Gov. Shapiro Poised to Raid Rainy Day Fund, Unprecedented Move Violates Law and Undermines Legislature

Harrisburg, Pa., September 29, 2023 – The Commonwealth Foundation expresses strong concern that Gov. Shapiro is ignoring the law and usurping the constitutional role of the legislative branch in the state budget process.  

By law, the state Treasurer is required to deposit surplus funds in the Rainy Day Fund on September 30 (tomorrow). 

In accordance with the law and long-established precedent, the amount of this deposit should be approximately $900 million. However, Shapiro’s Budget Secretary, Uri Munson, has created from whole cloth a new definition of “surplus” to require the transfer of only $411 million—making it easier for state government to overspend in the future.

The following statement was issued in response by Nathan Benefield, Senior VP for the Commonwealth Foundation.

“Since Shapiro has proven unable to work with the legislature to get laws passed—and the House refuses to even consider required fiscal code legislation—he’s instead choosing to ignore the law to do whatever he wants.

Shapiro and Munson are attempting to shortchange the Rainy Day Fund, which provides important protection for taxpayers and allows the state to prepare for emergencies. Pennsylvania still ranks below the national average in Rainy Day Fund balance as a percentage of spending. 

Even more problematic is the Shapiro administration simply ignoring what the law says. This continues the damaging and dysfunctional practice of Shapiro, like his predecessor, ruling by executive fiat and secrecy through unilateral executive order, rather than working cooperatively with the legislature as required by the state constitution.

Shapiro needs to lead his own party to finalize the unfinished state budget, rather than resorting to accounting gimmicks and disregard for legislative authority.”

Background: The Pennsylvania Fiscal Code spells out that 10 percent of the General Fund balance should be transferred to the Rainy Day Fund by September 30, while the Administrative Code lays out that the “unappropriated surplus” means all funds carried over to the next fiscal year (that definition is also used to determine if a budget is legally balanced). 

Secretary Munson is claiming, however, that the 10 percent deposit requirement only applies to the amount added to the General Fund balance in the prior year. This new definition not only flies in the face of the law and decades of past precedent, but even the definition of “surplus” from the Executive Budget Book released by Gov. Shapiro and Secretary Munson earlier this year

Surplus: A fiscal operating result that may occur in a fund at the end of a fiscal year, whereby expenditures are less than the fund’s beginning balance, revenues/receipts, and lapses during the same period. The surplus funds become available for appropriation during the following fiscal year.

To schedule an interview or background briefing with Commonwealth Foundation experts, contact Erik Telford at [email protected] or by phone at 202-280-8716

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