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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

How the Lehigh Valley helped Pennsylvania’s outdoor recreation economy grow to $19B

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How the Lehigh Valley helped Pennsylvania’s outdoor recreation economy grow to B


Forget elves: Patrick Brogan and his team at ArtsQuest are the reason some of country singer/songwriter Megan Moroney’s fans will awake on Christmas to find tickets waiting for them to her show July 31 in Bethlehem.

Planning the lineup featuring headliners like Moroney at ArtsQuest’s Musikfest each summer, plus other draws like its Levitt Pavilion outdoor concert series, is a year-round activity.

“We put out offers for the following year’s Musikfest before that year’s Musikfest even takes place,” said Brogan, chief programming officer for the nonprofit ArtsQuest. “By the Fourth of July I have offers out for the following year’s Musikfest already and we’re in active conversations.”

Nationally, festivals, sporting events and concerts are a big business, contributing $21.8 billion in 2023 toward an outdoor recreation economy that rose 9% to $639.5 billion compared to 2022, according to new data from the U.S. Bureau of Economic Analysis.

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Venues like Musikfest helped push ArtsQuest’s contribution to the regional economy to $132.7 million in 2023, based on Americans for the Arts funding formulas. And those summer nights shows are part of Pennsylvania’s outdoor recreation industry that contributed nearly $19 billion to the state’s economy in 2023, up 10% from 2022.

The Keystone State boasts the eighth-largest outdoor recreation economy in the country.

The value of outdoor recreation added made up 2.3% of the gross domestic product for the United States in 2023, in current dollars, and 1.9% of Pennsylvania’s GDP. It generates employment totaling 168,322 jobs in Pennsylvania in 2023, or 2.7% of the statewide workforce, and compensation totaling $8.7 billion, for 1.7% of payroll. Across all 50 states and the District of Columbia, outdoor recreation employment increased in 49 states and the District of Columbia in 2023, topped by 7.5% growth in Alaska; only Indiana saw a drop in outdoor recreation employment, of 4.8%, the federal Bureau of Economic Analysis says.

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The Bureau of Economic Analysis, part of the U.S. Department of Commerce, puts out its outdoor recreation economy report each fall. Nationally, the outdoor economy is outpacing other economic growth, the statistics show: Adjusted for inflation, the GDP for the outdoor recreation economy increased 3.6% in 2023, compared with a 2.9% increase for the overall U.S. economy.

What goes into the outdoor recreation economy?

It encompasses core outdoor recreation activities like bicycling; boating and recreation; climbing, hiking and tent camping; equestrian; hunting, shooting and trapping; motorcycling and ATVing; recreational flying; RVing; skiing, snowboarding and other snow activities (including snowmobiling); and apparel and accessories. Also included are outdoor recreation industries like amusement parks and water parks; festivals, sporting events and concerts; field sports; game areas (includes golfing and tennis); guided tours and travel; and productive activities such as gardening, plus support for outdoor recreation under headings that include construction; local trips and travel; food and beverages; lodging; shopping and souvenirs; transportation and government spending.

In the Lehigh Valley, outdoor recreation helps to drive the regional, state and national economy 12 months a year.

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“Tickets make great gifts,” ArtsQuest’s Brogan said, with the Musikfest 2025 headliners announced before Christmas 2024 that also include Riley Green, The Avett Brothers, Darius Rucker, Nelly and Jordan Davis.

Patrick Brogan, chief programming officer for Bethlehem-based ArtsQuest, says planning shows and booking acts for summer concerts like those at Musikfest is a year-round activity.Courtesy ArtsQuest

Regionally, it contributes to a GDP that grew to a record $55.7 billion in 2023, led by manufacturing, according to a December report from the Lehigh Valley Economic Development Corp.

Blue Mountain Resort outside Palmerton, for example, employs around 1,200 people during its peak season in winter when it offers 40 ski trails, five terrain parks, 16 lifts and up to 46 tubing lanes on the north face of the Kittatinny Ridge boasting the highest vertical drop — 1,082 feet — of any Pennsylvania ski area. In the warmer months, Blue Mountain has diversified to offer camping, a bike park and adventure park, along with dining options like the Slopeside Pub & Grill that is open year-round and sports panoramic views of the Pocono Mountains.

Dorney Park & Wildwater Kingdom in South Whitehall Township is part of an amusement and water parks industry worth $515 million in Pennsylvania and over $19 billion nationally. It’s closed to the public for the winter, but not dormant. Management in December announced winter maintenance season was in full swing, with ride inspections for Dorney Park signature attractions like Iron Menace, Steel Force and more; facility upgrades that include refreshing guest services, dining areas, pathways and restrooms; and other enhancements, such as the removal of two aging slide structures and the reimagining of several guest areas at Wildwater Kingdom.

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Pennsylvania’s outdoor recreation economy

Musik Express at Dorney Park & Wildwater Kingdom in South Whitehall Township is stripped for inspections and cleaning during fall 2024 as part of off-season maintenance.Courtesy Dorney Park & Wildwater Kingdom

The growth in Pennsylvania’s outdoor recreation economy comes as the state Department of Conservation and Natural Resources is launching its Elevate campaign. Announced during an event in October in Easton, the idea is to work with the businesses that make up Pennsylvania’s outdoor recreation industry to help them grow even more.

“My administration is committed to supporting and growing the outdoor recreation industry, which strengthens local economies, creates jobs, and enhances the quality of life for Pennsylvanians and visitors alike,” Gov. Josh Shapiro said in a news release on the federal economic data released in November. “By investing in outdoor recreation, we’re not just creating economic opportunity but also celebrating the natural beauty that makes Pennsylvania so unique. We will continue working to make the Commonwealth a national leader, where millions of visitors and residents can go to spend time outside with the people they love.”

Our journalism needs your support. Please subscribe today to lehighvalleylive.com.

Kurt Bresswein may be reached at kbresswein@lehighvalleylive.com.



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Pennsylvania

Small plane makes emergency landing on Pennsylvania highway

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Small plane makes emergency landing on Pennsylvania highway


BEAVER COUNTY, Pa. (WHTM) – A small plane made an emergency landing on a Pennsylvania highway on Sunday. According to the Chippewa Township Volunteer Fire Department, the single-seat aircraft landed on I-376 after the pilot realized they would not make it back to the Beaver County Airport. The plane avoided high-tension power lines and found […]



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Former Pennsylvania cop accused of sexually assaulting students while working at high school

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Former Pennsylvania cop accused of sexually assaulting students while working at high school


KDKA-TV Evening Forecast (12/23)

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KDKA-TV Evening Forecast (12/23)

03:40

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PITTSBURGH (KDKA) — A former police officer and school resource officer in Lackawanna County has been accused of sexually abusing five students. 

In a news release, the Pennsylvania Attorney General’s Office said Stephen J. Carroll has been charged with rape, involuntary deviate sexual intercourse, statutory sexual assault, official oppression, institutional sexual assault and other offenses. 

Officials said the 49-year-old Carroll was formerly a school resource officer at West Scranton High School and an officer with the Scranton Police Department. The attorney general’s office said the abuse happened over five years at his home and West Scranton High. The alleged sex crimes date back to 2009 and recent interviews and evidence led to the charges last week, authorities said. 

“This public servant took an oath to protect his community and was specifically assigned to look out for the well being of students — instead he used his position of authority to groom and sexually assault multiple teenagers,” Attorney General Michelle Henry said in the news release.

The Scranton Times-Tribune reported that Carroll is accused of multiple crimes, including sexual intercourse with a 16-year-old and sending graphic text messages, from 2009 to 2017. The newspaper reported, citing the criminal complaint, that four of the five victims were under 18 years old. 

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He was last employed by the Scranton Police Department in 2022 and has not been with the high school as a resource officer since 2018, The Times-Tribune reported. 

“The safety and well-being of our children and students are our highest priority, and any violation of that trust is both deeply disturbing and unacceptable,” Pennsylvania State Police Captain James Cuttitta said in the news release. “We are committed to ensuring that justice is served.”

Carroll’s preliminary hearing is scheduled for Jan. 3, 2025.  

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