Recently, I submitted a column to the Morning Call detailing how Pennsylvania navigated the budgetary crisis created by COVID-19. In 2021, state government must continue to advance fiscal policies and initiatives which will lead to a full recovery and a brighter and more prosperous future for all Pennsylvanians. You can read the submission in its entirety below:
State Must Advance Policies & Initiatives to Recover from Pandemic and Set a Course for a Brighter and More Prosperous Pennsylvania
As Pennsylvanians anticipate the ball dropping on another new year, images and experiences of 2020 may truly be “auld acquaintance to be forgot and never brought to mind.”
The year began with a brighter financial outlook for the Commonwealth than we have seen in a decade. The Independent Fiscal Office’s mid-year forecast showed revenues continuing to outpace estimates and projected a budget surplus for a second straight year.
Because the Senate Appropriations Committee advanced the objective of fiscal restraint in prior years, we were finally able to talk confidently about how far our state’s financial picture had improved. Unfortunately, in the blink of an eye, that all changed. In short, what we have faced this year are the devastating effects of the worst public health crisis in our lifetime. Our bright budgetary outlook quickly turned as the 2nd quarter 2020 became the worst quarter economically in our country’s history.
The ramifications of this pandemic on Commonwealth finances made it impossible to accurately develop a full fiscal year state budget by June 30. Instead, a 5-month interim budget was advanced. This prudent decision allowed us the opportunity to gain a clearer more predictable picture to more accurately project revenue before developing our final 2020-21 spending plan.
Thankfully, by October, greater clarity was matched with renewed confidence as revenue projections had improved by $2 billion compared to the dire shortfalls predicted in May. The improved revenue projections, along with federal support to help finance essential state programs and services, allowed us to pass a balanced Fiscal Year 2020-21 budget without asking our citizens to take on more, while maintaining commitments to support our children and services for our most vulnerable citizens.
Given a projected $4.2 billion shortfall we faced in May, it is remarkable that we closed this year’s budget without tax increases on families and job creators or long-term borrowing. Unlike federal budgeting standards, state constitutional prohibitions on “deficit spending” make long-term borrowing to meet current obligations an extremely disadvantageous budgeting practice. Similar actions by other states in equally stressed fiscal positions have been met with bond rating downgrades, making the future financing of much-needed infrastructure and capital investments in education and community assets more difficult and costly.
While we hope this past year’s financial circumstances continue to improve into the next fiscal year, a clear line of sight for how long this pandemic will last or the full effect it will have on our economy is still elusive. Preliminary estimates under current conditions assuming level funding of core services provide for a $3.5 billion deficit in the upcoming 2021-22 budget.
With that in mind, we must approach the new year with the same caution and fiscal restraint we have this past year. It is paramount that we identify more efficient and effective ways to allocate state resources, including reducing redundancies, while still delivering critical resources to our citizens.
Finalization of the merger of the Department of Corrections with Probation and Parole is an example. This will continue to ensure the efficient implementation of alternative sentencing practices that have already resulted in the first multi-year decline in incarceration rates in decades while increasing public safety. The savings recognized can then be redirected to invest in our education systems and the care of older Pennsylvanians.
Notwithstanding short-term challenges, the importance of continuing to provide Pennsylvania students with every opportunity to develop into the productive engines of tomorrow cannot be forestalled. At the same time, we can meet the increasing needs for vital programs and services to care for our elderly and those with disabilities, including more cost-efficient and individually-focused options that allow them to remain in their homes and communities.
Finally, the pandemic’s enormous economic impact on Pennsylvania businesses will require all levels of government to be vigilant when making financial decisions so as not to further burden them beyond the tremendous stress and financial pain they already face due to the pandemic. We must support fiscal policies which promote sustainability as a pathway not only through this public health crisis, but also so Pennsylvania businesses can flourish for the long term and the state’s economy can grow.
In anticipating the turn of the new year, all Pennsylvanians should be extremely proud of how our collective resolve has once again steered us through the maelstrom of global crisis. It is with this same fortitude, matched with ingenuity which has always defined our great Commonwealth, that state government must advance fiscal policies and initiatives which will help mark our full recovery from this unforeseen pandemic and lead to a brighter and more prosperous future for all Pennsylvanians.
You can also view the above on the Morning Call’s website: https://bit.ly/356MtyX
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