The Pennsylvania Treasury switched investment strategies this week to grow the state’s emergency savings account.
The change of course comes after three years of hefty deposits from the General Assemby in what’s known as the Rainy Day Fund – a $6.1 billion account meant to sustain operations during economic downturns. Since 2021, the balance has increased 25-fold, taking the state’s ability to fund the government from two days to 48 days.
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Pennsylvania’s rainy day fund will receive a big deposit after lawmakers settled a dispute with the governor’s administration this week over the definition of “surplus.”
State Treasurer Stacy Garrity said the $898 million contribution into the account, which helps agencies and programs withstand economic downturns, will keep the government operational for 48 days before running out of money – 3.5 days above the national median.
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Lawmakers and Gov. Josh Shapiro find themselves at odds once again over the amount the administration deposited into the state’s Rainy Day Fund.
The Office of the Budget said Thursday it transferred $411.6 million into the savings account, or about 10% of the $4.1 billion revenue surplus left over on June 30 – the end of the prior fiscal year.
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At first, Keystone State Republicans viewed Democratic Governor Josh Shapiro’s Fiscal Year 2023-24 budget proposal with mere skepticism. This week, state House Democrats larded it with an extra $1.1 billion and passed it, making a fray between their chamber and the Republican-run Senate even more probable.
The nearly $47 billion spending plan, approved by representatives along party lines, hikes spending by $5.7 billion over the current fiscal year, a more than a 13-percent increase. Members of the Republican minority excoriated their Democratic colleagues for rushing the plan to passage within six hours of its completion, a move they said reflected poor transparency. Representative Doyle Heffley (R-Weissport) spoke for many in his party when he called the House-passed plan a “poison pill” for Pennsylvania’s economy.
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High-ranking Republican Pennsylvania officials sounded off on Wednesday in the state Capitol Building against Governor Josh Shapiro’s budget legislation which would deplete state reserve funds in five years.
Pennsylvania Treasurer Stacy Garrity (R) and House Appropriations Minority Chair Seth Grove (R-York) observed that the scenario is rather sunny insofar as the Democratic governor’s projections don’t account for a potential recession. Shapiro’s calculations also assume government spending won’t surpass 2.36 percent in the next five years, a supposition so rosy it provoked Grove to snicker slightly.
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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 initial the budget amount at zero and forcing agencies to justify each proposed expenditure rather than using the previous year’s budget as a base upon which to request spending increases.
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A Pennsylvania lawmaker wants to use the state’s Rainy Day Fund to pay down the state’s unfunded pension liabilities that total more than $60 billion.
State Representative Joe Ciresi (D-Royersford) is asking colleagues to cosponsor a bill to move $670 million from the fund to the Public School Employees’ Retirement System (PSERS) and $330 million to the State Employees’ Retirement System (SERS). A memorandum describing his legislation avers it could save local real-estate taxpayers $2.1 billion over the next 20 years.
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Pennsylvania’s official fiscal watchdog this week told state senators that the commonwealth’s Rainy Day Fund contains less money than many experts recommend — and that’s before Democratic Governor Josh Shapiro’s long-term fiscal plan burns through it.
The state Treasury currently keeps $5.7 billion in the Rainy Day Fund to help public institutions endure revenue losses resulting from economic downturns. According the the department’s own calculations, current reserves in this account could sustain General Fund expenditures for just under 43 days.
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Unlike his fellow Democrat and predecessor Tom Wolf, Pennsylvania Governor Josh Shapiro hasn’t asked for tax increases as part of his first budget request. But the ranking Republican on the state House Appropriations Committee said on Wednesday that tax hikes likely await Pennsylvanians in a few years if lawmakers don’t pare back Shapiro’s spending proposal.
“We are facing massive structural deficits,” Representative Seth Grove (R-York) told reporters at the GOP Appropriations Committee Office in Harrisburg. “It’s something that is on our minds here in the General Assembly.”
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Pennsylvania Governor Josh Shapiro (D) is already claiming high-ranking Republicans “are praising” his first budget. Those Republicans’ actual remarks tell a different story.
A press release from the governor selectively quotes eight GOP state lawmakers’ reactions to the budget he unveiled last week. While the snippets accurately capture areas of agreement, they leave out decidedly negative sentiments the Republicans voiced about the $45.9 billion plan which would hike state spending by about four percent over the current level.
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Pennsylvania Josh Shapiro asked the state General Assembly members on Tuesday to support his requested $45.9 billion budget, which would increase spending by approximately 4 percent over current outlays.
The governor insisted he based his plan for Fiscal Year 2023-24 on “conservative” revenue estimates. And he did include some provisions appealing to anti-taxers and free-marketers including nixing the state cell-phone tax, a move he estimates would save Pennsylvanians $124 million annually.
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