Central PA News

The budget proposal for the fiscal year 2025-26, amounting to $51.47 billion, was presented by Governor Josh Shapiro today. The proposed budget marks an increase of 7.5% over the current fiscal year's budget. Representative Perry Stambaugh from the Republican Party (Perry/Juniata) criticized the plan, stating it fails to address the economic challenges faced by Pennsylvania's families and small businesses.

Stambaugh expressed concerns: "The governor’s spending plan isn’t rooted in reality. No reasonable person thinks that level of spending could possibly be healthy for Pennsylvania’s future.” He highlighted what he saw as the lack of effort to address Pennsylvania's structural deficit or to make the state's policies competitive with those of neighboring states such as Ohio and West Virginia.

The Pennsylvania Independent Fiscal Office (IFO) has forecasted a financial deficit of $3.675 billion for the ongoing 2024-25 state budget, with projections indicating a rise to $4.667 billion in the next fiscal year. This deficit is expected to keep growing, potentially reaching $6.5 billion annually in the subsequent years.

Efforts to bridge this financial gap involve drawing from the General Fund surplus, which began at approximately $8 billion when Governor Shapiro assumed office in January 2023. The IFO reflected concerns that this surplus will be exhausted by 2026. Additionally, $7 billion from the Rainy Day Fund could be accessed, leading to its depletion by the 2026-27 fiscal year. Stambaugh pointed out the added burden of the nearly $70 billion in unfunded pension obligations, potentially increasing expenses even further. “What’s next after that?,” Stambaugh queried, suggesting tax increases as a possible future measure.

While the budget proposal is currently under review, Stambaugh remains hopeful that it will lead to a collaborative effort to reshape Pennsylvania's economic path. “When it comes to the 2025-26 PA budget, I am always hopeful our impending fiscal crisis will force a long-overdue, concerted effort by all parties to change the Commonwealth’s economic trajectory," Stambaugh commented.

Governor Shapiro presented his budget plan to the General Assembly, and the state House and Senate will commence hearings soon to review the proposal before the fiscal year begins on July 1.