Budget hearings close, lines drawn over spending growth

Mar. 7—HARRISBURG — The Commonwealth Court's final judgment that Pennsylvania's existing system to fund public education is unconstitutional constitutes an emergency, the commonwealth's budget secretary said Thursday, and demands an emergent response.

Secretary of the Budget Uri Monson said if the General Assembly and Gov. Josh Shapiro don't successfully negotiate terms to meet the constitutional obligation for public education, a state judge rather than elected officials could impose a specific spending directive to bring the funding system into compliance.

"We have been ordered by the Commonwealth Court to address educational funding because how we do it currently is unconstitutional," Rep. Jordan Harris, D-Philadelphia, majority appropriations chair, said.

"It absolutely demands a response with a plan to address the issues raised by the courts," Monson said during a House Appropriations Committee hearing.

Three weeks of budget hearings closed Thursday in the General Assembly. Monson was the final cabinet member to testify before the House and was among the final panelists to testify in the Senate.

Shapiro has proposed a $48.3 billion spending plan from the commonwealth's general fund, the primary operating account, and $125 billion in total spending across all funds. The general fund proposal exceeds projected revenues by about $3.5 billion. Projected spending is more than 8% greater than the current budget.

Among the increases is a plan to spend $1.1 billion more on public education. It's viewed as a downpayment on the adequacy gap between wealthy and poor school districts identified in the education lawsuit.

Judge Renée Cohn Jubelirer ordered the legislative and executive branches of state government to develop a resolution that ensures all students "have access to a comprehensive, effective, and contemporary system of public education."

Monson estimated a collective $6 billion increase across several budgets to meet the court's order. A Democratic-backed plan presented to the Legislature suggests at least $5.4 billion in additional spending across seven years.

Pennsylvania has about $14 billion in reserve accounts — $8 billion in a budget surplus that rolls over from year to year and $6 billion in a Rainy Day Fund intended for emergencies and economic downturns.

Republicans have seized on the five-year projections in Shapiro's budget plan that show a structural deficit with spending outpacing revenues, projecting each fund to evaporate by fiscal 2029. They've pointed to an analysis of the Independent Fiscal Office that estimates the cumulative deficit by that point at more than $24 billion.

Monson said across 25 years, the commonwealth's average revenue growth exceeds 3%. The current growth is projected at 2.1%. He said revenue estimates are very conservative while spending is aggressive. Often, he said revenue collections have exceeded projections.

State lawmakers must vote on the adoption of a single-year budget, not a multi-year plan. Pennsylvania is at a point with its savings, Monson said, that it could afford to invest in programs that have an immediate impact and long-term returns — public education, workforce development, pad-ready building sites, affordable health care and home services.

These initiatives, he said, were developed in response to priorities identified by Pennsylvania citizens.

"There's a lot of need across the commonwealth," Monson said. "We can sit and watch all the things that are problems for us and wait for things to get worse or we can work to fix them."

Minority Appropriations Chair Rep. Seth Grove, R-York, said Shapiro's budget request is among the largest year-over-year increases he's experienced during his tenure in the House. None of the prior plans passed, he said, citing proposals that caused budget gridlock under former Gov. Tom Wolf.

The current year's budget, Shapiro's first, wasn't finalized until mid-December, far beyond the June 30 deadline.

"We've never done that large of an increase year over year. Why introduce something so massive and give a lot of people hope when it's probably not going to come to fruition?" Grove asked.

Monson said the failure to adopt an on-time budget last year haunts him. He pledged that the administration is committed to not only meet the deadline this year but actually beat it. And, he held that the Legislature must invest now in its economy and its citizens to reap rewards in the years ahead.

"Proactive spending, and I know you know this, is cheaper than reactive spending," Monson told Grove.