rainy day fund shapiro

State Law, Financial Experts, and the Governor Himself Condemn Budget Plan to Raid Rainy Day Fund

Harrisburg, Pa., February 19, 2024 — Pennsylvania significantly improved its fiscal standing over the last few years by making deposits into the Rainy Day Fund. Pennsylvania has gone from among the worst in the nation in reserves—ranking 49th, with only enough to run the state government for a few hours, as recently as 2019—to slightly better than the national average. The Rainy Day Fund has enough reserves to fund the state government for 48 days in the case of a recession, disaster, or emergency.

However, Gov. Josh Shapiro wants to pilfer the Rainy Day Fund to fuel deficit spending. Even with optimistic revenue projections and unrealistic spending projections, Shapiro’s budget calls for transfers of $7.9 billion from the Rainy Day Fund over the next five years.

The reliance of Shapiro’s 2024–25 budget proposal on the Rainy Day Fund ignores state law. Rating agencies, Treasurer Stacy Garrity, former Gov. Tom Wolf, and even Shapiro himself recognize that draining the Rainy Day Fund is illegal, imprudent, and undermines recent progress.

Rainy Day Fund Law

“Money from the Budget Stabilization Reserve Fund be appropriated only when emergencies involving the health, safety or welfare of the residents of this Commonwealth or downturns in the economy resulting in significant unanticipated revenue shortfalls cannot be dealt with through the normal budget process.”

“Money in the Budget Stabilization Reserve Fund shall not be used to begin new programs but to provide for the continuation of vital public programs in danger of being eliminated or severely reduced due to financial problems resulting from the economy.” …

“The General Assembly may then through approval of a separate appropriation bill by a vote of two-thirds of the members elected to the Senate and the House of Representatives appropriate money from the Budget Stabilization Reserve Fund to meet the needs identified in the Governor’s proposal.”

Fitch Ratings, November 2023:

“The upgrade of Pennsylvania’s IDR and related ratings reflects recent use of revenue surpluses to build its reserves to historical highs and Fitch’s expectation that substantial reserves will be maintained in the near term…”

Moody’s, September 2023:

Maintenance of adequate reserves is particularly important in Pennsylvania given a history of protracted budget negotiations, as well as demographic weaknesses that could have negative implications for long-term job growth, overall economic performance and state revenue.”

“Pennsylvania’s positive outlook is based on the significant increase in budget reserves over the past three fiscal years to levels consistent with higher rated peers. We expect that core rainy day reserves will remain near current levels due to sound budget management and continued steady revenue growth.”

S&P Global, September 2023:

“The positive outlook on all long-term ratings reflects our view of a one-in-three chance that we could raise the rating over the next two years if the state demonstrates a commitment to structural budgetary solutions that narrow or close projected out-year gaps, while also preserving or increasing reserve balances in its budget stabilization reserve,” said S&P Global Ratings Credit Analyst Geoff Buswick.

Treasurer Garrity, November 2023:

“Continuing to build our state’s Rainy Day Fund is a smart, prudent way to plan for the future. I applaud the General Assembly and the Governor for this substantial deposit, which will strengthen Pennsylvania’s fiscal outlook.”

Former Gov. Tom Wolf, October 2022:

“Over the past seven years, my administration has righted Pennsylvania’s shaky finances through sound fiscal management,” said Wolf. “When I took office, Pennsylvania was operating with a $2–$3 billion budget deficit, and the Rainy Day Fund had fallen to a mere $231,800.”

“Today, Pennsylvania has nearly $5 billion in emergency savings, a growing economy, and a strong fiscal foundation for the future.”

Shapiro Administration, December 2023:

“Governor Shapiro’s first budget, coupled with these remaining pieces of legislation, delivers on his key priorities while remaining fiscally responsible. The budget deposits $898 million into the Rainy Day Fund, bringing the balance to over $6.1 billion by the end of FY24.”

“All three major credit rating agencies recently affirmed the Commonwealth’s strong financial position—Fitch upgraded Pennsylvania’s credit rating to ‘AA’ from ‘AA-,’ Moody’s reaffirmed Pennsylvania’s Aa3 issuer credit rating and upgraded the Commonwealth’s rating outlook to positive from stable, and S&P Global Ratings also improved Pennsylvania’s outlook to ‘positive’ from stable and affirmed it’s a+ long-term rating.”

Shapiro Himself, September 2023:

“My Administration will strive to ensure that our fiscal outlook remains strong by working with leaders in both parties to continue making commonsense investments that support Pennsylvanians and create safer communities and healthier families, all while remaining fiscally responsible.”

Budget Secretary Uri Munson, September 2023:

“Sound financial management makes a difference in the lives of Pennsylvanians every day—and this rating and upgraded outlook affirms that the Shapiro Administration is making responsible decisions to ensure fiscal stability for our Commonwealth.”


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