STATEMENT: Stopgap Budget Is Incomplete but Takes a Small Step Towards a Just Recovery

Marc Stier |
HARRISBURG – Pennsylvania Budget and Policy Center director Marc Stier issued the following statement in response to the Pennsylvania General Assembly’s passage of a stopgap budget for Fiscal Year 2020-2021 and legislation that appropriates part of Federal Cares Act funds.

“The Pennsylvania House and Senate, with the support of Governor Wolf, this week took an important step towards enacting a budget for Fiscal Year 2020-21, which starts on July 1, and also made some important decisions on how to distribute the federal CARES (Coronavirus Aid, Relief, and Economic Security) Act funds.

Everyone acknowledges that the budget remains incomplete. In saying that, we mean that not only is most of the budget funded for only five months but that critical needs remain to be met as well. The pandemic has shown everyone what many of us have long known—there are deep inequities in our society. Our goal is not just to return to where we were before the pandemic but to create a Pennsylvania in which everyone can thrive—Black, brown, and white; Latinx; Asian; native-born and immigrant; and people of all genders. The final budget for the 2020-21 fiscal year must give us what Pennsylvanians need—a just recovery from the COVID-19 disaster.

There is a good reason to put off budget decisions for a few months. There is great uncertainty about the course of COVID-19, the depth and length of the recession, and thus how much stat tax revenues will fall. There is also uncertainty about whether the federal government will provide additional relief funds. We recognize there is a political element to putting off these decisions, as well, as it spares the General Assembly from making painful choices about cutting spending or raising taxes before the General Election, and also about how to ensure the recovery from COVID-19 is just. We will do our part to keep reminding the public about the important choices yet to be made and urge others to do so well.

Two decisions made in the last few days give us some reason for optimism. The first is the allocation of $2.6 billion of the federal CARES Act funding to meet critical needs arising from the COVID-19 crisis, including funding for long-term care; small businesses; college student debt relief and aid to disadvantaged college students; mortgage and rental assistance; assistance to the homeless; child care and pre-K education; food access assistance; and funding to counties that did not get direct assistance from the federal government. These are some of the areas where new investment is needed to create a Just Recovery.

The second was the decision to fund state pensions and education, from pre-K to college, for the entire year. While we believe that education needs more funding at all levels, the decision to fund education and pensions for the whole year protects those two major portions of the budget from being cut to balance the budget for the full fiscal year. Those were areas that received major cuts under Governor Corbett in 2011-2012 during the Great Recession—with great damage to education, the state’s economy, and its fiscal health—and which we were afraid might be cut again in response to the COVID-19 recession. Taking them off the chopping block—together with the necessity of the state continuing to fund Medical Assistance and other social service programs that draw down federal support—limits the possibility of meeting a deep budget deficit that might remain after the next round of federal funding by drastically reducing spending. As we will explain in more detail next week, the state will have to meet a deficit in the second half of the fiscal year by either raising taxes or by borrowing—with the latter requiring some increase in revenues in the future.”