Top GOP budget negotiators from the House and Senate say the $7.76 billion in additional relief and state tax money cannot be stretched too far.
-
Sam Dunklau
(Harrisburg) — Republican state lawmakers who help oversee Pennsylvania’s annual budget say they want to be careful not to overspend this year, despite the state having about $8 billion more than he wouldn’t usually have now.
Democrats say with so much extra money, lawmakers should use it to help people and businesses immediately. Gov. Tom Wolf, however, says he agrees with Republicans.
“It’s one-time money, and it’s supposed to be for things directly related to the pandemic,” Wolf told reporters on Wednesday. “But it’s not a license that we have forever to spend a bottomless pit.”
The Pennsylvania Department of Revenue said last month that the state raised $1.5 billion more than expected over the past year. As part of the U.S. bailout that federal lawmakers agreed to last year, Pennsylvania also received about $7.3 billion. After the state spent just over $1 billion of that amount last year, more than $6 billion remains.
Sen. Pat Browne (R-Lehigh), the House’s top Republican budget official, said the extra money puts the state in a better position than usual.
“I think so [our financial position] is stronger than it has been,” he said. “However, we cannot confuse cash in the bank with our budget balances.”
Translation: This money can’t be stretched too far. Browne said the extra money will likely be used over the next few years because of the way it’s structured.
The US Treasury has said US bailout money must be spent by the end of 2024 – and there is no money left to replace it. Republicans believe the extra taxes, meanwhile, largely come from people spending extra money the federal government sent them through things like the Child Tax Credit program, which ended. this month.
Federal agencies have said they will continue to cut such spending this year and the Federal Reserve has signaled it may raise interest rates it has been keeping low to keep the economy going during the pandemic. That has lawmakers like Browne as well as his House counterpart Rep. Stan Saylor (R-York) on edge.
“Once those federal dollars are all spent by the people receiving them, that money won’t come in,” Saylor said.
A forward-looking report released by the state’s Independent Fiscal Office in November also painted a grim picture of Pennsylvania’s fiscal direction. Analysts have predicted “as the impact of the federal stimulus… declines,” tax revenues may not be as strong as they were last year.
A forward-looking report released by the state’s Independent Fiscal Office in November also painted a grim picture of Pennsylvania’s fiscal direction. Analysts have predicted “as the impact of the federal stimulus… declines,” tax revenues may not be as strong as they were last year.
If spending on state agencies and programs stays true to IFO forecasts, Pennsylvania could end up with nearly $2 billion in the hole by 2024.
“At present, [based] on what we know we are spending in a deficit,” Browne said. “So that has to be part of our thought process.”
Democratic lawmakers haven’t denied that prospect, but say Republicans are once again living up to their old tricks.
“When we don’t have money, Republicans say we don’t have money. When we have money, they say we don’t have any. It’s getting old,” Sen. Vincent Hughes (D-Philadelphia) said in a statement. “The fact is that we have the capacity to make solid investments in the next budget without creating a deficit.”
Hughes, who co-chairs the Senate Appropriations Committee alongside Browne, says the state can invest because it consistently generates more revenue than analysts predicted last year and now has nearly $3 billion. in his Rainy Day fund.
While this emergency piggy bank holds significantly more money than in previous years, the Treasury estimates that the money would only cover about a month’s running costs.
House Democratic Appropriations Speaker Rep. Matt Bradford (Montgomery) said he also doesn’t disagree with the budget outlook that Republicans are pointing to.
“I think our real difference is our view of how we grow so we can have a prosperous economy,” Bradford said. “I just don’t know how we get into the fiscal fetal position and act like we’re going to get a more prosperous economy.”
Bradford and other budget leaders shared their thoughts as Wolf and state lawmakers agreed to use $225 million in pandemic relief cash to support struggling healthcare workers and facilities .
Asked if that signals the state’s willingness to spend that money on other areas, Browne said it will be “part of the conversation” in future budget discussions. Saylor, meanwhile, said lawmakers are working on a special spending program for nursing homes that he hopes to announce “at some point.”
Wolf will present his final ideas on the state budget next month and says he’s ready to discuss what to do with the extra money.
