(The Heart Sq.) – A brand new report warns that some states, together with Pennsylvania, could also be relying an excessive amount of on short-term federal funds for long-term bills. Doing so units up states for a “fiscal cliff” that causes future funds issues.
The report from the Volcker Alliance, a nonprofit group that works to strengthen public service training and efficient authorities, additionally raised considerations in regards to the lack of transparency in how Pennsylvania is spending its federal COVID-19 cash. The American Rescue Plan Act despatched $7.3 billion to the commonwealth, which was accredited for tasks associated to public well being, unfavorable financial impacts, some infrastructure, and different areas.
Not all states have spent their cash properly, nevertheless.
“The allocation of lump-sum funds for income substitute could imperil budgets when federal funding is exhausted,” wrote Beverly S. Bunch, a professor on the College of Illinois-Springfield. “Moreover, reporting on use of those funds is inconsistent. In lots of states, the dearth of transparency about applications … will make it harder to evaluate downstream budgetary penalties and maintain authorities officers and businesses appropriately accountable.”
By July 2021, Pennsylvania had spent 63% ($4.6 billion) of its federal cash despatched to the state authorities. Of that cash, $3.8 billion went to the state’s normal fund to pay for well being and training bills. One other $372 million went for job creation and retention and different help, and $282 million for nursing dwelling/assisted residing/private care wants.
Whereas the cash was spent according to federal pointers, the cash was a one-time increase. The state used it to fund well being care and training wants that require sustained funding, not non permanent funding. The Volcker Alliance gave Pennsylvania a D- grade for its funds practices during the last 5 years, and referred to as the grade “constant” with how the state authorities spent these pandemic funds.
Relatively than rising above its unhealthy spending habits of the previous, Pennsylvania has continued its outdated methods.
The report really useful that states ought to create spending plans to keep away from fiscal cliffs that come from relying an excessive amount of on one-time injections of federal cash, making these plans publicly out there, and enhancing transparency on how they spend the cash.
“States themselves should be sure that $195.3 billion in emergency help granted to them by Congress doesn’t set them up for future fiscal shortfalls after the federal largesse ends,” Bunch wrote.