FILE - Pennsylvania State Capitol

The Pennsylvania State Capitol in Harrisburg, Pennsylvania.

(The Center Square) – Pennsylvania lawmakers opted for a budget Friday that saves most of the state’s $10 billion in tax surplus and federal stimulus as they brace for an unprecedented fiscal cliff when the good fortune “dries up” come 2024.

The $40.8 billion spending plan socks away $2.5 billion in unexpected sales tax revenue into the state’s nearly depleted Rainy Day Fund and holds back two-thirds of the $7.3 billion in stimulus received from the American Rescue Plan for future deficits, leaving just enough for line item increases to public education, transportation projects and nursing homes, among other priorities.

Senate Appropriations Chairman Pat Browne, R-Lehigh, said the prudent plan will prevent taxpayers from reaching into their pockets to fill a $7 billion deficit projected in just two years.

“Those who fail to learn from history are doomed to repeat it,” he said on the Senate floor Friday night. “We do not want to empty the piggy bank and place the financial security of the commonwealth at risk when federal stimulus dries up.”

Browne’s comments reference money given to the state during the Great Recession that legislators poured into public education. In 2011, the General Assembly faced a choice – raise taxes to cover more than $800 million in education funding financed by depleted stimulus or make cuts to shrink a $4 billion deficit and avoid massive tax hikes. 

The situation, Browne said, has impacted students and the state’s financial well-being for the past decade. He said this year shows an “unbelievable amount of similarity to where we were 10 years ago.”

“We now face a $7 billion hole in two years when only committing ourselves to the obligations we are committed to and will stick to,” he said. “This will no doubt put tremendous pressure on our taxpayers just to cover our existing obligations.” 

The plan received broad bipartisan support and the stamp of approval from Gov. Tom Wolf himself, even though the spending it authorizes falls far short of his goals. The governor advocated for a $1.3 billion boost to public education, while Democratic leaders wanted to distribute a large chunk of the stimulus to schools using the state’s newer formula that considers social and economic constraints in each district.

Instead, the budget spends an additional $300 million on basic education, $50 million on special education and $30 million on prekindergarten and other early education programs. Another $350 million from the federal stimulus will help schools address pandemic learning loss and host summer enrichment programs for students. 

Republican leaders agreed to funnel $200 million of the new basic education spending through the updated formula, dubbed the Level Up Initiative, though Wolf said he was “disappointed” that the majority of the nearly $8 billion the state spends on schools is still distributed based on 1992 population levels.

“There is much to be proud of in this budget, but I am disappointed that we could not find agreement with Republicans to direct all school funding through the bipartisan fair funding formula …,” he said Friday. "The Level Up initiative is a down payment in this fight which provides critical annual funding increases for the districts that need it most – but it is far from enough.”

Democratic leaders expressed less enthusiasm for the plan, calling it a “missed opportunity” that “woefully misses the mark” to help families and the economy recover post-pandemic. 

“It’s always good to prevent tax hikes on working families, and we did manage to get more money to schools, seniors, violence prevention, and roads and bridges, but that’s just not enough,” said House Democratic Leader Joanna McClinton, D-Upper Darby. “There are billions of dollars in surplus money that belongs to the people and should have been used to help fairly fund every school and maybe even cut property taxes for homeowners.”

While many said they applaud the use of the money the state agreed to spend – including $279 million for transportation infrastructure, $282 million for nursing homes struggling to cover pandemic costs and $50 million to help the Pennsylvania State System of Higher Education with its redesign – the “battle” to allocate the billions in savings has just begun.

“Although we wanted much more for the people of Pennsylvania, and they certainly deserve much more, the Republican controlled majority has once again, stood in their way,” said Senate Appropriations Chairman Vince Hughes, D-Philadelphia. “However, this is what I know: this fight is not over … we must immediately come back to the table with concrete demands to help Pennsylvania’s people who continue to suffer from the COVID Pandemic.”

Republicans leaders celebrated the budget in joint statements Friday that reiterated its focus on shielding taxpayers from future deficits while still boosting funding for critical programs.

“By learning from the past and wisely managing a large influx of one-time federal funding in Pennsylvania to meet current needs and prepare for the future, we can be certain that regardless of what comes our way we will not have to go back to taxpayers for more of their hard-earned money,” said House Majority Leader Kerry Benninghoff, R-Bellefonte. 

Wolf said he will sign the budget next week, while lawmakers won’t return to Harrisburg until mid-September. That leaves other key priorities – such as legalizing takeout cocktails, expanding the sale of canned mixed drinks and striking an election reform deal – unaddressed. 

Staff Reporter

Christen Smith follows Pennsylvania's General Assembly for The Center Square. She is an award-winning reporter with more than a decade of experience covering state and national policy issues for niche publications and local newsrooms alike.