July 5 – Even with $2.5 billion of the federal stimulus money going into a Rainy Day fund at the state level, how can the Pennsylvania budget have an 8.8% increase in spending?
State Representative Paul Schemel joined Pat Ryan and Michele Jansen recently on First News where they talked about the budget.
Schemel said, “So we’re saying this is a successful budget because we didn’t blow all of it. I don’t share that view but that certainly made it easier to budget this year. Revenues were a little higher last year as we went into the budget year. We weren’t sure how much the government shut downs were going to impact things. The economy has returned although we are very concerned about where it’s going to go. There’s so many people out of work. Decidedly out of work. They don’t want to go back to work and we don’t know how long that will continue.”
The state budget for this year is a little over $40 billion.
Even with the federal stimulus money, that’ an 8.8% increase over last year and if you look at the last two years, it’s an increase of 18%.
Schemel said, “That’s uncontrolled spending. Our real rate of growth was 1.78%. We had an 8.8% increase in spending. We had a 1.78% increase in real growth.”
Some people will say this is one-time money. It’s not a recurring expense.
Schemel said, “But that’s not really true. That’s smoke and mirrors. For example, a state police cadet course. Well that’s a one-time expenditure. Except we do it every year so I guess next year we can not have any new state police. We do that every year. You can’t count that as a one-time expense.”
When you factor in education, the issue becomes really frustrating.
Schemel said, “Republicans will get flayed especially in an election year next year if we don’t spend the same on education. This year we had over $100 million in additional spending, plus another $100 million on top of that for the level up which goes to the 100 poorest school districts. Incidentally the school districts that are usually the least competent to spend money. Like the city of Harrisburg that should be criminally held incompetent for their ability to spend money are getting more. They’re getting rewarded with more money out of this budget.”
Schemel voted against it and feels both sides have as much to blame.
The other caveat here is the federal money we didn’t spend versus the money that was put in the Rainy Day fund are actually two separate things.
Money goes into the General Fund in the state from tax payers or from the federal relief bill and can be allocated in different ways.
But it kind of becomes a shell game. For instance, the money that would have been spent on roads goes into the Rainy Day fund or put elsewhere, like in education.
Jansen said, “That’s what bothers me. People are saying we didn’t give into the Democrats to spend all this money but isn’t it being spent anyway? It’s not like it’s really be saved and used maybe as wisely as people would like to think.”
Schemel predicted, “We’ll blow it next year because what we’ve done is we’ve increased spending 8.8%. So we’ll blow it next year because next year is an election year and oh my heavens, we can’t cut these valuable programs. Even though they’ll say you had an increase effectively of $200 million dollars. Well that was just one time – no it wasn’t. We’ve never decreased spending in education and we never will. Elected officials will never do that because they will get crucified if they do. So you think that was one-time spending? It was not. We will spend 200 million + additional dollars next year. I guarantee it.”
In the example of the Chambersburg School District, they raised taxes without knowing what would happen with COVID relief and then they got money in December that they could do with what they want. On top of that, they got money again in the spring that had strings attached saying they couldn’t use it to reduce taxes.
Why can’t the December money be used to reduce taxes?
Schemel said, “School districts are a black hole of money. I don’t think there’s ever been a school district in the history world that has ever said it has enough money. Every school district will always say it needs more money. They did get a significant amount of money in federal funds.”
The interesting thing about school districts is they budget during the summer and they got the federal stimulus money during the school year. The federal government could track what they were using it for because they were already following the budget and the school district received the money after that.
Schemel said, “With the state, we receive the money and now we budget. So the federal government said here’s the money and here are the strings so we budget those strings into the budget itself. It’s baked in. So we can spend those moneys however we want because we’re able to demonstrate to the federal government oh yeah, we spent those moneys exactly as you told us.”
In terms of reducing the unemployment compensation early to get people back to work, Governor Wolf has said nothing indicating he’s going to do that.
Schemel hears from employers every day that they can’t find employees.
Ryan asked, “How is it that he (Wolf) can’t understand this. This couldn’t be more text book in front of you. Stop funding, stop handing out this candy and people will get back to work. Not only are you handing out other people’s money, you’re getting us further into debt on a country platform. You can see it here. You hear it from business people all over the place. When is the candy supposed to expire?”
It’ll likely end in September.
Additionally, you can look at other states that have taken away the unemployment and low and behold, people have gotten back to work.
Schemel said, “I really don’t know on what argument we aren’t doing that in Pennsylvania.”
Jansen pointed out that Bob Casey is proposing the extra child money be made permanent, where you get a monthly check depending on the number and age of your children.
Schemel said, “Yes, those are popular, but how do you fund them?”
Future budgets are going to be incredibly painful because of this influx of cash we’re seeing from the federal government now.
Mark our words.