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The budget surplus is projected to soon run dry in Pennsylvania

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The budget surplus is projected to soon run dry in Pennsylvania


HARRISBURG — Pennsylvania’s multibillion-dollar surplus will soon be halved according to a projection by a state budget watchdog, the result of a long-running structural deficit combined with a growing list of obligations competing for public dollars.

The commonwealth’s recent $47.6 billion budget increased spending by 6%, with more than $1 billion in new money going to public schools in response to a court ruling that found Pennsylvania underfunds poor districts.

However, the state brought in just $44 billion in net revenue last fiscal year. So to afford the spending plan, lawmakers are reaching into the state’s sizable cash reserves, which sat at roughly $13.6 billion as of June 30, according to the Independent Fiscal Office.

That total was roughly split between the state’s rainy day fund — the equivalent of a long-term savings account — and the state’s General Fund. The latter is essentially Pennsylvania’s checking account.

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Lawmakers used $3.3 billion from the General Fund to balance the recent budget, according to the IFO. That money will be spent over the course of this fiscal year.

Pennsylvania will completely deplete the General Fund surplus by the next fiscal year, the IFO estimated based on expected spending, in-progress tax cuts, and revenue projections.

That will force lawmakers to tap into the rainy day fund to balance the budget due less than a year from now if they don’t find new revenue or cut spending.

While fiscal good fortune built the current surplus, Pennsylvania’s policymakers have historically struggled to create new revenue sources as the state’s budget increases annually. This year, Gov. Josh Shapiro pitched regulating slot-like skill games and legalizing recreational marijuana to raise millions in needed dollars, but the divided General Assembly didn’t adopt either.

The rainy day fund currently contains more than $7 billion, up from just $22 million only a few years ago. This meets the level that experts say states should keep on hand. Pulling money out of that fund would require a level of bipartisan support that’s been elusive.

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The IFO’s estimate assumes a 4% increase in state spending in the 2025-26 plan, much of which would pay for contractually required increases in state workers’ wages and benefits and federally mandated human services spending. It assumes education would get only a modest, 2.4% increase in line with inflation.

No one who helped draft the spending plan is saying much about what’ll happen next year to sustain the state’s spending.

Christina Fonseca, spokesperson for state House Appropriations Committee Chair Jordan Harris (D., Philadelphia), said in an email that the IFO report made “certain assumptions to arrive at its conclusions regarding the status of both the Rainy Day and General Fund balances” that the caucus disagreed with.

Fonseca said the caucus supports a financial statement from the Governor’s Budget Office. However, she did not send the statement when asked and did not respond to follow-up questions about what assumptions the caucus disputed.

Matt Knittell, executive director of the IFO, acknowledged the gap between his agency’s projections and the governor’s. Either way, the difference is a matter of degree and not of substance.

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“We both agree there is a substantial deficit,” Knittel said in an email.

For months, Democrats have downplayed the IFO’s recent projections by arguing that the state’s revenue has consistently grown. Speaking to lawmakers during a spring budget hearing, Budget Secretary Uri Monson said the state has averaged almost 4% annual revenue growth over the past 25 years.

“We are very conservative on the projections of where we’re going to be but the actual results have been growing surpluses,” Monson said.

Further spending is likely. Legislative Democrats wanted to appropriate $5.1 billion to underfunded school districts over several years in this budget but only secured $500 million.

Addressing a brewing crisis in public transit funding is a top priority for Shapiro and Democrats this fall. Systems received a one-time boost of $80 million in the recent budget; Shapiro had called for $1.5 billion over the next five years.

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To afford these priorities, they’ll need a lot of new cash — either from new taxes, a booming economy, or another source — or make cuts elsewhere in the budget.

Spending down the surplus has short-term implications as well, said state Rep. Seth Grove (R, York), minority chair of the Appropriations Committee.

The state collects interest on its big surplus — by spending those dollars, that revenue will disappear. The state earned almost $780 million in interest from its cash reserves in the just-finished fiscal year, according to the Department of Revenue — nearly double projections.

Meanwhile, if the general fund gets too low during the year, the state will have to borrow money to pay employees and run other key government functions. While the state isn’t currently in danger of running out of operating money, it has in the recent past. That came with consequences, including a downgraded credit rating.

Grove noted that deficits are less manageable for states than they are for the federal government. “Unfortunately at the state level, we can’t print money,” Grove told reporters early this month.

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The structural deficit — where annual costs exceed annual revenue — isn’t new.

For a decade-plus, Pennsylvania has consistently spent more than it brings in under Democratic and Republican leadership alike. Neither party has mustered the political will to find the right combination of spending cuts, tax increases, or growth-inducing policies to correct the issue.

Instead, the commonwealth’s budget has raised one-time revenues by expanding gambling, taking on debt, or using budgetary tricks that shift costs around to balance the books each year.

Even the current surplus — built on stimulus dollars and unexpectedly high tax revenues — hasn’t led to consistently smooth budgetary sailing, with three straight late budgets in a divided Harrisburg.

State Senate Republicans are typically more open to increased spending than their GOP colleagues in the state House. That dynamic played out again this year, with the upper chamber passing the budget deal with more than two-thirds support. The plan fell a dozen votes shy of the mark in the lower chamber amid widespread GOP opposition.

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Grove, along with his fellow York County Republicans, called the spending plan “reckless” in a news release soon after it passed.

But fellow Republican and chief budget negotiator state Senate Majority Leader Joe Pittman said the budget was a compromise — a product of the realities of divided government.

Pittman had a recommendation for unhappy state House Republicans: “I think they need to get a seat at the table by retaking the majority.”

BEFORE YOU GO… If you learned something from this article, pay it forward and contribute to Spotlight PA at spotlightpa.org/donate. Spotlight PA is funded by foundations and readers like you who are committed to accountability journalism that gets results.



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Pennsylvania

Josh Shapiro to run for second term as Pennsylvania governor, trailed by talk of a 2028 White House bid – The Boston Globe

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Josh Shapiro to run for second term as Pennsylvania governor, trailed by talk of a 2028 White House bid – The Boston Globe


Ever since he won the governor’s office in a near-landslide victory in 2022, Shapiro has been mentioned alongside Democratic contemporaries like California Gov. Gavin Newsom, Illinois Gov. JB Pritzker, Maryland Gov. Wes Moore and others as someone who could lead a national ticket.

Shapiro, 52, has already made rounds outside Pennsylvania. Last year, he campaigned for Democrats running for governor in New Jersey and Virginia, and he’s a frequent guest on Sunday talk shows that can shape the country’s political conversation.

He was also considered as a potential running mate for Kamala Harris in 2024. She chose Minnesota Gov. Tim Walz instead.

A pivotal first term as governor

Shapiro’s first-term repeatedly put him in the spotlight.

He was governor when Pennsylvania was the site of the first attempted assassination of President Donald Trump; the capture of Luigi Mangione for allegedly killing United Healthcare chief executive Brian Thompson; and the murder of three police officers in the state’s deadliest day for law enforcement since 2009.

Last year, an arsonist tried to kill Shapiro by setting the governor’s official residence on fire in the middle of the night. Shapiro had to flee with his wife, children and members of his extended family, and the attack made him a sought-out voice on the nation’s recent spate of political violence.

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As Shapiro settled into the governor’s office, he shed his buttoned-down public demeanor and became more plain-spoken.

He pushed to quickly reopen a collapsed section of Interstate 95 in Philadelphia, debuting his new and profane governing slogan — “get s—- done” — at a ceremony for the completed project.

He crossed the partisan divide over school choice to support a Republican-backed voucher program, causing friction with Democratic lawmakers and allies in the state.

Shapiro regularly plays up the need for bipartisanship in a state with a politically divided Legislature, and positioned himself as a moderate on energy issues in a state that produces the most natural gas after Texas.

He’s rubbed elbows with corporate executives who are interested in Pennsylvania as a data center destination and thrust Pennsylvania into competition for billions of dollars being spent on manufacturing and artificial intelligence infrastructure.

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A repeat winner in competitive territory

Shapiro has enjoyed robust public approval ratings and carries a reputation as a disciplined messenger and powerhouse fundraiser.

He served two terms as state attorney general before getting elected governor, although his 2022 victory wasn’t the strongest test of his political viability. His opponent was state Sen. Doug Mastriano, whose right-wing politics alienated some Republican voters and left him politically isolated from the party’s leadership and donor base.

For 2026, Pennsylvania’s Republican Party endorsed Stacy Garrity, the twice-elected state treasurer, to challenge Shapiro.

Garrity has campaigned around Pennsylvania and spoken at numerous Trump rallies in the battleground state, but she is untested as a fundraiser and will have to contend with her relatively low profile as compared to Shapiro.

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Shapiro, meanwhile, keeps a busy public schedule, and has gone out of his way to appear at high-profile, non-political events like football games, a NASCAR race and onstage at a Roots concert in Philadelphia.

He is a regular on TV political shows, podcasts and local sports radio shows, and he keeps a social media staff that gives him a presence on TikTok and other platforms popular with Gen Z. He even went on Ted Nugent’s podcast, a rocker known for his hard-right political views and support for Trump.

Shapiro also became a leading pro-Israel voice among Democrats and Jewish politicians amid the Israel-Hamas war. He confronted divisions within the Democratic Party over the war, criticized what he describes as antisemitism amid pro-Palestinian demonstrations, and expressed solidarity with Israel in its drive to eliminate Hamas.

In 2024, some activists argued against him being the party’s nominee for vice president. Harris, in her recent book, wrote that she passed on Shapiro after determining that he wouldn’t be a good fit for the role.

Shapiro, she wrote, “mused that he would want to be in the room for every decision,” and she “had a nagging concern that he would be unable to settle for a role as number two and that it would wear on our partnership.” Shapiro disputed the characterization, telling The Atlantic that Harris’ accounts were ”blatant lies” and later, on MS NOW, said it “simply wasn’t true.”

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An audition on 2026’s campaign trail

In a September appearance on NBC News’ “Meet the Press,” the host, Kristen Welker, asked him whether he’d commit to serving a full second term as governor and whether he’d rule out running for president in 2028.

“I’m focused on doing my work here,” he said in sidestepping the questions.

His supposed White House aspirations — which he’s never actually admitted to in public — are also mentioned frequently by Garrity.

“We need somebody that is more interested in Pennsylvania and not on Pennsylvania Avenue,” Garrity said on a radio show in Philadelphia.

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For his part, Shapiro criticizes Garrity as too eager to get Trump’s endorsement to be an effective advocate for Pennsylvania.

In any case, the campaign trail could afford Shapiro an opportunity to audition for a White House run.

For one thing, Shapiro has been unafraid to criticize Trump, even in a swing state won by Trump in 2024. As governor, Shapiro has joined or filed more than a dozen lawsuits against Trump’s administration, primarily for holding up funding to states.

He has lambasted Trump’s tariffs as “reckless” and “dangerous,” Trump’s threats to revoke TV broadcast licenses as an “attempt to stifle dissent” and Trump’s equivocation on political violence as failing the “leadership test” and “making everyone less safe.”

In a recent news conference he attacked Vice President JD Vance — a potential Republican nominee in 2028 — over the White House’s efforts to stop emergency food aid to states amid the federal government’s shutdown.

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Many of Shapiro’s would-be competitors in a Democratic primary won’t have to run for office before then.

Newsom is term-limited, for instance. Others — like ex-Transportation Secretary Pete Buttigieg — aren’t in public office. A couple other governors in the 2028 conversation — Moore and Pritzker — are running for reelection this year.





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1 killed in crash involving horse and buggy in Lancaster County, Pennsylvania State Police say

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1 killed in crash involving horse and buggy in Lancaster County, Pennsylvania State Police say



One person was killed in a two-vehicle crash involving a horse and buggy in Lancaster County on Wednesday afternoon, according to Pennsylvania State Police.

The crash happened around 1:30 p.m. Wednesday in the 4000 block of Strasburg Road in Salisbury Township, state police said.

One person was pronounced dead at the scene, according to state police.

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Strasburg Road, or Rt. 741, near Hoover Road, is closed in both directions, PennDOT says.

PSP said the Lancaster Patrol Unit, Troop J Forensic Services Unit and Troop J Collision Analysis and Reconstruction Specialists Unit are on scene investigating the crash.



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Police hunt for masked suspects who looted a Pennsylvania Lululemon overnight

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Police hunt for masked suspects who looted a Pennsylvania Lululemon overnight


Pennsylvania police are searching for at least two masked suspects believed to have looted a Lululemon store overnight.

At least two masked men broke into a Lululemon in Ardmore, Pennsylvania, around 2 a.m. Tuesday, police told NBC 10 Philadelphia. Ardmore, a suburb of Philadelphia, is home to about 14,000 people.

The suspected thieves used a sledgehammer to break the glass on the store’s front door, according to police.

Once they gained access, the masked individuals grabbed handfuls of merchandise, security footage shows. The men went in and out of the store several times, grabbing handfuls of items that included coats, vests and shirts from the men’s section, police told local outlet WPVI.

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Surveillance footage shows at least two masked men breaking into a Pennsylvania Lululemon, police say

Surveillance footage shows at least two masked men breaking into a Pennsylvania Lululemon, police say (ABC 6/Lower Merion Police Department)

“This is taking it to another level,” Lower Merion Police Superintendent Andy Block told WPVI.

The suspects then loaded the merchandise into a U-Haul truck. Their truck was last seen at the intersection of Bryn Mawr Avenue and Woodbine Avenue, just a few miles from the store, police said.

The entire incident lasted about five minutes, which Block said is longer than usual for this type of burglary.

“Usually, it is because in a smash-and-grab situation they want to get in and get out before they’re identified or anybody’s notified on it,” Block told CBS Philadelphia.

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Block told WPVI the store is a popular target for robbers, given that many of its items cost more than $100. Now, he expects the alleged thieves have sold or exchanged the items.

“They’re using it on the market, maybe they’re exchanging it for drugs, or they’re selling it on the black market. It’s a highly sought-after item,” he told WPVI.

Thieves took off with handfuls of merchandise from a Pennsylvania Lululemon, according to police

Thieves took off with handfuls of merchandise from a Pennsylvania Lululemon, according to police (AFP via Getty Images)

Even though police say Lululemon is a popular target, Lt. Michael Keenan of the Lower Merion Police Department still called the incident “out of character.”

“This is an out of character, out of type incident where we don’t normally see people smashing windows in the middle of the night. But, certainly this is something that is distinct,” Keenan told NBC 10 Philadelphia.

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The store still opened Tuesday, with a banner covering the smashed glass on the door, according to Fox 29. Gina Picciano, a general manager at a restaurant across the street, said it was a frightening incident.

“I walked out here with my bartender and we looked, and it’s scary that it’s happening right across the way from us,” Picciano told Fox 29.

The same store was previously robbed in May 2024. Thieves stole more than $10,000 worth of merchandise during that incident, NBC 10 Philadelphia reports.

The Independent has contacted the Lower Merion Police Department and Lululemon for comment.



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