The budget approved by the Republican members of the House Appropriations Committee does basically what we expected. Most of the budget is flat-funded with increases to meet Medical Assistance caseloads and a few other mandatory expenditures.
While it is an important achievement that there are no deep cuts to education and human services in the budget, the budget does not meet the needs of Pennsylvanians who are suffering from the effects of the COVID-19 pandemic and the economic crisis it created. Front-line workers; small businesses, especially in the hospitality and entertainment industries; those who are threatened with losing their homes; and many other Pennsylvanians are not getting the support they need from the state.
The budget is balanced with close to $5 billion in one-time revenues: CARES Act funds; enhanced Medical Assistance funding from the federal government (which may not be forthcoming); transfers from special funds and the Rainy Day Fund; the rollover of spending from this fiscal year to the next; and, once again, a likely underestimation of the true cost of Medical Assistance during the year.
Given the reliance on one-time funds and the uncertain prospects for the economy, especially in light of the resurgence of COVID-19 which will lead to a slow recovery in state tax revenues, this budget plan again puts off difficult decisions to the future.
Balancing the next budget will be increasingly difficult and may require deep cuts to vital state programs unless the federal government enacts a new stimulus package that helps state and local governments and leads to a faster economic recovery—or unless the General Assembly raises state taxes that, from our point of view, should be paid exclusively by the richest Pennsylvanians and multinational corporations that do not currently pay Pennsylvania’s corporate income tax.