Budget and Policy Experts Split on When, How to Spend Pa. Surpluses
HARRISBURG, Pa. (ErieNewsNow) - Pennsylvania’s budget spends nearly $1 billion more than what the state is expected to generate in revenue. Because of the deficit, the state will have to tap into reserves this year, and in the years to come.
Pennsylvania has roughly $13 billion in the bank between revenue surpluses and the rainy-day fund. Much of it is from COVID-era relief dollars from Washington. Some are opposed to using up the additional funds so quickly, but others say it’s a wise investment.
“The challenge is that the budget is not in balance. Spending more than revenue and having spending increases that are faster than what state revenue is growing at, is problematic,” said Nathan Benefield, Senior Vice President of the Commonwealth Foundation.
Benefield says at the current rate, Pennsylvania's surplus is on track to be depleted in the next few years. He believes Harrisburg needs to think long term.
“Politicians often think of the short term, like how much can we spend before the next election that will help us. But we need to bring this budget into balance in three or four years or else we're going to face a tax hike. That long term thinking is what needs to be part of this,” said Benefield.
“The budget proposal that the governor put forward back in March shows that we will draw down that surplus over the next four years. That means in each of those years, we’ll be spending a bit more than tax revenue brings in,” said Marc Stier, Executive Director of the Pennsylvania Policy Center. "There's no reason not to do that. One can quibble about what we're spending that surplus on exactly, but it's taxpayer money. We should be using it for public purposes,” he added.
Stier says the public investment deficit is more serious than the budget deficit. He acknowledges a surplus is important to have, but that $13 billion is too much.
"We don't need $13 billion in the bank,” said Stier, adding that investments are desperately needed for public education and infrastructure, among other things.
Addressing future deficits, Stier believes, starts with the tax system, which he calls “upside down.”
“I think if the very rich paid at the same rate that working people and middle-income people pay, we'd have plenty of money to meet all the requirements,” said Stier.
Stier and Benefield do agree on one thing, and that is the fact that lawmakers need to finish the remaining pieces of Pennsylvania's budget puzzle as soon as possible. The heavy lifting is done, however, lawmakers still need to approve code bills and some enabling legislation before many budget dollars can be sent out.
The House and Senate are scheduled to return in September.