Can Other Funds Help Balance the State Budget?

The total operating budget for the state exceeds $80 billion. In addition to the $32 billion General Fund, the “shadow budget” includes:

• $28.7 billion in federal funds,
• $4.7 billion in special funds, and
• $15.3 billion in other state funds.

Lawmakers must prioritize all that spending.

In recent years, spending has increasingly shifted offline, from the General Fund into 150-plus other funds. Indeed, since the 2000-01 fiscal year, spending from other funds has grown a whopping 199 percent (the General Fund growing “only” 61 percent in the same time).

As a result, the state operating budget represents about 12.1 percent of Pennsylvania’s personal income, up from 10.7 percent in 2000 and 8.6 percent in 1970.

Prioritizing these other funds would allow lawmakers to balance the state budget without taking more from working families.

According to the latest numbers from the State Treasurer, these state funds have nearly $11 billion in the investment pool—which is how the Treasury could “loan” $750 million to the General Fund—and more than $72 billion in total fund balances.

Bringing some of these funds back online, and using just a fraction of the excessive fund balances, would allow the state to pay back the $1.5 billion General Fund deficit—the result of both a revenue shortfall and Gov. Wolf spending $400 million more than was appropriated last year, despite facing a deficit.

Secondly, prioritizing spending from this shadow budget would create “recurring revenues” to the General Fund, to help bring the current year’s budget into balance. The Commonwealth Foundation identified more than $3 billion in other funds (and tax credits) in the shadow budget that need to be reexamined before asking more from taxpayers. This $3 billion in shadow budget spending greatly exceeds the $600 million needed to close the budget gap.

The choice for lawmakers should be clear: Prioritize spending from all sources, bringing other funds back online, or impose broad-based taxes on working families, destroying jobs in the process.