Pennsylvania’s official fiscal watchdog this week told state senators that the commonwealth’s Rainy Day Fund contains less money than many experts recommend — and that’s before Democratic Governor Josh Shapiro’s long-term fiscal plan burns through it.
The state Treasury currently keeps $5.7 billion in the Rainy Day Fund to help public institutions endure revenue losses resulting from economic downturns. According the the department’s own calculations, current reserves in this account could sustain General Fund expenditures for just under 43 days.
Pennsylvania’s economy will have modest real economic growth but also a dip in tax revenues in the next fiscal year as one-time boosts fade away, according to the latest revenue estimates from the Independent Fiscal Office.
The estimate for fiscal year 2022-23 does not assume a recession will hit, but does assume inflation will still be a problem, which cuts away at real gains in areas such as wages and salaries.
On Tuesday, at the first Pennsylvania Senate hearing on next fiscal year’s budget, lawmakers considered the state’s slow economic recovery—and the state’s failure to attract new residents.
Independent Fiscal Office (IFO) Director Matthew Knittel testified before the Senate Appropriations Committee regarding the state’s fiscal, economic and demographic outlook. Particularly in that last category, the Keystone State doesn’t boast an envious position.
On Tuesday, at the first legislative hearing on Pennsylvania’s next budget, the Wolf administration and the Independent Fiscal Office (IFO) offered divergent near-term revenue projections.
Governor Tom Wolf (D) proposed a Fiscal Year 2022-23 budget last week that would total $43.7 billion, 16.6 percent greater than the current fiscal year’s spending allotment. The plan’s feasibility (without a tax increase) will partly depend on whether the general-fund revenues anticipated by the governor’s Revenue Secretary, C. Daniel Hassell, come to fruition.