Budget Secretary Monson Defends Shapiro Plan to Spend Part of Pennsylvania’s Surplus

Peter Hall | Pennsylvania Capital-Star•

Pennsylvania Budget Secretary Uri Monson speaks during a House Appropriations Committee hearing on Thursday, March 7, 2024.

Gov. Josh Shapiro’s top fiscal strategist defended proposals to invest some of Pennsylvania’s $14 billion surplus in education, infrastructure and people and borrow another half billion dollars to prepare the commonwealth for new industry.

Fielding questions from House Appropriations Committee members on Thursday, Budget Secretary Uri Monson said Shapiro’s $48.3 billion budget proposal abandons a bunker mentality in exchange for investments in prosperity.

"This is not about what we’re spending. I prefer to think of budgets as what we’re buying,” Monson said during the final day of budget hearings in the House.

Shapiro’s spending plan touts more than $1 billion in new money for Pennsylvania public schools, an overhaul of the state’s higher education system, investment in public transit, expansions of social safety nets and reinforcement of public safety and emergency preparedness programs.

GOP lawmakers have criticized the budget as reckless and unsustainable, taking aim especially at its drawdown of the general fund balance and requiring future withdrawals from the state’s rainy day fund.

Formally called the budget stabilization reserve fund, state law requires that the fund be tapped only in emergencies or economic downturns and not to begin new programs, state Rep. Louis Schmitt (R-Blair) said.

"What is the projected emergency in fiscal year 26-27 that will cause us to take almost $3 billion out of the rainy day fund?” Schmitt asked.

Monson replied that the budget projects "very conservatively” on revenues and aggressively on expenditures, adding that he did not accept the premise of Schmitt’s suggestion that the spending proposal was reckless.

"The only thing that we’re asking for you … is to vote on a single year budget. And in that year’s budget, we would still end the year with $11.5 billion in surplus funds,” Monson said before Schmitt shouted over him, claiming that "In a few years, Pennsylvania will be broke.”

State Rep. Joe Webster (D-Montgomery) said the conservative fiscal policies of the last 40 years have had negative consequences for the state.

"I would argue … that these ideas have basically starved public education, and we’ve starved infrastructure and transportation and we’ve starved health care and community services. And we’ve even starved veterans benefits,” Webster said.

"We have an inflection point that the governor has taken advantage of, and it’s pretty exciting to me … this inflection point gives us the chance to invest in Pennsylvania,” Webster said.

Monson said the significant surplus available is an opportunity to invest.

"We can think of it as sitting in a bunker surrounded by a stash of canned foods … waiting for supplies to run out,” Monson said. "Or we can take what we’ve saved and … we can proactively invest in ourselves, our community, we all continue to prosper.”

Investing in an aging population in ways that allow them to remain in their homes and investing in children to make them part of the workforce and keep them away from the justice system is good fiscal policy, Monson added.

"Those are actually good investments that have compound interest, which we don’t even account for in our estimates,” he said. "We can either make the future we want, or we can wait around for the world to end.”

Monson also spoke about the inclusion of a $500 million bond issue to pay for an expansion of the state’s SITES Fund, which is used to pay for industrial site preparation to provide construction-ready infrastructure to attract new businesses.

"The single biggest issue we hear about is you don’t have places to go for us to go that are ready,” Monson said, noting that neighboring states including Ohio and New York are able to show prospective businesses construction-ready sites "We have good places but they’re six months away from being ready, 12 months away from being ready.”

Rep. Zachary Mako (R-Northampton) asked Monson why the proposal is to borrow the money rather than asking the General Assembly to appropriate $500 million.

"When I see something that needs a lot of upfront money which will have payoff down the road, I try to when I think about it I try to match a financing approach to the program. And that matches better in my view. It aligns with the goals of the program,” Monson said.