As Pennsylvania’s July 1 fiscal deadline looms, Governor Josh Shapiro is pushing a $51.5 billion budget that, at first glance, looks responsible. It doesn’t raise income or sales taxes, boasts a $2.5 billion increase in Medicaid, and adds $800 million for education. Sounds like progress, right?
Look closer. Shapiro’s budget relies heavily on $4.5 billion in reserve funds to balance the books—a move that, while politically convenient, virtually guarantees tax hikes or painful cuts in the years ahead. It’s a textbook case of fiscal misdirection: increasing permanent spending while pretending it won’t eventually cost anyone anything.
One-Time Cash, Long-Term Commitments
The problem isn’t just the spending—it’s how it’s funded. Rainy day funds and surplus cash are one-time revenues. Using them to cover recurring costs like Medicaid or public school funding is financially reckless. Once that money is gone, the commitments remain, and lawmakers will have only two choices: raise taxes or make unpopular cuts.
Shapiro is gambling that future revenues—from legal marijuana sales and the taxation of slot-style “skill games”—will materialize quickly and generously enough to sustain these expansions. But those proposals are still entangled in political and legal uncertainty, with the Senate skeptical of both their feasibility and fiscal impact.
Meanwhile, the state’s robust reserve—currently around $10.5 billion—would shrink by nearly half under Shapiro’s plan. Republican lawmakers are rightly concerned that this is not sustainable. Senate GOP leaders, including Kim Ward and Scott Martin, have even floated a stop-gap spending resolution to avoid rushing into a structurally unbalanced budget.
Fiscal Shell Game
This isn’t just political jockeying—it’s about basic financial stewardship. According to an analysis from the Commonwealth Foundation, Shapiro’s plan would create a structural deficit of up to $4.65 billion. Projections suggest that to close that gap in the future, Pennsylvania families could face tax increases equivalent to $1,900 per household or even a 52% hike in income tax rates.
The governor’s defenders say tapping into reserves is justified to fund long-overdue investments. But budgeting isn’t about short-term wins—it’s about long-term viability. If those reserves are exhausted by 2028, as some analysts predict, Pennsylvania will face an even more painful reckoning: either break promises made to schools and healthcare recipients or raise taxes on working families.
Kicking the Can
Governor Shapiro’s budget may win applause today, but it risks setting a trap for tomorrow. We should not mistake temporary solvency for sustainable governance. If you build a house with borrowed bricks, you may have a structure, but it won’t stand for long.
The prudent path forward is clear: align spending increases with recurring revenue, stop relying on speculative income sources, and preserve reserves for actual emergencies, not political convenience. Anything less is just kicking the fiscal can down the road.
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