Our Broken Budget Process
By State Representative Seth Grove
Fiscal Year 2024-25 starts in a similar position to Fiscal Year 2023-24: an unnecessary budget impasse. This budget impasse can largely be attributed to an absentee Governor and House Democrats beginning the budget process late. We can only speculate as to why House Democrats began the process in late June: an inability to govern, using the budget deadline as a bargaining chip for more spending, or what they have demonstrated they do best – political gamesmanship?
What cannot be blamed for this impasse is a lack of budget solutions offered from House Republicans.
In April, House Republican Appropriation Committee members offered the Back to Basics plan. The bills in this legislative package aim to assist state government in performing its basic and essential tasks.
Throughout the 2024 budget hearings, we heard from many agencies failing their basic tasks. Committee members kept notes of every agency’s testimony, budget requests, and the past year’s results under the Shapiro administration. House Republicans have drafted thirteen pieces of legislation and identified two existing bills as action items we can do right now to assist the Shapiro administration in getting state government back to basics.
As the Republican Chairman of the House Appropriations Committee, I had planned to offer an amendment to implement Zero-Based Budgeting (ZBB). However, due to the budget process starting late, I withdrew the amendment. For several sessions, House Republicans have been advocating for the urgent need to implement ZBB; what we lacked was a partner in the executive branch to get it done.
I truly believed this was the year we could actually do it because Governor Shapiro himself implemented ZBB when he was a county commissioner, saying at the time, “I believe zero-based budgeting is the most important thing governments can do.”
ZBB requires agencies to justify their spending from the bottom up — not just increase their prior year’s budget spending by default. This process will help us identify each line item’s constitutional and statutory functions. By moving to ZBB, all programs will be reviewed and examined for effectiveness, necessity, and cost/benefit analysis, ultimately leading to the most effective use of valuable taxpayer dollars and a more transparent budgeting process.
This approach will ensure that every dollar spent is justified and contributes to the overall goals of the agency and state government as a whole. ZBB will also ensure that each agency implements any necessary recommendations from the Performance-Based Budgeting Committee and state and federal audits. This is not a budget solution that seeks to indiscriminately cut all agencies and programs such as sequestration – these are targeted, honest spending reviews.
In fact, as evidenced by the experience in Montgomery County, many agencies and programs will actually see an increase in funding. Any reductions came from wasteful and ineffective programs – we should all favor budgeting like this.
We have everything we need to make this a success: a willing partner in the General Assembly, a governor who has successfully done this in the past, and a budget secretary who has also implemented ZBB in the past.
From the very beginning of this session, House Republicans have acknowledged that we have a budget surplus, currently just over $6.83 billion due to one-time Covid-related federal stimulus dollars, but we also have a growing structural deficit. However, House Republicans are not opposed to spending some of the surplus. In fact, House Republicans voted to fund the Governor’s economic development plan known as PASITES from the surplus. PASITES is an example of one-time costs with positive future returns — exactly what we should spend surplus dollars on.
The current budget impasse confirms what we already know: our budget process is broken.
Fiscal Year 2023-24 authorized $45.02 billion in spending. After tax refunds are removed, total revenue reached $43.59 billion. The result of this is a structural deficit of $1.43 billion. While year-to-date expenditures are only $41.97 billion, the remaining $3.05 billion unspent is available for agencies to spend down in future years, which is why the House Republican Appropriations financial brief tracks prior spending.
We are spending more than we receive in revenues, which was only increased by the Covid pandemic, according to the IFO. House Republicans have and will continue to propose nonpartisan solutions to fix our broken budget process — led by Zero-Based Budgeting. Do the Democrats have the courage to join us and actually govern?
Seth Grove represents Pennsylvania’s 196th Legislative District in York County. He is the Republican Chairman of the House Appropriations Committee and has a master’s degree in Public Financial Management from the University of Kentucky.
