Governor Josh Shapiro has big plans to spend a nice fat chunk of PA's surplus cash. 🤑 He's proposing plans to spend $3.5B of the surplus to improve public transit, overhaul the K-12 education program, and expand economic development programs. 💰
Now, PA can totes afford it. The surplus is currently at $14B. However, some worry that the state's spending might push things over the edge. 🥴
Here’s Five Fast Facts on PA's surplus cash:
- 💸 The Tax Man Cometh - Critics say PA would get into hot water if the state were to rely on tax revenue alone to fund Shapiro's plans. Why? PA's annual costs of paying government workers and providing healthcare to those who can't afford it consistently exceed the money the state generates from taxes.
- 🤸🏻♀️ See-Saw Vibes - PA's surplus was depleted back during the Great Recession. Then things turned around in 2019 when the state brought in more tax revenue than expected. Once the pandemic hit, PA got a ton of extra federal aid and the stimmy checks boosted sales and income tax dollars. This brought the rainy day fund back up to par.
- 📉 Running Low - According to experts, states should keep about 12% to 15% of their total annual costs in a rainy day fund. For 2024, PA's target would be an estimated $7B. However, at one point five years ago, there was only $22M set aside. That's only enough to keep the state government running for a few hours.
- ⚖️ Play By the Rules - The federal government goes into debt all the time, but Pennsylvania isn't allowed to. According to the PA Constitution, the state can only go into debt to “suppress insurrection,” “rehabilitate areas affected by man-made or natural disaster,” or pay for capital projects. Any other type of debt outside of those circumstances has to be approved by voters.
- 🤔 Penny For Your Thoughts - How does either side of the aisle feel about the state budget? To free up more cash, Republicans have looked towards cutting General Assistance (cash payments for the poor) and wanted to add work requirements to the state Medicaid program. Democrats feel like worries about overspending are a little bit too “Boy Who Cried Wolf.” They say the state has always found a way to balance things without tax increases. Fun facts: PA last increased its income tax in 2004 and the sales tax rate hasn't gone up since 1968.
🔥Bottom line: Shapiro's plans for improvement sound pretty decent, but also super costly. Hopefully, the state can pull things off without creeping dangerously close to the red. Did you know some are pushing for digital driver's licenses in PA? Check out all the details here.
Do you think PA has a budget problem?
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