While many of us are focused on our household budgets, we should also be paying attention to the annual state budget because it has a big impact on both your income and expenses.
Back in February, the governor presented us with a budget that would have increased income taxes for individuals, families and small employers by 46%, imposed a new tax on the energy industry (that would have undoubtedly been passed on to us as consumers) and increased state spending a whopping 8%.
The state budget we ultimately passed last month will be much easier on your wallets as it keeps spending in check and imposes no new or increased taxes on anyone. It’s a plan that funds the core functions of government and respects the taxpayers who foot the bill.
This is a time of transition for the Commonwealth and our country as we look to put the COVID-19 pandemic and related economic impacts behind us. State revenues came in higher than expected this year, but all signs point to that being short-lived. Federal stimulus money will soon dry up. Now is not the time to go on a spending spree and grow the size of government. It is a time to be prudent, live within our means and prepare for what lies ahead.
This year’s budget directed $2.6 billion into the Rainy Day Fund. This is our state’s equivalent of a family’s savings account, meant to help us weather short-term economic slowdowns by using these funds to meet our obligations rather than turning to taxpayers to send more of their hard-earned money to Harrisburg. It brings the balance in our Rainy Day Fund to a historic $2.87 billion and represents more than 6.5% of General Fund revenue, the first time we’ve met that threshold since a 6% goal was set back in 2002.
The budget also wisely preserves a portion of federal relief funds to be used in future budgets. When the last comprehensive economic stimulus package was advanced after the 2008 recession, then-Gov. Ed Rendell immediately spent every cent to grow the size of our government, leaving taxpayers with a $4 billion deficit that led to drastic cuts in the budget. While there were many calls to spend all of this year’s stimulus money the same way, we resisted that push.
We also took an important step to rein in the biggest and fastest-growing segment of our budget – human services. In this year’s budget alone, we are investing $17.3 billion in these programs, a $1.8 billion, or 11.7%, increase over last year. While some of these increases are the result of federal mandates, others are due to new – and unauthorized – programs created by our Department of Human Services. That leads to consistent cost overruns in the department that must be paid through “supplemental appropriations” at the end of each fiscal year. To help stop this from happening, we included language in a budget-related bill known as the Fiscal Code to prevent DHS from creating new programs that are not expressly authorized or funded by the General Assembly.
While taking steps to save money and keep spending in check, this year’s budget also funds the core functions of government: education, infrastructure and public safety.
The budget provides a record $13.5 billion in funding for PreK-12 education, including increases for basic education, special education and early childhood education. To support children who suffered educational losses throughout the COVID-19 pandemic, the budget allocates $350 million in federal relief funds for learning loss, summer enrichment and after school programs. Another $44 million in federal funds supports career and technical education to train students for the jobs of today.
We also dedicate $279 million in federal relief funds for road and bridge projects. Much of our road work in the Commonwealth is funded by our gas taxes, and those revenues took a serious hit in 2020 as people stayed home due to the pandemic. This investment helps make up for those revenue losses.
Finally, we allocated funding to support two new Pennsylvania State Police cadet classes, which will add up to an additional 180 troopers to our Commonwealth. An additional $372 million is directed toward ongoing pandemic response in our communities.
I am pleased we were again able to adopt a state budget that invests your hard-earned money wisely while also planning for the future. If you’d like to learn more about our state budget, visit www.pahousegop.com/2122PAbudget.