Going into annual budget deliberations, Pennsylvania faces a structural deficit exceeding $1 billion, a problem Republicans say Governor Josh Shapiro (D) should address with a concept he once embraced: zero-based budgeting.
The practice involves setting the initial budget amount at zero and forcing agencies to justify each proposed expenditure rather than using the previous year’s budget as a base to request spending increases.
Briefing reporters on Thursday, House Appropriations Committee Minority Chair Seth Grove (R-York) lamented that the state spends more than it collects in tax dollars and that the structural deficit may worsen amidst an expected recession. (The commonwealth has lately been able to avoid dealing with the issue as COVID-19 relief funds flowed in from the federal government.) He observed that Democrats expressed the same concern, pointing to budget-hearing remarks from State Representative Napoleon Nelson (D-Glenside), among others.
“We have a structural budget deficit,” the Democrat said. “It’s been clear; we all understand it. We understand our Rainy Day Fund [i.e., the state’s emergency reserves] will continue to dry up over the next five years of this projection.”
Grove (pictured above) noted that the governor and most Democrats, mindful of the fragile economy, have resisted calling for tax increases. The Democrats, who control the state House of Representatives, have nonetheless voted to increase spending by about $8 million through expanding workplace-safety measures and introducing new education programs.
“These are not provided for in the governor’s budget,” the minority chair said. “These are increased costs above and beyond what the governor has in his plan, so, to date, they are adding to the structural deficit.”
Meanwhile, state revenue collections are trending downward, showing negative growth last month. Population decline has been a major driver of that trend, with reputedly more business-friendly states like Texas, Georgia, North Carolina, and Florida each gaining thousands of former Pennsylvanians over the last few years.
Stressing the lower revenues, Grove urged Shapiro to recall using zero-based budgeting as a Montgomery County Commissioner in the early 2010s when he inherited a $10 million budget shortfall and a $49 million structural deficit. Within a year of getting elected in 2011, Shapiro and his county colleagues balanced the budget with no tax increases.
“This is bold leadership,” Grove said. “This is really what we need in Pennsylvania to fix where we’re at budgetarily and financially…. I love what he did in Montgomery County with this.”
On Wednesday, State Representative Dawn Keefer (R-Dillsburg) introduced legislation requiring state agencies responsible for at least one-fifth of the commonwealth’s general fund budget to offer zero-based budget plans at least once every five years. Keefer’s proposed reform comes in addition to numerous budgetary reforms Grove and his GOP colleagues proposed in recent days.
Budget deliberations this year could become more contentious as Democrats have a slim majority in the House, and Republicans control the Senate. The commonwealth sets a June 30 deadline to finalize the annual spending plan, but the process frequently goes beyond that date.
The governor’s office did not return a request for comment.
– – –
Bradley Vasoli is managing editor of The Pennsylvania Daily Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Seth Grove” by Seth Grove. Photo “Josh Shapiro” by Josh Shapiro.
Not only is Pennsylvania losing residents to other States, it’s losing income tax revenue from payroll taxes both the employer and employee when they switch from a live person to self-checkout! This is also hurting the social security funds that used to be collected again from employers and employees.
The State should consider taxing the companies that are replacing employees with machines.