PA Budget Talks Hit Half-Time

Member Group : Center Square

 (The Center Square) – Halfway through the state’s annual budget talks, the governor’s administration appears unified around a single strategy: spend money to make money.

Gov. Josh Shapiro’s $44.4 billion proposal invests in career and technical education, sustaining pandemic-era investments in public assistance programs, tax incentives for in-demand careers and boosted support for public schools – all to bolster a shrinking workforce that will, if left unaddressed, drive Pennsylvania’s checking account into the red by billions of dollars.

In total, Shapiro wants to spend roughly $50 billion the state has on hand over the next five years, from recurring revenues and a $5.6 billion rainy day fund. His administration believes the upfront investment will pay out in the long run, boosting Pennsylvania’s pool of workers to support the “silver tsunami” of retirees that lies ahead.

This isn’t a dynamic that caught state officials off-guard, and the COVID-19 pandemic only reinforced it, they say. The Independent Fiscal Office’s most recent analysis concluded that two-thirds of the 105,000 workers lost since 2019 were residents that retired.

The remaining third left for reasons “harder to quantify,” said IFO Executive Director Matthew Knittel. Some possibilities, he said, include more families choosing homeschooling or cyber charters; workers staying home to care for elderly parents; post-pandemic lifestyle changes that prioritize leisure; and excess savings from various federal stimulus programs.

“Overall, we believe that most of this underlying dynamic would have occurred even without COVID,” he said. “At this point, it’s unknown whether labor force participation rates will revert to pre-pandemic levels.”

All signs point to no, so far. But the pandemic did provide a glimpse into what more money could do to tackle the most immediate challenge facing the Department of Aging: keeping seniors fed.

Acting Secretary Jason Kavulich said additional support could cover the flexibilities afforded to the state using federal stimulus funds and regulatory waivers that have recently expired. These combined measures covered the cost of meals for 21 million residents between March 2020 and August 2022.

Allowing seniors to age in place not only reduces the financial strain on state programs, but also provides “the dignity and respect they deserve,” he said.

The money for these programs, however, won’t be there unless the administration’s other policy proposals deliver returns.

The Department of Human Services – which focuses on supporting working-age residents – said labor shortagesinaccessible childcare, and the end of federal expansions for Medicaid and food stamps all undermine the state’s efforts to raise workforce participation rates – and by extension, tax revenues.

“It’s no secret that human service programs, like many others, are experiencing workforce challenges,” said Brandon Cwalina, a department spokesman. “This was a concern before COVID-19, and the pandemic has exacerbated the greater focus necessary to ensure our workforce can meet the needs of Pennsylvanians.”

Cwalina said the department is focused on raising wages and increasing benefits to attract and retain workers, but it’s a struggle that’s been decades in the making.

And, as officials from the Pennsylvania’s colleges and universities warn, it will only get worse. Tuition rates at 10 state-owned universities outpace systems in New York and New Jersey, and declining enrollment drives those costs higher, The Center Square previously reported.

Dwindling career opportunities and unaffordable education only accelerate this economic spiral, leaving many lawmakers worried about the future and the viability of Shapiro’s proposals.

“It’s something that is on our minds here in the General Assembly is how we use substantial one-time surplus and rainy day funds and it’s not even raining,” House Appropriations Chairman Seth Grove, R-York, said recently. “So, I think we all realize that a bad economy means these numbers – it’s a bigger problem.”

Regional Editor

Christen joins The Center Square as its Pennsylvania News Editor and brings with her more than a decade of experience covering state and national policy issues from all angles. She’s a Pennsylvania State University alumna and has been published in the The Washington Examiner, the Pittsburgh Post-Gazette, RealClear and Broad+Liberty, among others.