DV Journal

There is an old saying among farmers and financial analysts: Don’t eat your seed corn.

That sums up what House Appropriations Chair Seth Grove (R-York) said in an hour’s discussion with the press Wednesday about Gov. Josh Shapiro’s $48.3 billion 2024-25 budget ahead of budget hearings. The Democratic governor wants to spend $3.7 billion more than the previous year or 8.4 percent.

Shapiro’s plan calls for spending more money than the state takes in and will burn through its general fund surplus and Rainy Day Fund by 2028-29, leading inevitably to tax increases, according to Grove.

The general fund surplus would be cut in half to $3.4 billion from the projected $7.1 billion.

In the current fiscal year, revenue is falling $209 million below projections. Revenue from personal income taxes is down by $306 million; non-motor vehicle sales and use is down by $29 million, and cigarette taxes are down by $17 million.

He said three agencies use 84 percent of the budget: Human Services, Education, and Corrections.

Grove referred to Shapiro’s “Christmas List” of requested spending, with an additional $1 billion for education topping the gifts.

Shapiro did not address the structural deficit, said Grove. His budget would “blow through” $15.9  billion of the general fund and Rainy Day Fund balances.

They are two separate funds. The Rainy Day Fund, now at $6.12 billion, was created for economic downturns like the 2009 recession, he said.

Because the state has a $6.2 billion surplus in the general fund, the treasurer does not have to borrow to meet expenses throughout the year, saving $10 million on interest payments “that we can use for other stuff,” he explained. The state also makes money from interest on the Rainy Day Fund, which is invested, he said.

“Over the next three years, (Shapiro’s) budget eviscerates that,” said Grove.

Grove claimed Shapiro “wants to be president,” adding Lt. Gov. Austin Davis might not want to run with Shapiro again because he’d be stuck raising taxes.

Two “revenue modifications” that Shapiro proposes are raising the minimum wage to $15 an hour and imposing a 42 percent tax on the daily gross from some electronic gaming machines (skill games). The increased wages could bring in $22.6 million in personal income tax and $34.1 million in sales and use taxes in 2024-25. And the skill games tax would bring in $150.4 million this year and $300 million annually in the following years.

But he said while Shapiro’s budget calls for $2.5 billion in new or expanded government programs, including for basic education, there’s no accountability. Grove noted the governor also plans to spend more on higher education.

“The big question is, do we have a balanced budget?” said Grove. “There’s one-time revenue propping up massive spending.”

“The big problem is we’re growing (the budget) at 2 percent based on the basic education ($1 billion in additional funding) he has,” said Grove.

“It’s a compounded problem…the general fund balance goes to zero, and then you start on the Rainy Day Fund,” said Grove. “And we’re out of all surplus in 2027-28.”

“Everything sounds good when you want to give puppies and kittens and chocolate and candy to everybody. But there’s a cost to that,” said Grove.

Grove said the income tax would be raised by 6.3 percent to cover the budget gaps, noting Democrats prefer to raise income taxes rather than other taxes, like the sales tax.

And if they shift taxes so the wealthy are paying more: “If you have money, you’ll be out of here in two seconds.”

“If someone finds a new tax that we didn’t propose, I’d be shocked,” he said, listing various taxes, such as the hotel tax, that the legislature has considered over the years. “You need a major tax source to cover billions of dollars.”

“Based on this budgeting (Shapiro) is going to be good for reelection, all this spending without raising taxes,” said Grove. “Financially sound, yada-yada.”

But eventually, taxes will need to increase. Unlike the federal government, the state can’t print money.

Personnel costs are increasing under Shapiro, Grove pointed out, including $2.1 billion for pending contracts for the state police and corrections officers. Employees have increased by 1,200 people, and so have salaries. Total salaries are up 4.8 percent. The average state employee’s compensation is $114,752, including benefits. Overtime expenses have also increased, reaching $372 million for 2022-23, up from $351 million for the prior year.

Shapiro also penciled in $161 million more for SEPTA, bringing the total state funding to $1 billion. Grove said the counties served by SEPTA should increase their share of SEPTA funding.

“They need skin in the game as well. I have not seen one county propose new revenue or new taxes,” said Grove, who also noted SEPTA’s money woes stem from falling ridership due to passengers’ safety fears. He said the legislature passed a bill for a special prosecutor for SEPTA areas that Shapiro signed. The attorney general has not yet hired that prosecutor in the face of opposition from Philadelphia District Attorney Larry Krasner, and a 30-day deadline has passed.

The Shapiro administration said, “The Commonwealth is projected to have a total budget surplus of $14 billion at the close of June 2024. This sum factors in federal funding received during the COVID-19 pandemic and nearly $7.2 billion in the Rainy Day Fund.

“Even if every one of the initiatives in the governor’s budget is fully funded, Pennsylvania will still have an $11 billion surplus by the end of Fiscal Year 2024-25. This is on top of the fact that the governor’s vision maintains a balanced budget and does not raise taxes.”

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Over the last couple of weeks, you may have heard the news about the Pennsylvania Award for Student Success program, or PASS. You may have also heard that this program, aimed at giving children in Pennsylvania’s poorest-performing schools a high-quality education, has been the center of the ongoing budget stalemate in Harrisburg.

I believe it is important to set the record straight on PASS and why I am a firm supporter of this program, which promises to help supplement and support Pennsylvania’s education system.

No matter a student’s race, sex, religion, zip code, or economic status, every child deserves access to a high-quality education. We all know that, above all else, education is the great equalizer and is the surest way to set children on the path of realizing their potential. The solid foundation that a quality education builds creates a lifetime of opportunity.

But an unfortunate reality for many students is that they will never realize these opportunities because they are trapped in a school system that has failed them. Through no fault of their own, they routinely are denied the opportunities afforded to other students, with little or no hope of changing this reality. The bottom 15 percent of Pennsylvania schools are performing woefully below acceptable levels of educational attainment:

• Only 7.6 percent of elementary students are proficient in math and 23.6 percent in English.
• Only 19.5 percent of high school students are proficient in math and 28.3 percent in English.

This is a reality I am not willing to accept for the next generation.

Every day that passes is one less day a child in a failing district has to receive a high-quality education. It is time that we provide hope for these families.

That is why I support the inclusion of the PASS program in our state’s 2023-24 budget. The program is simple: a student attending a school performing in the lowest 15 percent of achievement and living in a household 250 percent or below the federal poverty level ($75,000 for a family of four) can qualify for a scholarship to go to another, better-performing school.

For far too long, these families have had to resign themselves to a future of uncertainty, knowing they are not receiving the tools to succeed by a system they cannot escape. Under the PASS program, families without financial resources will now have a fair shot at options that level the playing field and enable parents to decide what is best for their children.

Some have claimed that PASS is an attack on public education funding. I wholeheartedly support public education, as I support all avenues that provide the fertile ground for children to grow and blossom into future leaders.

This program does not take one dollar away from public education and represents less than 0.2 percent of our state’s budget. In fact, the Senate has committed a historic $1 billion of new funding towards public schools, including basic and special education. These appropriations build on the previous General Assembly investments for basic education, which increased by $1.05 billion reoccurring over the last two fiscal years alone. That means that over the last three fiscal years, our schools are slated to receive more than $2 billion of new funding, which reoccurs yearly.

PASS, and the historic funding increases contained in our state budget can provide the first steps in building a stronger education system that begins to meet the standards of the recent Commonwealth Court decision on state funding for schools.

Most states already have similar initiatives as PASS, and two out of three Pennsylvanians support programs that give students enrolled in underperforming schools options.

Democrats, Republicans, and independents, including Gov. Josh Shapiro, have all expressed their support. He repeatedly expressed support for this concept when campaigning for governor, and I believe that the people elected him in large part because he supported this commonsense proposal.

Unfortunately, Gov. Shapiro changed his course and announced that he will veto the PASS program from the budget he helped negotiate. I hope he will reconsider his position and support thousands of students whose lives will be changed with the implementation of the PASS program.

It’s not too late for Gov. Shapiro to use his influence within his party to finalize a state budget that funds public schools at historic levels while providing hope to the thousands of families in need of the help that PASS offers.

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Once again, it’s summer, and Pennsylvania is without a new state budget. It’s a story we hear all too often in our state’s capital. I want to take the opportunity to explain why I am a firm supporter of the 2023-24 spending plan that passed the Senate in late June.

The $45.5 billion spending proposal that passed in both chambers has a lot to like. It contains no broad-based tax increases, fully funds state government’s core responsibilities and obligations, and puts money away to prevent future tax increases. It is an expression of our priorities that puts Pennsylvania in a strong position.

The budget provided more funding to help law enforcement keep our communities safe, funds four new State Police cadet classes, and places State Police funding on a more stable footing by moving it from Transportation to the General Fund. This move will free up additional dollars to be devoted to our state’s roads and bridges – nearly $500 million more by 2026.

Equally as important, $500 million was added to our state’s Rainy-Day fund, which is crucial for funding vital services and preventing tax increases during economic downturns. It wasn’t long ago that the Rainy Day fund balance stood near zero, putting our state’s financial future at risk.

But above all else, I firmly support this budget because of the significant new funding for schools. The budget includes more than $1 billion in new funding for public education, including historic levels for basic education, special education, and early learning programs. It also contains significant new funds for career and technical institutes, which play an invaluable role in preparing young people for promising in-demand careers.

These investments build on the previous General Assembly increases for basic education, which increased by $1.05 billion over the last two fiscal years.

This budget puts Pennsylvanians first and was a product of robust negotiations with Gov. Josh Shapiro and included bipartisan compromises on both sides of the aisle on key priorities important to Republicans and Democrats.

Unfortunately, the agreed-upon budget passed by the Senate ran into opposition from special interest groups, which led to Gov. Shapiro announcing he would line-item veto a key budget provision, one he highlighted in his campaign for governor.

That is the Pennsylvania Award for Student Success (PASS) program. This $100 million program, representing 0.2 percent of our budget, is designed to provide a lifeline for students trapped in Pennsylvania’s worst-performing schools. The program is simple: a student attending a school performing in the lowest 15 percent of achievement and living in a household 250 percent or below the federal poverty level ($75,000 for a family of four) can qualify for a scholarship to go to another better-performing school.

The program levels the playing field and gives families the ability to decide what is best for their children. But best of all, it allows thousands of children to escape failing schools and the opportunity to obtain a high-quality education.

Most importantly, the program does not take a single dollar of state support away from public education.

Every day that passes is one less day a child in a failing district has to receive a high-quality education. It is time that we provide hope for these families.

This is a concept that Gov. Shapiro has repeatedly supported and was a central element of his campaign message to the people of Pennsylvania. Unfortunately, his reversal on this important educational program leaves the previously reached budget compromise in jeopardy.

House Democrats followed his lead and only passed the spending plan part of the budget, with the promise from the Governor that he would veto the PASS program.

The PASS program is worth fighting for because it has the potential to provide hope and lift children out of poverty without impacting state funding for education.

I agree with the governor when he said Senate Republicans must “give more than they’re used to,” and House Democrats cannot “expect to get everything they’ve wanted over the last decade in one budget.” I believe the Senate Republicans have lived up to their side of this equation, having compromised and included many programs, such as indigent defense, whole home repair, and level-up funding, important to Democrats.

It is my hope that Gov. Shapiro will change course and again support this pivotal program so that we can finish the 2023-24 budget. We have an obligation to ensure that this budget works for all Pennsylvanians, especially for those left behind in failing schools.

In government, as in life, a person who cannot keep their word is a person not worth trusting.

During his campaign, Gov. Josh Shapiro promised the people of Pennsylvania many things – that he was an independent Democrat, not beholden to special interests; that he supported school choice for our students; and that his energy policy must protect jobs and lower consumer prices.

Six months into his administration, Gov. Shapiro has deceived the people of Pennsylvania – when it all unfolded during the negotiation process of the $45.55 billion budget.

Bottom line: The current budget impasse solely lies at Gov. Shapiro’s feet. All the while, he’s trying to deflect from his broken promises and poor governing by blaming Republicans.

Gov. Shapiro voiced his serious concerns regarding the energy tax known as the Regional Greenhouse Gas Initiative (RGGI) over 458 days ago and pledged, “Energy policy for me must pass the test of protecting jobs, lowering consumer prices and addressing climate change.”

Over a year later, Gov. Shapiro refuses to remove Pennsylvania from this massive $663 million energy tax, which he could have done on day one of his administration. This unconscionable tax will kill Pennsylvania jobs and quadruple electricity rates on working families who are already struggling to make ends meet.

Gov. Shapiro offered hope to the children of Pennsylvania who have been trapped in failing schools when he advocated for school choice on national news and declared that “every child of God” deserves a “quality education.”

Senate Republicans and Gov. Shapiro struck a budget deal which included funding for a lifeline to students trapped in the worst performing school districts through the Pennsylvania Award for Student Success (PASS) Scholarship program.

Days later, Gov. Shapiro announced he would veto the PASS program, an initiative he campaigned for, breaking his promise and abandoning Pennsylvania’s children at the behest of special interest groups and radical Democrats.

It’s easy to state a conviction when it goes unopposed – but Gov. Shapiro has proven that at the first hint of a challenge, he will abandon his convictions and break his promises. Without conviction or guiding principles, the governor cannot be negotiated with in good faith.

So, where does it leave Pennsylvania when you have a governor who you cannot trust? It leaves Pennsylvania with missed opportunities and lost jobs, it leaves families with exorbitant taxes and crushing bills, and it leaves children in failing schools and without hope for a better future.

It is imperative we disrupt the status quo by fighting against a corrupt agenda and provide hope to the people of this great Commonwealth.

Republicans are more than ready to get a commonsense budget through the finish line. Are Gov. Shapiro and House Democrats?

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Pennsylvania Gov. Tom Wolf introduced his final state budget plan in February.

He proposed $45.7 billion to increase general fund spending by $4.5 billion—a nearly 11 percent hike. Wolf made the argument that the state should increase spending on education by $1.55 billion, especially in poorer school districts.

His plan includes increasing the minimum wage, workforce development, veterans’ services and suicide prevention, and funding for environmental programs.

Wolf, a Democrat, recently asked the legislature to give Pennsylvanians $2,000 per household.

“The cost of everything from gas to groceries is a little higher right now than it was just a few weeks ago and for Pennsylvanians living paycheck to paycheck even a small increase in expenses can mean painful decisions like paying for food or rent,” said Wolf. “I see that pain in communities across Pennsylvania and I want to talk about solutions. I want to put $2,000 checks into the hands of Pennsylvanians and families that need it.”

However, Independent Fiscal Office (IFO), the nonpartisan financial watchdog, warned Pennsylvania could face as much as a $1.8 billion deficit by June 2024.  And now the U.S. economy may be on the brink of a recession.

The deadline to adopt the budget is midnight June 30. But the issue of whether or how much of the $6 billion surplus and $1.7 billion pandemic relief funds to spend is a sticking point. Negotiations between Wolf and the Republican-led legislature are continuing.

“During the last three weeks of June we hope to finalize the 2022-2023 budget,” said Sen. Bob Mensch (R-Berks/Bucks/Montgomery). “While the governor seems intent to spend the state into debt, I and my Senate Republican caucus are determined to be fiscally responsible and we will fund our next budget without creating future debt, and thus avoid the future tax increases the governor’s proposal definitely create.

“In a time of hyperinflation and a pending recession, it would be irresponsible to create future economic chaos with a spendthrift budget.”

Rep. Chris Quinn (R-Media) agrees with the governor that more needs to be spent on public education.

“We must make another record-setting investment in public education, as we have in each of the last several years,” said Quinn. “There are learning deficits due to the COVID-related school closures that must be addressed if our kids are going to be prepared for success. With families challenged by runaway inflation, increased energy costs, and skyrocketing gas prices, we must craft a budget that does not further burden hardworking taxpayers.

“Finally, I’d like to see Growing Greener III be considered. Sponsored by Rep. Lynda Schlegel Culver (R-Northumberland/Snyder) and myself. The legislation would invest federal stimulus funds in projects to restore and protect our waterways, preserve open space, and upgrade drinking and wastewater facilities. That targeted investment promotes job growth and activity in tourism and agriculture, our top two industries which are vital to Pennsylvania’s economic well-being.”

Rep. Todd Stephens (R-Montgomeryville) said, “I’m focused on helping restore communities devastated by last year’s tornado, continuing our record-setting investments in our schools and protecting families from the long-term impact of the out-of-control price increases we’re experiencing every day.”

“As always, my top priorities for this budget season are families, education, and economic development,” Rep. Melissa Shusterman (D-Paoli). “Our state is currently sitting on an $8.5 billion dollar surplus. It’s time to start investing that money in hard-working Pennsylvanians, and Gov. Wolf has proposed a budget that will do just that. It includes a Child and Dependent Care tax credit, to reduce the financial burden of childcare on working families and would enable parents to rejoin the workforce without worrying about how to pay for expensive care.

“Additionally, the proposed budget includes increased investment in education, which will provide much-needed property tax relief for homeowners, as well as continuing to ensure our graduates are prepared for the jobs of tomorrow. Both priorities will holistically improve our state’s economic climate which will spur more business investment and create better-paying jobs,” said Shusterman.

But Rep. Tracy Pennycuick  (R-Gilbertsville) urges caution on spending and recommends adding to the state’s savings account. Pennycuick is running for the Senate to replace Mensch, who is retiring.

“For the 2022-23 state budget, I would like to see priorities placed on additional funding for education and school security. I think we also need to dedicate more dollars to address our mental health crisis. Given the economic climate, it is vitally important we continue to put additional dollars in the state’s Rainy Day Fund to help offset any future economic downturns, as well as support our business community to bring down the cost of doing business and address inflation,” said Pennycuick.

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In his final budget address to the state legislature, Gov. Tom Wolf proposed a $45.7 billion plan to increase general fund spending by $4.5 billion—a nearly 11 percent hike.

Wolf made the argument that the state should increase spending on education.

“Refusing to fund education equitably does not save us money,” he said. “It just means we wind up spending more on social services, remedial programs, even prisons. And that calculation doesn’t even take into account the opportunity costs of failing to invest in our kids: The skills our workforce doesn’t develop, the products and services that never become a reality, the business growth and tax revenues that vanish.”

Wolf said the state’s finances were in dire straits when he took office. But working with the legislature, Pennsylvania now enjoys a $2 to $$3 billion structural surplus.

“We’ve built our rainy day fund to more than $2.8 billion,” he said.

Wolf also proposed raising the state’s minimum wage from $7.25 to $15 an hour.

Delaware Valley Republicans accused Wolf of pushing a budget that creates future deficits.

“The spending includes billions of dollars from the federal government, so he wants to spend one-time monies for recurring situations, and when you do that, you create yourself a real problem in the out years,” said Sen. Bob Mensch (R-Bucks/Berks/Montgomery). He noted Wolf’s proposed new spending comes from $2 billion in federal American Rescue Plan (ARPA) funds. If enacted, it would produce a $1.3 deficit for the 2023-24 fiscal year, when Wolf will be out of office, Mensch said.

According to the Senate Appropriations Committee budget projections, the governor’s plan would produce a $1.3 billion deficit for the 2023-24 fiscal year and create an even bigger bill for Pennsylvania taxpayers to pay long after the governor leaves office: A $13 billion deficit by 2026-27.

“While he wants to leave a legacy of no taxes, he’s leaving a terrible legacy for the future because it will only increase costs to our taxpayers,” said Mensch.

“Bigger government, higher taxes, and increased spending are what the governor has proposed today,” said Rep. Tracy Pennycuick (R-Harleysville). “That is not the type of decision-making my constituents are asking of me. I am being asked to shrink government, hold the line on taxes and invest prudently in programs and services that have proven track records.”

Rep. Craig Williams (R-Chadds Ford), however, struck a more conciliatory tone.

“I was very glad to hear the governor spend several minutes from the outset of his speech reviewing our hard work to bring the commonwealth from a budget deficit to a budget surplus,” said Williams. “He also said some very favorable things about our Rainy Day Fund, created last year by the House. We have worked very hard to get our state’s financial condition in shape. As the governor noted, running a budget surplus now gives us an opportunity to invest in programs of great concern to all of us: education, health care, including mental health and addiction, and public safety.”

“Of course, the budget he offered runs out all of the state’s surplus and puts us back into a budget deficit,” Williams said. “So, I choose to see his budget as notional or a ‘wish list.’ I am confident that we will find middle ground during the budget process to bring relief to so many who continue to suffer, especially in light of the pandemic.”

Not surprisingly, Democrats praised Wolf’s budget.

“The governor’s proposed budget is exactly what Pennsylvania needs right now,” said Sen. John Kane (Chester/Delaware). “This budget uses our strong economic position to address the issues facing our communities: a $1.55 billion increase in funding for basic education, nearly $4 million to improve our public health infrastructure, and $14 million to expand SNAP benefits for individuals in need. It finally allocates the remaining American Rescue Plan funding into programs to serve the public. And, just like he has every year, the Governor has proposed a raise to our abysmal minimum wage.”

Kane added, “We can’t work for the people without investing in the people. That means supporting access to quality healthcare, a good education no matter the ZIP code, and common-sense policies that strengthen our economy from the bottom up. I look forward to working with the governor over the next few months to pass a budget that invests in Pennsylvanians.”

The House Democratic leadership released this statement: “Governor Wolf’s sound fiscal stewardship has resulted in a historic budget surplus while making thoughtful and targeted investments in education, infrastructure, and our workforce. A budget is a statement of priorities, and once again, the governor has shown that our first priority must be investing in both our pandemic recovery and our long-time growth.

“The governor’s vision for this budget mirrors many of the ideals we’ve been fighting for that will lead to better schools, better jobs, and a better Pennsylvania. Last year we took a historic step through the Level Up initiative to provide more resources to our most underfunded schools. This year, we look forward to continuing to work toward equity for all students as we invest in their futures from pre-K through postsecondary education.”

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