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.