In the first of what will be three weeks of public hearings, the Pennsylvania Senate’s Appropriations Committee began work on the 2023-2024 budget Monday.
The committee is considering Gov. Josh Shapiro’s $45.8 billion proposal to increase state spending by more than $1.3 billion. The focus for the first day was on revenue estimates and the health of the Rainy Day Fund as the committee grilled Independent Fiscal Office Director Matthew Knittel. Knittel said uncertainty at the national level, including banking instability, debt ceiling debates in Washington D.C., and pending challenges to student loan forgiveness, add to the difficulty in making economic forecasts.
State Sen. Scott Martin (R-13), the committee’s chair, and other members voiced concern over projections that the governor’s budget would create annual structural deficits of more than $2 billion annually for the next five years. Under those conditions, the state’s Rainy Day Fund, which sits at $5 billion, would be almost completely depleted by 2027-2028, committee members said.
Economic experts say states like Pennsylvania should maintain a Rainy Day Fund at more than $5 billion.
Committee members also asked about the Regional Greenhouse Gas Initiative (RGGI) and its impact on the state’s economy. Knittel said the RGGI would mean hundreds of millions in new energy taxes, and that the state’s participation in the program, as well as the resulting energy taxes, would make it more difficult for the state to attract and retain jobs, and that consumers would bear the brunt of the tax increases.