No tax dollar collected, held or spent by state government belongs to the government. The money belongs to the people who entrust elected officials to be fair stewards of their money.
With this thought in mind, a group of House members – Reps. Seth Grove (R-York), Dawn Keefer (R-York/Cumberland), Andrew Lewis (R-Dauphin) and Tim O’Neal (R-Washington) – unveiled today a package of bills to strengthen the financial management of the Commonwealth.
“As proposed, our legislation would reduce state borrowing, improve our credit and strengthen the Commonwealth’s Rainy Day Fund,” said Grove, whose House Bill 1988
is included in the package. “My legislation addresses cash flow problems the state faces each year by moving money in 17 special funds back online into the General Fund.”
Each year, the Pennsylvania Treasury is tasked with loaning the state money to cover General Fund expenses These loans carry interest, which is ultimately paid by taxpayers, and harms the state’s credit rating. In November, $400 million was loaned to the state to pay for expenses. Without the cash infusion, the General Fund would not have been able to cover expenses until April 2020.
By moving funds back into the General Fund, as Grove proposes, state government would not need to borrow its own money to meet General Fund obligations.
To ensure the state is prepared for an economic downturn and to shore up its savings account, O’Neal’s House Bill 1989
would add an amendment to the state Constitution to require the state treasurer to transfer all surplus funds into the Rainy Day Fund. This saving’s plan would continue until the total amount in the Rainy Day Fund is equal to 20% of all revenue collected by the Commonwealth. In order for the money in the Rainy Day Fund to be spent, a 2/3 vote of the General Assembly is required.
“It is vital for us to meet our financial obligations in both good times and bad,” O’Neal said. “This proposed constitutional amendment would better prepare the state when a downturn occurs. In addition, my proposal would require greater thought before using Rainy Day Funds. As it should be, if approved in two consecutive legislative session, the voters would have the final say in whether this addition is needed.”
To remove politics from the budgeting process and accurately predict the Commonwealth’s financial situation, Lewis’ House Bill 1990
would establish a collaborative process by creating a Council on State Finances. The current budgeting process is subject to political whims, which have sadly been deemed necessary to get the needed votes to pass a “balanced budget” the governor will sign.
“Tax dollars are not ‘Monopoly money’ to be used indiscriminately, and treating them as such is disrespectful to taxpayers,” said Lewis. “House Bill 1990 would require an unbiased and thorough evaluation of Pennsylvania’s financial situation be taken before budget negotiations intensify.”
In order to rein in shadow spending through special funds, which aren’t accounted for in the General Fund, Keefer’s House Bill 1991
would amend the Commonwealth’s Constitution to prevent the creation or use of special funds.
“This form of offline spending is simply disingenuous to taxpayers. During the 2017-18 fiscal year, General Fund expenditures were $31.9 billion which constituted 63% of the Commonwealth’s total operating budget of $84 billion,” Keefer said. “This form of budgeting hides the true cost of the budget from taxpayers and even lawmakers.”
The bills are in the House State Government Committee.
Representative Seth Grove
Representative Dawn Keefer
Representative Andrew Lewis
Representative Tim O’Neal
Pennsylvania House of Representatives
Media Contact: Greg Gross