Pennsylvania’s Budgetary Déjà Vu

Pennsylvania’s budget battle feels oddly familiar – like we’ve been here before. Our sense of déjà vu is valid: The 2024–25 fiscal battle looks strikingly like last year’s.

Last year, Pennsylvania lawmakers finished the budget nearly six months after the fiscal year began July 1. Once again, they will likely miss this deadline.

And at center stage, yet again, is the Lifeline Scholarship initiative, or the Pennsylvania Award for Student Success (PASS) Scholarship Program. This program would offer scholarship accounts to low-income students attending Pennsylvania’s worst schools, giving families an option and ability to afford a better education at a private school.

Last year, Pennsylvania House Democrats’ refusal to adopt Lifeline Scholarships caused the budget stalemate.

One year later, this caucus is as dogmatic as ever. House Democrats recently passed legislation proposing a $6 billion increase in basic education funding. Despite Pennsylvania’s record-breaking $21,985 per-pupil spending (seventh in the nation), House Democrats insist on throwing money at the problem without accountability, while taking away options for families.

Meanwhile, Gov. Josh Shapiro appears to be doing what he did last year: very little. During last year’s budget fight, Shapiro’s hands-off approach allowed negotiations to falter.

When push came to shove, Shapiro buckled under pressure and vetoed Lifeline Scholarship funding in the 2023–24 budget. Since then, he’s repeatedly called the proposal “unfinished business” and indicated his support. But he’s also been avoiding serious negotiations in the Capitol to instead travel the state, campaign style.

If there were a time to finish said business, now would be that time. Though the debate about Lifeline Scholarships isn’t new, the momentum behind the proposal has reached a new level of enthusiasm.

Support for this student-first program has never been higher. Nearly eight in ten Pennsylvanians support Lifeline Scholarships. The program’s popularity has even drawn national attention, including Jay-Z and his organization, Roc Nation, organizing a grassroots campaign to promote the proposal.

So, is this the year that we finish this business? Or will Shapiro allow another campaign promise to remain unfulfilled?

Thus far, Shapiro isn’t off to a good start. Like last year, the governor is overpromising and underdelivering. To fund his overzealous $48.3 budget proposal (a 7% increase from the previous year), the governor erroneously brags about a $14 billion budget surplus.

There’s one problem: Such a surplus doesn’t exist. Nearly half of this “surplus” is invested in the state Rainy Day Fund, which lawmakers cannot legally use to fund new projects. The rest is one-time funds, resulting in part from federal pandemic-related aid.

Pennsylvania’s projected budget is far less rosy. Indeed, Shapiro’s proposals would create a $3 billion deficit this year that would then grow to $6 billion in a few short years.

To make up the difference between revenue and Shapiro’s spending, lawmakers would need to raise taxes – about $2,000 annually for a family of four. Such a tax hike couldn’t come at a worse time for the Keystone State.

Pennsylvania’s economy continues to lag, and job growth has been stagnant. Pennsylvania finally returned to pre-pandemic employment levels but still has an anemic 1% job growth over the last four years. In contrast, Utah and Idaho have led the way with more than 11% job growth.

Inflation also persists. The Consumer Price Index is up 8.5% over the past two years and a 19.3% increase in prices since January 2021.

Because of this uncompetitive economy, Pennsylvania has suffered from an outmigration of residents in 12 of the past 13 years. Tens of thousands of residents leave Pennsylvania for greener pastures in economically competitive, fiscally responsible states, such as North Carolina, Florida, and Texas.

These aren’t new problems.

In fact, Shapiro campaigned to address these challenges – promising tax relief, removing regulatory red tape, and empowering families with educational choice.

Most of these campaign promises remain unfulfilled, and Shapiro has struggled to work with the legislature to deliver substantive policy change.

To stop recent history from repeating itself, Shapiro must avoid his previous shortcomings to get stuff done – namely, pressuring lawmakers to reduce taxes, reduce the regulatory burden on businesses, and expand educational choice.

Otherwise, Pennsylvanians can expect another year of déjà vu.