Pennsylvania’s next governor will face a looming budget deficit

In 2019-2020, over 75,000 kids in Pennsylvania were denied a chance to leave their failing schools. Now there will be 30,000 fewer, thanks to a major win for students in this year’s budget.

The budget includes a $125 million expansion in the Educational Improvement Tax Credit — the biggest ever in the program’s history — that will empower more families with scholarships to attend the school of their choice. The previous caps on the program not only denied students better alternatives but turned away $116 million in business donations to the program.

We should do more than applaud this win — we must demand more of it. The wait list for a kid to get out of a failing school and into one of their parents’ choosing should be zero. States like Florida have balanced budgets — where the governor also slashed unnecessary spending — but still have enormous tax credit programs. We can do that in Pennsylvania.

The other bright spot was for job creators in our state, and those we hope to attract. Bravo to lawmakers for finally making long-overdue progress toward reducing the state’s corporate tax rate. In 10 years’ time — assuming all other states’ corporate tax rates stay the same—– we should have one of the lowest in the country. This should stem the tide of lost jobs and wages to business-friendly states like Texas and Florida.

While the wins were significant, the reality is we could have achieved them and had a balanced budget. This would have served working families struggling in today’s economy.

Pennsylvanians are paying $5 a gallon for gas, and the price of hosting a summer cookout is up 17% from last year. Gov. Tom Wolf and lawmakers approved a budget that will cost working families more of our already dwindling disposable income in the future.

I’m not talking about taxes. The newly signed 2022 state budget doesn’t include a tax increase this year, but it does include excessive spending — and in the long run, that will cost us.

The final budget — passed with bipartisan support in the legislature — increases state spending by 10.7%, and spends $3 billion more than state revenues, leaving the next governor with the challenge of a looming budget deficit.

The timing is terrible. Voters across the state and country already believe we’re in the midst of a recession. Purchasing power has plummeted. Inflation is up 9.1% over last year, and real earnings are down. But instead of helping taxpayers by controlling spending, our lawmakers decided to pile on more spending. It’s a problem that Democrats and Republicans alike have contributed to.

Unfortunately, this short-term thinking — spend now, in advance of an election, and deal with consequences later — is the same pattern of spend, borrow, and print money that created the inflation crisis in the first place.

Gov. Wolf originally proposed a budget that would have spent $2.7 billion more than the state’s revenue. The budget that was passed and enacted crams in $300 million more, leaving a massively out-of-balance budget.

For lawmakers to fix this without raising taxes (which they should not do), elected officials will need to cut programs. They don’t like doing that. In fact, they dislike doing it so much that they decided to use one-time dollars to fund at least five programs. These include the State Parks and Outdoor Recreation Program, the Clean Streams Fund, the Whole-Home Repairs Program, COVID-19 Cultural and Museum Preservation Grant Program, the Development Cost Relief Program, and the affordable housing construction grant program — programs that we’re not going to have funding for in future years.

Inflation is still the number one issue on voters’ minds. People don’t like having to pay more money when they already have less in their wallets.

» READ MORE: Tax credit scholarships are a boon for Philadelphia students

The spending binge is easy for officials like Wolf, who will not be facing accountability from voters this fall, but with 228 legislative seats and key committee positions up for grabs this cycle, you’d think lawmakers would be wiser about the burden they’re passing on to us.

Thanks to a booming national economy during the Trump era, Pennsylvania was able to increase revenue, and Gov. Wolf was thwarted in passing any major tax hikes, despite his best efforts. Wolf proposed no fewer than 14 tax increases during his tenure. But this final spending binge is fueled by billions in one-time federal aid that is not sustainable.

“Inflation is still the number one issue on voters’ minds.”

Our next governor and legislature (including new appropriations chairs) will not just inherit this out-of-control spending, but also an expected economic downturn that will lead to further revenue shortfalls. They will have to fix this mess and balance the budget to prevent a tax hike on working families.

Lower taxes, less government, and fiscal restraint are winning issues in any given year. Our lawmakers must gain the political will to consistently pass balanced budgets that protect our paychecks from runaway spending, help kids leave failing schools, and lower taxes to lure more job creators. This, and not unsustainable spending, is the bright future all Pennsylvanians deserve.

Jennifer Stefano is the executive vice president of the Commonwealth Foundation and a fellow at the Independent Women’s Forum.