Balancing the State Budget Didn’t Have to Be This Hard

On Tuesday, lawmakers returned to Harrisburg for the first sine die session (a session after Election Day) in 14 years. They have a tough job, finishing Pennsylvania’s 2020-21 budget with an estimated $3 billion gap between revenues and spending.

It didn’t have to be this hard.

If lawmakers had enacted the Taxpayer Protection Act in 2018, they would face a $770 million gap between revenues and spending. Going one step further, if lawmakers had enacted the Taxpayer Protection Act in 2015, they would enjoy a $930 million surplus.


A review of other states confirms how poorly Pennsylvania has managed finances in the years since the Great Recession. As Pew recently reported, states took advantage of the boom years, 2017-2019, to stock up their rainy-day funds. By 2019, states on average held enough rainy-day funds to cover 49.7 days of operations. Pennsylvania, though, put aside $340 million—enough to run state government for 3.7 days.

According to the National Conference of State Legislatures, 15 states used those rainy-day funds to balance their budget as COVID-19 caused steep declines in tax revenue.

Returning to a hypothetical, if Pennsylvania had enacted the Taxpayer Protection Act in 2018, the state would have reduced spending by $2 billion over the last two fiscal years. If all those funds went to the rainy-day fund, Pennsylvania could have covered 23 days of operations.

What does a responsible full-year 2020-21 budget look like? Using the Taxpayer Protection Act and last year’s general fund spending of $34,007,687, this year’s budget should spend no more than $34,742,458,787 or a $735 million increase.

Commonwealth Foundation has created a whole menu of revenue sources and spending cuts that lawmakers can use to responsibly balance the budget. Only then can they even consider a spending increase.