Pennsylvania lawmakers start negotiations over the new state budget
State lawmakers are starting to hash out the details of Pennsylvania’s next state spending plan. Experts agree there’s plenty of money to go around for the coming fiscal year, but how to spend it is proving contentious.
Gov. Tom Wolf’s administration is arguing Pennsylvania can spend $44 billion between this June and next, and still have $3 billion left. That would be a roughly $4 billion increase over last year’s spending plan. Wolf has said his optimism is tethered to the fact that the state has at least $7 billion in surplus taxes, emergency spending cash and federal pandemic relief money.
The treasury and revenue departments, along with the state’s Independent Fiscal Office, agree the state’s fiscal picture is rosy right now. They each agree a cash surplus is likely for this year and next. But Republican Treasurer Stacey Garrity says that’s only because there’s a lot of federal money, which has to be spent in the next few years.
Pennsylvania’s remaining $2.2 billion in American Rescue Plan money, for instance, has to be distributed by the end of 2024. $4.5 billion more to help the state’s elementary and secondary schools cover pandemic-related expenses has to be spent down by September of that year.
“We are going to face a fiscal cliff,” she said. “So, we have two choices. We can either spend modestly now, saving as much as possible, or we can spend a lot of money now, which will make the cliff even higher.”
The revenue department disagrees with Garrity, saying the state raked in several billion extra tax dollars last year because people were spending more and will be for a while. It pointed to market data from IHS Markit, a global financial research firm.
Agency Secretary Daniel Hassell said the revenue department is forecasting that despite the drop-offs in federal money that are coming, there will be enough from other sources to sustain higher spending in the coming years.
“It’s not going to be like dropping off the edge of a table, and that there will be a more gradual unwinding of that strength,” Hassle said.
Wolf’s own financial forecasts show that surplus could dwindle to as low as $34 million by 2025.
The Independent Fiscal Office said to keep higher spending up, lawmakers will need to figure out how to bring more people back into the workforce.
Data gathered by the IFO shows there are around 350,000 fewer people working right now than there were two years ago.
Pennsylvania’s Department of Transportation is pitching to state lawmakers what it will need in the upcoming state budget.
Last year, the state gave PennDOT just shy of $2 billion from its largest fund to help fund operations. PennDOT’s current annual funding of $9.1 billion is funded in large part by Pennsylvania’s motor fuel tax and the federal government.
Secretary Yassmin Gramain told lawmakers that funding has been helpful. But she added it would still need $8 billion to $9 billion more to address the road and bridges that have been neglected.
“We have over 2,500 state-owned bridges in Pennsylvania that are in poor condition,” she said. “There are another 1,600 bridges locally-owned in poor condition. Ok? The need is massive.”
The nation had its eye on Pennsylvania’s bridges when one of them, which engineers rated in poor condition, collapsed in Pittsburgh earlier this year.
The state will be getting $1.6 billion from the federal infrastructure bill just for bridge maintenance and construction. But Republican state Sen. Pat Browne (R-Lehigh), one of the chamber’s lead budget negotiators, warned that money might not go as far because of rising construction costs.
“The one thing that’s really going to affect this [money] right now that’s really important for us to recognize is inflation,” Browne said. “So, coming to solutions sooner rather than later is definitely in our interest.”
The U.S. Consumer Price Index, a key inflation metric that measures the cost of goods, rose by 7.5% in the last year according to data from the Bureau of Labor Statistics. That same data shows energy prices have risen by 27 percent on average since last year.
PennDOT told lawmakers it’s still considering tolling as many as nine interstate bridges to pay for their reconstruction. Agency heads estimated during a state Senate hearing it would cost as much as $2.5 billion to carry out the necessary work on all of them.
Department of Corrections
The state Department of Corrections wants Pennsylvania lawmakers to support its recruitment efforts in the upcoming budget.
Little says workers have logged more overtime hours in the last two years, leading to burnout and early retirements:
“Getting individuals in and keeping them past 18 to 24 months is a real challenge in the current environment,” he said. “We’ve got a lot of baby boomers, we’ve got a lot of folks who came to our institutions when they opened 20, 25 years ago. Now they’re reaching that 20 to 25 year retirement age.”
Wolf’s budget office has recommended lawmakers give the department $2.78 billion next year, or a $100 million increase from last year.
Some of that would support the agency’s recruitment efforts at schools and community organizations, as well as what Little referred to as three “speciality” recruiters that target communities that have historically produced corrections officers or staff.
The department said re-staffing is important in part because state prisons have re-opened to in-person visitations for fully-vaccinated people. Little added inmates and their families have made good use of video visitation technology during the past year.
“It clearly has been a success, and it’s allowed families to share moments with on-site visitation that they couldn’t have shared,” Little said.
State prisons suspended in-person visits in late January in response to a surge in COVID-19 cases due to the omicron variant.
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