(The Center Square) – Pennsylvania’s pre-pandemic rainy day fund would have covered less than three days of government spending, according to a new report, ranking it the second smallest reserve account in the nation.
Second only to Illinois – which would theoretically burn through its own rainy day funds in just a few hours – Pennsylvania’s $243 million reserve account covered just 2.7% of overall annual state spending.
Pew Charitable Trusts published the analysis this week that found half of states had at least 29 days worth of spending socked away in rainy day funds in 2020. While some states relied on these reserves when the pandemic swept across the country that spring, many more relied on federal stimulus and disaster aid.
States also boosted their reserves with tax revenues that bounced back stronger than anticipated after months of pandemic-related economic and travel restrictions. In Pennsylvania, lawmakers socked away $2.5 billion in sales tax profits and more than $5 billion in American Rescue Plan stimulus in preparation for an $8 billion projected fiscal cliff.
This decision doesn’t sit well with legislative Democrats, who have remained persistent in their criticism of Republican leaders’ unwillingness to dole out the money to schools, front line workers and hard-hit small businesses.
“The federal government gave us billions of your tax dollars to help PA recover from COVID-19, and some folks are just like ‘nah’,” said Rep. Jordan Harris, D-Philadelphia, via Twitter on Thursday. “It's sitting in a rainy day fund while it continues to pour on businesses, students, parents, and frontline workers.”
In June, Senate Appropriations Chairman Pat Browne, R-Lehigh, said the prudent savings 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. “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 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.”