Gov. Wolf’s Sound Fiscal Management Results in Budget Proposal That is Balanced Responsibly with Recurring Revenues
February 23, 2022
Following the announcement of his budget proposal and the start of budget hearings in the legislature, Governor Tom Wolf today said his budget plan is responsibly balanced with recurring revenues and builds in a multi-billion-dollar surplus for his successor.
“We have the opportunity to not only make meaningful, reasonable investments in our commonwealth, but we can do it using steady revenues and still have a surplus and healthy Rainy Day Fund. My budget plan responsibly balances the books using reliable revenues and with future revenue projections in mind,” Gov. Wolf said. “It’s critical that we soundly invest in Pennsylvanians, and that’s why my proposal invests in our classrooms, our workforce and our economy — the areas that I have prioritized throughout my administration. Making these smart investments now will ensure that our economy continues to grow and thrive, without jeopardizing future spending.”
Through sound fiscal management, and by paying our bills, Governor Wolf’s administration has put Pennsylvania back on track. Over the past seven years, the governor has turned a $2-3 billion structural budget deficit into a $2-3 billion budget surplus and built our Rainy Day Fund to more than $2.8 billion — more than 12,000 times what it was when he took office. Governor Wolf will be the first governor since Dick Thornburgh, who left office in 1987, to turn over a budget surplus to his successor.
The budget plan is balanced based on available recurring General Fund revenues and does not rely on one-time funding sources. If the governor’s proposed budget was implemented in its entirety, there would still be a $3.3 billion surplus at the end of Fiscal Year 2022-23, which would be on top of the $2.87 billion that would remain in the state’s Rainy Day Fund.
Revenues continue to show healthy growth. As of Wednesday, our General Fund balance, per the PA Treasury, is $9.2 billion. Further, the Department of Revenue released its January collections, which were 11.7% over estimate. The past seven years have shown a steady tax revenue increase of $1.3 billion to $1.4 billion a year.
The administration relies on Moody’s Analytics and IHS Markit as our resources for revenue forecasts and risk management, which are both nationally recognized economic forecasting firms.
“We not only have the means to support my budget plan but we have the data and the forecasts to show we can do this responsibly,” Gov Wolf said. “To deprive Pennsylvanians by short-changing our state programs and services for the sake of hoarding revenues is irresponsible and fiscally unwise.”
The governor has proposed using the remaining $2.2 billion in ARPA dollars for one-time expenditures to support pandemic-related impacts, including a $1.7 billion plan to support hardworking Pennsylvanians.
The governor has also proposed reducing the corporate net income tax rate from 9.99 percent, among the highest in the nation, to 7.99% with an eventual path to 4.99 percent as quickly as possible, will make Pennsylvania more competitive and expanding the tax base to level the playing field for all businesses.