Revenue Surplus at Center of Pennsylvania Budget Debate

By Yasmin Tadjdeh | PA Independent

With less than two weeks remaining before the state budget must be passed, the hottest debate is whether the state should spend a $540 million revenue surplus or keep it for a rainy day. 

Some argue the extra money isn’t a “surplus” at all, since the state has nearly $4 billion in unemployment debt and $20 billion in state pension liabilities. 

Senate Republicans want to spend a portion of the revenue surplus to offset certain budget cuts, but House Republican leaders and Gov. Tom Corbett do not want to spend any of the money. 

“Our caucus believes a portion of the surplus can be used in a sustainable, fiscally responsible way to reduce the impact of proposed budget cuts,” said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Chester, who would not comment further on the amount that would be spent and where it would be used. 

Democrats want to spend the entire surplus, plus extra revenue they say the state will take in during next fiscal year.

Democratic Appropriations Committee Chairman Joe Markosek, D-Allegheny, on Thursday called for an additional $1 billion in spending, swallowing up the entire revenue surplus while adding funds. 

“We don't have (an exact) number; we know it's close to a billion. We could even go as high as $1.2” billion, Markosek said. Less than $1 billion in new spending would be a deal-breaker for the minority Democrats, he added. 

Stephen Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, reiterated the Republicans’ popular phrase “revenues over estimate” when asked about spending the revenue surplus, and said that qualifying a $540 million revenue surplus as a legitimate surplus is difficult, given that the state faces billions of dollars in liabilities. 

Sam Rohrer, state director for the Pennsylvania chapter of Americans for Prosperity, a taxpayer advocacy group, agreed that “there is no surplus as long as there’s debt.” 

Pennsylvania owes the federal government nearly $4 billion in unemployment compensation alone, and as of January of this year, the debt has been collecting interest. As a result, businesses are paying $500 million in extra taxes this year.

The state also has more than $20 billion in unfunded pension liabilities and has to repay $800 million that was drained two years ago from a special account used to cover malpractice insurance for doctors. 

The Corbett administration has said the state must manage its fiscal issues with lower spending, not higher revenue. 

State workers weighed in on the issue Thursday afternoon during a demonstration in the state Capitol. About 100 members of SEIU Healthcare Pennsylvania, an affiliate of the Service Employees International Union, took to the Capitol’s Rotunda steps with umbrellas in hand. They danced and sang to “It’s Raining Now,” an original song calling for lawmakers to spend the revenue surplus now, that was set to the tune of the popular 1980s song “It’s Raining Men.” 

“We realize that there is a very large surplus in state funds of about $540 million, and we would like to have our Legislature and our governor use that fund now instead of saving it for a rainy day,” said group spokesman Scott Young, who works at Mount Nittany Medical Center in State College, Penn.