Jan. 12, 2024
HARRISBURG – House Republican Appropriations Chairman Seth Grove (R-York) reacted to the Democrat plan adopted by the Basic Education Funding Commission (BEFC) with significant concerns about its eye-popping costs.
“The adopted BEFC report calls for a $291 million increase in spending for school districts (property taxes!) and more than $7 billion in recurring revenue over the next seven budget cycles for the state,” Grove said. “When added with the current state structural deficit of $1.8 billion – and without accounting for any other increases which may be in Gov. Josh Shapiro’s 2024-25 budget proposal – the Commonwealth needs to find $8.9 billion in recurring revenue. Democrats would need to increase our state income tax by almost a percentage and a half in order to cover this spending spree, bringing the overall rate from 3.07% to near 4.5%. Even more concerning, this $7 billion is a conservative estimate, other initiatives highlighted in the report have the potential for billions more in spending.”
“As I have previously warned, Pennsylvania’s bond rating will be tied to how the governor and legislature handle education funding moving forward following the Commonwealth Court decision in William Penn SD v. PA Department of Education,” Grove added. “In addition, the bond rating agencies have recommended against spending down our reserves to pay for recurring costs like the BEFC recommends; we must have stable revenue streams.”
S&P:
We could lower the rating if the resolution of the education funding litigation required significant new spending and the commonwealth was unable to identify or agree on reoccurring funding sources in a timely manner.
Fitch: Failure to maintain improved operating performance, such as through material draws on reserves to support recurring needs or inability to maintain structural budget balance, particularly as the commonwealth addresses the findings of the school funding lawsuit.
Moody’s: Significant growth in leverage (debt or other unfunded liabilities) or the state's fixed cost burden.
“The Democrat BEFC report isn’t based in reality, nor is this a workable solution for our budget circumstances,” Grove added. “This will raise both local school property taxes and our state taxes – the prudent measures the General Assembly has taken over the past several years to ensure our sound financial footing will be evaporated as neither our General Fund nor our Rainy Day Fund reserves, nor a combination thereof, is enough to cover these recurring costs. Further, the report takes direct aim at effective alternatives for parents and students by attacking charter schools, and completely ignores options for school choice like Lifeline Scholarships.”