Pennsylvania would have a massive budget deficit within three years under Gov. Josh Shapiro’s proposed 2023-24 budget, the ranking Republican member of the state House Appropriations Committee said Wednesday.
Rep. Seth Grove, of York County, outlined House Republicans’ priorities in upcoming budget negotiations and hearings in a news conference where he said Shapiro’s budget plan obscures growth in spending – and uses an overly optimistic estimate for expenditures in coming years.
Shapiro’s $44.4 billion spending plan masks a structural deficit by drawing more than $2 billion from the state’s nearly $6 billion surplus, Grove said.
That continues a practice in place since former GOP Gov. Tom Corbett’s administration, Grove said, of using windfalls, such as the state’s share of tobacco settlement funds, to balance the budget.
“We’ve had billions of federal dollars come into the commonwealth …” Grove said, referring to the pandemic-era federal aid. “That’s why we have such a high surplus and rainy day fund currently.”
“All those gimmicks … mask that reality of a $2 billion deficit, structural deficit within the budget, and it’s something that needs to be addressed, the sooner the better, because it just will continue to get worse,” Grove said.
Shapiro spokesperson Manuel Bonder said Shapiro’s proposal is a commonsense plan that provides solutions to the most pressing needs of Pennsylvania residents.
“In keeping with the governor’s track record of fiscally responsible leadership, this budget is built around conservative revenue estimates – using projections that are $3 billion lower over the next five years than those of the always-cautious Independent Fiscal Office,” Bonder said.
Bonder added: “The governor looks forward to working with the Democratic-led House and the Republican-led Senate to deliver on these commonsense solutions for all Pennsylvanians.”
Grove commended Shapiro’s proposed investments in career and technical education, expansion of the state police, and hiring of additional Department of Environmental Protection inspectors to expedite permit reviews. But he added that he and fellow Republicans will be looking for accountability.
“If we’re going to give them more money to hire new staff, we do expect a point in time where these permits will be done,” Grove said.
Assuming spending continues to grow at 6%, which Grove said is a more realistic figure than Shapiro’s projections, the deficit could top $10 billion in five years.
At the same time, Grove said he is pessimistic about economic growth in the state. Shapiro’s plan to accelerate the reduction of the corporate net income tax and to streamline the environmental permitting process are a good start. Grove said those measures alone won’t be able to reverse decades of job and population losses.
“We need to do a lot better on numerous fronts,” Grove said.
Shapiro unveiled his budget proposal in an address to a joint session of the General Assembly on March 7. He touted investments in growing the state’s economy and employment, bolstering public safety and ensuring every Pennsylvanian has access to quality education in grade school and beyond.
The plan would accomplish that, Shapiro said, while preserving the state’s flush coffers.
“We’re prepared to weather a storm should it come. And we can afford to make critical investments for the people of Pennsylvania right now,” Shapiro said.
Asked whether he expects the budget to be approved by the June 30 deadline, Grove said he thinks that’s in “everyone’s best interest.” But given the recent history of late budgets, including a nine-month impasse at the start of Wolf’s first term, and the limited impact on government functions, Grove said he’s “not sure it matters anymore.”
Grove on Wednesday was critical of Shapiro’s plan to move nearly $932 million in appropriations for the Pennsylvania State Police into a special fund where the General Assembly would have less oversight of the agency’s spending.
While Shapiro touted it as a move that would free money from the state’s Motor License Fund, which collects revenue from the gasoline tax and registration and license fees, for transportation projects.
Grove said that by moving that money out of the general fund, Shapiro was able to claim a 3.7% increase in spending. If the money, which comes from the state’s 18% liquor tax and non-cigarette tobacco tax, was included, next year’s spending increase would be close to 6 %.
Grove noted that the state police would be the fourth state agency funded outside of the general fund budget along with the departments of aging, banking and insurance.
“Personally I’ve never liked these. I think it’s bad for transparency, particularly moving the entire agency offline,” Grove said.
Grove also raised questions about Shapiro’s proposal to eliminate the state’s cell phone tax for a $134 million savings for consumers. Based on the budget documents provided by Shapiro’s office, the savings would be about $90, Grove said. And he said that could be negated by increases keyed to inflation in the 911 surcharge on wireless devices that would be tied to inflation.
The 911 surcharge supports county emergency dispatch systems. And while that’s critical infrastructure, Grove said he believes the funding source needs to be examined.
“We need to take a deep dive into the 911 fund to begin with. How much are counties using it? How much are they really saving? Are they regionalizing? Are they doing cost saving measures at the local level and what can we do to incentivize those two?” Grove said.
Part of Shapiro’s plan would extend a free breakfast program for K-12 students and enhanced supplemental nutrition benefits provided as part of the federal pandemic relief act. Grove said House Republicans don’t support that spending.
Grove said House Republicans would also look to Shapiro’s cabinet secretaries for efforts to rein in spending and prevent waste and fraud.
“When we go into this budget hearings, we’ll want to know this from state agencies. What are you doing as a secretary to start balancing the budget? What are you doing to hold down costs? How are you going to manage within the confines of your upgrade appropriations,” Grove said.