Op-Ed: Don’t believe Shapiro’s budget claims

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Gov. Josh Shapiro recently defended his fiscal record. During Pennsylvania’s one and only gubernatorial debate, the governor insisted that (1) he balanced the state budget, (2) Pennsylvania has an $8 billion surplus, (3) he has cut taxes, and (4) Pennsylvania is the only “growing economy in the Northeast.”

Unfortunately, none of this is true. 

For starters, Pennsylvania has a $5 billion budget deficit, created by Gov. Shapiro.

As he has every year since taking office, Shapiro started the budget process by proposing billions in reckless spending. His original pitch called for $53.3 billion in spending and relied on illegally draining $4.6 billion from the Rainy Day Fund.

Apparently, the Rainy Day Fund, the state’s emergency reserves, is what constitutes Shapiro’s purported “surplus.” But treating state savings as a slush fund for the governor’s new, costly projects is beyond worrying.

It’s also illegal. The Rainy Day Fund is a savings account specifically reserved for extreme economic downturns or unforeseen emergencies. Any attempt to raid the fund for new spending – especially without a two-thirds vote by the state legislature – is explicitly forbidden. Instead of tapping the reserves, lawmakers resorted to deferring $2.6 billion in Medicaid payments and clawing back unused appropriations.

One-time gimmicks have papered over the gap. State spending is up 21 percent since 2022 while recurring revenue is up 9 percent. Put differently, more money is going out than in.

The budget Gov. Shapiro signed into law spends $4.8 billion more than revenues coming into the state.

Meanwhile, Shapiro’s taxpayer-funded public relations machine claimed his budget wouldn’t raise taxes. The reality was it would have required statewide tax hikes. The Independent Fiscal Office warned that, if passed, the governor’s plan promised “a broad-based tax increase will be necessary.”

This, of course, runs contrary to the governor’s claims about cutting taxes. He likes to take credit for cutting the Corporate Net Income Tax, but that annual reduction began in 2022, predating his time as governor. His other purported tax cuts offer small, limited rebates, but do nothing to reduce the overall tax rate on property, sales, or income.

Shapiro has made more effort to raise taxes than cut them. Since taking office, the governor has proposed new taxes on corporate income, energy and electricity rates, recreational marijuana, skill games, and telephone bills. Thankfully, most of these haven’t advanced in the state legislature, even in the House of Representatives where the governor’s party holds the majority.

That brings us to Shapiro’s final claim: Pennsylvania is the only growing economy in the Northeast. The governor is touting the commonwealth’s mediocre 13th-place finish on CNBC’s list of top states for business – not even in the top ten. Being the best in a sluggish region isn’t the same as having a thriving economy.

A broader look tells a different story. U.S. News & World Report ranks Pennsylvania 40th overall, 42nd in fiscal stability, and fourth-to-last for its economy. Federal data comparing 2015 to 2026 show Pennsylvania ranks 31st in employment growth, 46th in personal income growth, and 39th in population growth.

Moreover, Pennsylvanians have voiced their disapproval by fleeing the state. The commonwealth has lost more residents than it has gained through state-to-state migration. Census data show that, since 2020, Pennsylvania has lost 55,000 residents to other states; meanwhile, Texas and Florida have gained nearly 1.6 million. Over the last decade and a half, a steady trickle of outmigration has forced Pennsylvania to lose four congressional seats in the last three Census reapportionments. All things being equal, we will lose another one by 2030. 

Taken together, the governor’s record is clear. Based on his past budget proposals, his strategy seems to be: overspend, drain our emergency savings, and create a deficit with no way to pay for it. Pennsylvanians deserve better than what amounts to a meaningless victory lap at best, gaslighting at worst. 

Instead of celebrating mediocrity, Shapiro must pursue reforms that attract businesses and families, such as empowering students with educational choice, unleashing Pennsylvania’s energy industry, cutting red tape and taxes, and reining in deficit spending.

Until he does, Pennsylvania will keep falling behind – no matter what the governor says on a debate stage.