom Wolf and legislative Democrats want to invest in causes ranging from gun violence awareness to repairing roadways.
“It’s not a surprise that the House Democrats want to spend more money,” House Speaker Bryan Cutler, R-Lancaster, told reporters Wednesday. “That’s pretty expected, unfortunately.”
But the threat of a sudden, multi-billion fall off in state revenues over the next five to six years is not news, Brenda Warburton, deputy director of the Independent Fiscal Office, told the Capital-Star.
“Every year, I don’t know what year exactly it started, but for the last several years, we have been highlighting a structural deficit problem,” she said.
In January, the IFO released an economic report that predicted Pennsylvania’s General Fund will run structural deficits over the next five years, predicting upwards of $2 billion through 2026.
Using federal funds to offset corrections personnel or state police would fix the issue but only for one year, Warburton said.
“It doesn’t do anything for you the next year,” she said. “To address a really long term structural deficit, you have to do something on the cost side or the revenue side that has a multiple year impact.”
Republicans have controlled the public purse for the past decade. In that time, they’ve eschewed tax increases, while spending has gradually grown.
Conservative Republicans, egged on by free market groups, have attempted to get a balanced budget amendment in front of voters for approval, but it hasn’t garnered enough support among legislators.
Democrats were quick to point out the irony of GOP leaders, who had a decade to address the state’s finances, suddenly warn of an uncertain future.
“It’s an interesting thing. That structural deficit has been in existence for a long time,” House Minority Leader Joanna McClinton, D-Philadelphia, told reporters Monday. “The challenge we have is that Pennsylvania needs infrastructure investment now.”
Instead, Democrats said the influx of federal funds presents a rare chance to offer a helping hand to the millions of Pennsylvanians still recovering from the COVID-19 pandemic.
“We have projects looming. We need people to get back to work. We need kids to get into community colleges. We need workforce development. We need violence prevention, and these federal funds should not be put on the sideline,” McClinton said.
Democrats have proposed two spending plans — the “New Deal for Pennsylvania” from Senate Democrats and the “Pennsylvania Rescue Plan” from the House. Both call for investments in infrastructure, schools, and businesses, and prioritize support for parents and frontline workers
We’ve tentatively put out the ‘New Deal for PA.’ It’s comprehensive. It’s bold. It’s broad,” Senate Minority Leader Jay Costa, D-Allegheny, told reporters Monday. “But at the end of the day, it’s the starting point, and that’s the conversation that we’re waiting to have.”
Jason Thompson, a spokesperson for Senate President Pro Tempore Jake Corman, R-Centre, said talks are ongoing internally among Senate Republicans on how best to spend the relief funds. Earlier this month, Thompson said the final plan will most likely differ from what the Democrats are proposing.
“We still have some work ahead of us on that front, but the hope is that we can coalesce behind a final plan that both chambers and all parties can support in the weeks ahead,” Thompson said.
Wolf has not specified how the administration would like to spend the federal funds, but a spokesperson said he plans to work with the General Assembly to make “strategic and comprehensive investments” to address gaps in technology, create jobs, invest in education, and support business. The focus, the spokesperson added, is high-quality, well-paying jobs that create careers with family-sustaining wages.
“It is vital to the future success of our commonwealth that additional funding be allocated to address immediate and long term infrastructure needs, to revitalize our communities, and to jumpstart our economy and support our workforce,” the spokesperson wrote in an email.