Recently, I submitted an op-ed to the Morning Call, detailing the state’s improved budget position and possible future fiscal challenges. Overall, because of tight fiscal stewardship and an expanding economy, we are in a much better financial position today than we were just a short few years ago. My article is below in its entirety.
Entering the third decade of a new millennium, probably the best way to encapsulate this transition is “What a difference a decade makes.”
During the past 10 years, Pennsylvania, like many states, experienced its most challenging fiscal period since the Great Depression. Historic declines in tax revenue resulted in enormous deficits requiring many programmatic sacrifices to achieve fiscal balance.
Now, thanks to years of financial discipline demanded by the Senate Appropriations Committee, coupled with improvements in the state’s economy, the commonwealth’s fiscal position is considerably stronger. For the first time in over 10 years, 2018-2019 actual revenues were ahead of official estimate by $883 million, and the 2019-2020 budget was adopted with a surplus of more than $300 million.
The current state budget is balanced without tax increases and controls spending to 1.8% over the prior year, less than the rate of inflation. Despite its overall austerity, the budget increases support for essential services to seniors, families and citizens with disabilities, promotes workforce development efforts and bolsters education spending at all levels.
This is encouraging as we begin a new decade and capitalize on opportunities ahead of us. However, notwithstanding this progress, the commonwealth’s projected spending trends continue to outpace our revenue capacity. Furthermore, Pennsylvania is poorly positioned to anticipate an inevitable future slowdown in our economy.
Committing the full surplus to the Rainy Day Fund was an important step. But with our reserves currently only 10% of rating agency recommendations to promote stability, we must do more.
To ensure efficient allocation, we must continue to identify fiscal deficiencies in administration of programming not only to eliminate duplication but ensure cost-effective execution of necessary functions.
Consolidating the Department of Human Services and the Department of Health will allow for more efficient administration of programs with common objectives and better align regulatory responsibilities with program execution. Finalizing the merger of the Department of Corrections with Probation and Parole will ensure long-term, efficient execution of alternative sentencing practices, which have resulted in the first multiyear decline in incarceration rates in decades while increasing public safety.
With seniors being Pennsylvania’s fastest-growing demographic and with growing waiting lists for services by citizens with disabilities, increased focus on community-based long-term care services has been essential. We expect this to continue through the next decade with the statewide roll-out of community-based managed care in long-term care. This effort will allow more Pennsylvanians to receive the care they require in settings they prefer while reducing Pennsylvania’s long-term care financial burden. With average caseloads and inflationary growth rates of over 8% per annum, this alternative delivery model is paramount over the next decade to ensure fiscal sustainability.
Corresponding efforts to ensure efficiency, the General Assembly is currently in a five-year implementation period of a new performance measurement system. Collaborating with the governor, this initiative will evaluate programmatic spending by departments against outcomes-based objectives. Completed evaluations have resulted in both reforms and elimination of several longstanding tax credit programs.
With fiscal stewardship, the years ahead can focus on maximizing the value of key assets to promote growth and opportunity. Recognizing the importance that our state’s world-class higher education sector will play in Pennsylvania’s future competitive position, a Higher Education Funding Commission, which I chair, was created.
The commission will hold hearings throughout the state during 2020 and will consider factors such as per institution operational costs, school/student performances, affordability, program market relevance, student need and geographical capacity in developing a new formula to distribute higher education funding. When adopted, this new methodology will be structured to promote the greatest overall success of our institutions and the students they serve.
Given market demands, the highest public sector priority to promote commercial success must be the technical skills and competencies of Pennsylvania’s unmatched workforce. In recognition of this reality, the current fiscal plan increases our commitment to workforce development, job placement and training. Funding increased for Career and Technical Education and Equipment Grants, colleges of technology, programs that assist job seekers obtain the resources they require to attain employment and funding to offers grants and loans to support business expansion and job growth.
Building on these investments over the next decade will have proven results in preparing our job seekers for quality, family-sustaining employment.
Unfortunately, as Pennsylvania is unmatched in workforce legacy and potential, our state continues to be unrivaled in its oppressive cost to operate, maintaining the country’s highest corporate income tax rate. Collaboration involving business and labor leaders will continue over the next decade to reform our business tax structure to eliminate policies discouraging investment.
These efforts, along with the provision of more site-based, locally governed initiatives proven to revitalize the economic condition of our most challenged communities, will provide for a comprehensive platform to expand economic opportunities throughout our great commonwealth.
In the wake of a decade of extreme fiscal challenge, all of state government must work together to continue fiscal policies that promote sustainability. Such collaborative, responsible action over the next decade will provide opportunities to invest in the future and pave a path of promise and opportunity for all Pennsylvania citizens.
-Pat Browne, R-Lehigh, is the Pennsylvania state senator representing the 16th District and chairman of the Senate Appropriations Committee
You can also view the article on the Morning Call’s website: https://bit.ly/38h5WMP
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