HARRISBURG, Pa. - Republican state lawmakers who help oversee Pennsylvania’s annual budget say they want to be careful not to overspend this year, despite the state having roughly $8 billion more than it usually would have around now.
Democrats say with that much extra cash, lawmakers should be using it to help people and businesses right away. Gov. Tom Wolf, however, says he agrees with Republicans.
“It’s one-time money, and it’s supposed to be for things dealing directly with the pandemic,” Wolf told reporters Wednesday. “But it’s not a license that we have forever to spend a bottomless pit of dollars.”
Pennsylvania’s Department of Revenue said last month the state raked in $1.5 billion more tax dollars than expected over the last year. Under theAmerican Rescue Plan that federal lawmakers agreed to last year, Pa. also received around $7.3 billion. After the state spent just over a billion of that last year, more than $6 billion remains.
Sen. Pat Browne (R-Lehigh), the chamber’s top Republican budget handler, said that extra cash puts the state in a better position than usual.
“I think it [our financial position] is stronger than it has been,” he said. “However, we can’t confuse what cash is in the bank as opposed to what our budgetary balances are.”
Translation: That money can’t be stretched too thin. Browne said the extra cash will likely be used up within the next few years because of how it’s structured.
The U.S. Treasury has said American Rescue Plan money has to be spent by the end of 2024 – and there isn’t any more money coming to replace it. Republicans believe the extra taxes, meanwhile, are largely coming from people spending extra cash the federal government has been sending them via thingslike the Child Tax Credit program, which ended this month
Federal agencies have said they’ll continue winding down that spending this year and the Federal Reserve has signaled it may raise interest rates it’s kept low to keep the economy rolling during the pandemic. That has lawmakers like Browne as well as his House counterpart, Rep. Stan Saylor (R-York) on edge.
“Once those federal dollars are all spent by individuals who are receiving them, that money won’t be coming in,” Saylor said.
A forecasting report issued by the state’s Independent Fiscal Office in November also painted a grim picture of where Pa. is headed financially. Analysts predicted “as the impact of federal stimulus…wanes,” tax receipts may not be as strong as they were last year.
A forecasting report issued by the state’s Independent Fiscal Office in November also painted a grim picture of where Pa. is headed financially. Analysts predicted “as the impact of federal stimulus…wanes,” tax receipts may not be as strong as they were last year.
If spending on state agencies and programs stays true to what the IFO predicts, Pennsylvania could be almost $2 billion in the hole by 2024.
“Right now, [based] on what we know, we are spending ourselves into a deficit,” Browne said. “So that has to be part of our thought process.”
Democratic lawmakers did not deny that outlook, but say Republicans are just up to their old tricks again.
“When we don’t have any money, Republicans say we don’t have any money. When we have money, they say we don’t have any money. It gets old,” Sen. Vincent Hughes (D-Philadelphia) said in a statement. “The fact is that we have the ability to make robust investments in the upcoming budget without creating a deficit.”
Hughes, who co-chairs the Senate Appropriations committee alongside Browne, argues the state can invest because it’s consistently brought in more revenue than analysts predicted in the last year and now has nearly $3 billion in its Rainy Day fund.
While that emergency piggy bank has substantially more money in it than in past years, the state Treasury estimates that money would only cover about a month’s worth of operating costs.
House Democratic Appropriations Chair Rep. Matt Bradford (Montgomery) said he also doesn’t disagree with the fiscal outlook Republicans are pointing to.
“I think what our real difference is is our vision for how we grow ourselves so that we can have a prosperous economy,” Bradford said. “I just don’t know how we go into the fiscal fetal position and act like we’re going to get a more prosperous economy.”
Bradford and other budget chiefs shared their thoughts right as Wolf and state lawmakers agreed to use $225 million in pandemic relief cash to prop up struggling healthcare workers and facilities.
When asked if that signals the state’s willingness to spend that money in other areas, Browne said that would be “part of the conversation” in upcoming budget talks. Saylor, meanwhile, said lawmakers are working on a special spending package for nursing homes he hopes to announce “at some point.”
Wolf will be presenting his final state budget ideas next month, and said he’s ready to chat about what to do with the extra cash.