Constitutionally, Pennsylvania’s General Assembly is required to create a balanced budget each year. After months of proposals, hearings and negotiations, the House and the Senate vote on a budget before it moves to the governor for his signature. Of course, most people know the process is not that straightforward.
In fact, we started 2020 with a $904 million state deficit, an overdraft that started in October – just four months into the fiscal year. Currently, to address cashflow shortfalls like this one, the state treasurer and auditor general approve a Short-term Investment Pool loan. This year, they authorized a $1.5 billion loan to take money from the state’s hidden accounts and charged taxpayers an extra $11 million in interest. Essentially, taxpayers were charged interest to use their own money as part of the state’s poor financial management practices.
This is yet another reason why we need to focus on being hyperaware of how money is spent and cutting money that is being wasted. If we can build more of a cushion by strengthening our reserves, we will be able to weather the times of the year when spending outpaces our revenue without socking taxpayers with another bill.
Last year, we invested $317 million in the state’s Rainy Day Fund. Clearly, we need to do more. Recently, a group of legislators proposed commonsense reforms to address the state’s poor financial management without taking more of your money.
Sen. Kristin Phillips-Hill (R-York) and Rep. Seth Grove (R-York) introduced Senate Bill 885
and House Bill 1861
, respectively, which propose an amendment to the state’s Constitution to address any spending by the governor exceeding the amount approved in the annual state budget.
House Bill 1988
, which Grove sponsored, would move $2 billion of special funds back into the General Fund to eliminate the need to borrow and increase costs to taxpayers.
To ensure the state is prepared for an economic downturn and to shore up its savings account, Rep. Tim O’Neal’s (R-Washington) House Bill 1989
would add an amendment to the state Constitution to require all surplus funds go into the Rainy Day Fund. A two-thirds vote of the General Assembly would be required to spend money from the Rainy Day Fund.
Rep. Andrew Lewis’ (R-Dauphin) House Bill 1990 would establish a collaborative process by creating a Council on State Finances. By having open and transparent dialogue about the real finances of the Commonwealth, elected officials will be able better make financial decisions.
To rein in the shadow spending through special funds, which aren’t accounted for in the General Fund, Rep. Dawn Keefer’s (R-York/Cumberland) House Bill 1991 would amend the Commonwealth’s Constitution to prevent the creation or use of special funds.
Rep. Ryan Warner’s (R-Fayette/Westmoreland) House Bill 1316
would place a constitutional limit on state spending based on population growth and the Consumer Price Index.
Rep. Frank Ryan (R-Lebanon) proposed House Bill 1995
to establish a Bipartisan Keystone Solvency Operating Commission to study financial decisions which have led to insolvency of other governmental entities.
As the governor prepares to give his budget address, which is likely to call for more taxes of some kind, my colleagues and I will be focused on using state funding more responsibly and advocating for more prudent financial policies to protect taxpayers for years to come.
Representative Matthew Dowling
51st Legislative District
Pennsylvania House of Representatives
Media Contact: Alison Evans