This year’s budget process, which ended with passage of Senate Bill 255 on Friday, June 25, was quite different from the usual and traditional actions that accompany the finalization of the state spending plan.
Two things in particular stand out. First, it did not take until June 30 – the final day of the state fiscal year – to hammer out a budget deal. In fact, budget negotiations often linger into July. Second — and most importantly — instead of the usual scramble to find money to cover state expenses, Pennsylvania was flush with funds on hand. That good fortune, however, was where we found disagreement and dissension in the Legislature. I will circle back to that, but first let’s take a quick look at the budget itself.
The $40.8 billion General Fund Budget for Fiscal Year 2021-22 does not include any of the tax increases proposed by the governor in February. Nor does it include the governor’s proposal to divert money from the Race Horse Development Fund, a plan I vehemently opposed. That fund is a key reason why we have horse racing at Presque Isle Downs.”
The budget includes $300 million more for Basic Education Funding, $50 million more for Special Education, $25 million more for Pre-K programs and $5 million more for Head Start. The budget package also includes $5 million for the development and operation of the Erie Community College. In addition, the final budget restores the governor’s proposed cuts in funding for health care and agricultural programs and services.
It is a fiscally responsible budget, but some of my colleagues strenuously argued for more spending since the state expected to carry a $2.5 billion surplus into FY 2021-22.
We can always find ways to spend money, but this is no time to flash the cash like an intoxicated seafarer in port. In many ways, the surplus really is artificial. Our state economy is far from booming and spending was reduced last year as Pennsylvania coped with the financial devastation caused by the global pandemic.
Fortunately, our economy is improving, demonstrably due to the re-opening of businesses throughout the state, but the real catalyst for the budget surplus lies with the billions of dollars in pandemic relief funding we received from the federal government.
Despite the significant rebound in revenues and the availability of federal stimulus funds, we must remain vigilant and restrain spending because Pennsylvania’s mandated spending growth still outpaces its revenue growth and we cannot depend on continued funding from Washington.
Pennsylvania must avoid repeating the problems faced in 2011. Reckless and excessive spending of federal stimulus funding would surely return us to the same dismal financial position that the Commonwealth faced back then when budget deficits of more than a billion dollars were commonplace.
Instead of going on a spending spree, the majority of my colleagues in the Senate and the House of Representatives acted responsibly by paying back some outstanding loans and putting the surplus in the state Rainy Day Fund.
Even though we have a budget surplus right now, we must plan for harder economic times. That lesson was driven home by the COVID-19 pandemic. While we are finally coming out from under that cloud, the potential for an economic crisis is always on the horizon. That’s why staying fiscally conservative is so important.
In closing, I encourage local residents to visit my website, www.senatorlaughlin.com, and my Facebook page, https://www.facebook.com/senatorlaughlin/, to keep up to date with state government news – including the state budget — and learn more about state services and agencies.
Contact: Matt Azeles mazeles@pasen.gov