{"id":3867,"date":"2026-07-30T16:12:57","date_gmt":"2026-07-30T16:12:57","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=3867"},"modified":"2026-07-30T16:12:57","modified_gmt":"2026-07-30T16:12:57","slug":"did-pennsylvania-really-balance-its-budget","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=3867","title":{"rendered":"Did Pennsylvania really balance its budget?"},"content":{"rendered":"
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Pennsylvania\u2019s newly enacted budget has been described as balanced.\u00a0\u00a0Legally and technically, that may be true, but economically, it is not.\u00a0Far from being balanced, it is an incredible masterpiece of financial deception.<\/p>

Read more Dr. Fauci takes the Fifth UPDATED<\/a><\/p>\n

The Commonwealth\u2019s 2026\u201327 budget is a troubling example and should become a gold standard in how to manipulate a budget with few the wiser \u2014 until it is too late.<\/p>\n

It relies on delayed Medicaid payments, one-time transfers, redirected gaming revenues, and a new pension obligation that is being separated from the normal employer contribution process.\u00a0\u00a0Each decision may have an explanation.\u00a0\u00a0Taken together, however, they create the appearance of financial stability while pushing substantial costs into future years.<\/p>\n

The most obvious example is the decision to delay Department of Human Services payments.\u00a0\u00a0Pennsylvania is postponing two monthly Medical Assistance payment cycles \u2014 one in the prior fiscal year and another in the current fiscal year.\u00a0\u00a0Each delayed payment is approximately $1.32 billion.\u00a0\u00a0Together, they create $2.64 billion of temporary budgetary relief without considering the impact on those not paid!<\/p>\n

Nothing was saved.\u00a0\u00a0In fact, an illusion was created that the budget was miraculously balanced.\u00a0\u00a0Using that logic, perhaps all payments for 2026 should be delayed by one year, and then cut the tax rate to zero!\u00a0\u00a0Absurd!<\/p>\n

A state budget is prepared under statutory budget rules.\u00a0\u00a0The Commonwealth\u2019s audited financial statements, however, must follow governmental accounting standards.\u00a0\u00a0If a Medicaid obligation has been incurred before the end of the fiscal year, it may need to be recorded as a liability even if the cash payment is delayed.\u00a0\u00a0The payment schedule can change.\u00a0\u00a0The underlying cost cannot.<\/p>\n

The Commonwealth\u2019s own Independent Fiscal Office estimates that spending without the payment delay would be approximately $52.17 billion \u2014 not the $50.85 billion shown in the enacted budget.<\/p>\n

That difference should be plainly explained to taxpayers and future bond investors to prevent allegations of fraudulent presentation of the Commonwealth\u2019s financial position.<\/p>\n

The larger concern is the structural deficit.\u00a0\u00a0The Independent Fiscal Office estimates that Pennsylvania has a structural deficit of approximately $5.03 billion.\u00a0\u00a0That means recurring expenditures exceed recurring revenues by more than $5 billion even during a relatively stable economy.\u00a0\u00a0The gap equals roughly 10 percent of annual General Fund revenue.<\/p>\n

Pennsylvania currently has a substantial Rainy Day Fund.\u00a0\u00a0That is an important financial strength, and the Commonwealth deserves credit for rebuilding it.\u00a0\u00a0But a reserve is not a substitute for a balanced operating plan.<\/p>\n

The risk becomes far more serious if Pennsylvania enters a recession.\u00a0\u00a0During a downturn, personal income tax, sales tax, corporate tax, and investment-related revenues may decline.\u00a0\u00a0At the same time, demand for Medicaid, unemployment assistance, and other safety-net programs increases.\u00a0\u00a0At the same time, falling investment markets could weaken the funded position of the Commonwealth\u2019s two major pension systems.<\/p>

Read more Does U.S. national security actually exist?<\/a><\/p>\n

Pennsylvania\u2019s budget also approved a cost-of-living adjustment for certain retirees who retired before July 2001.\u00a0\u00a0Helping them is understandable and compassionate.\u00a0\u00a0But compassion does not eliminate cost.\u00a0\u00a0Once approved, the COLA likely becomes constitutionally guaranteed.<\/p>\n

The total annual obligation may approach $188 million.\u00a0\u00a0The unusual feature is how that cost will be funded.\u00a0\u00a0The legislation directs that gaming revenues be used to make the payments.\u00a0\u00a0This may reduce the appearance of pension cost in employer contribution rates, but it does not reduce the pension liability.\u00a0\u00a0It merely places the obligation somewhere else.<\/p>\n

That \u201csomewhere else\u201d is also important.\u00a0\u00a0The gaming revenues being redirected have supported Local Share and Commonwealth Financing Authority programs used for water systems, sewer projects, roads, public safety, community facilities, and economic development.\u00a0\u00a0When those funds are diverted to pension payments, local governments may receive fewer grants.<\/p>\n

The Commonwealth\u2019s obligation does not disappear.\u00a0\u00a0The cost may simply move to counties, municipalities, and local property taxpayers.\u00a0\u00a0Local governments may have to delay projects, increase taxes and fees, borrow additional money, or defer maintenance.\u00a0\u00a0Deferred maintenance, of course, usually becomes more expensive maintenance later.<\/p>\n

Every financial decision has a cost.\u00a0\u00a0Almost always, the people who ultimately pay that cost are not the people who made the original decision.\u00a0\u00a0Future governors and legislators may face the consequences.\u00a0\u00a0School districts and municipalities may be forced to raise taxes.\u00a0\u00a0Retirees may depend upon funding streams that prove less reliable than expected.\u00a0\u00a0Taxpayers may discover that today\u2019s balanced budget was financed with tomorrow\u2019s revenue.<\/p>\n

Pennsylvania still has time to act.<\/p>\n

The Commonwealth should publish a multi-year plan to eliminate its structural deficit and stop schemes that give the illusion of a balanced budget.\u00a0\u00a0It should also stress-test the budget against a recession, a decline in gaming revenue, and a major pension investment loss.<\/p>\n

The greatest danger is not that Pennsylvania lacks resources.\u00a0\u00a0The greatest danger is that temporary financial strength may allow policymakers to postpone decisions until those resources are gone.<\/p>\n

A budget should not merely make the numbers balance for one year.\u00a0\u00a0It should tell taxpayers the truth about what government costs, who will pay for it, and whether the promises being made today can be sustained tomorrow.<\/p>\n

Frank Ryan is a CPA, retired U.S. Marine Corps Reserve colonel, former member of the Pennsylvania House of Representatives, and former vice chair of the Pennsylvania Public School Employees’ Retirement System (PSERS).<\/em><\/strong><\/p>

Read more Leftist infighting is ending the old lie that every election is a conflict between communism and fascism<\/a><\/p>\n

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Image via Pxhere.<\/em><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

Pennsylvania\u2019s newly enacted budget has been described as balanced.\u00a0\u00a0Legally and technically, that may be true, but economically, it is not.\u00a0Far from being balanced, it is an incredible masterpiece of financial deception. Read more Dr. Fauci takes the Fifth UPDATED The Commonwealth\u2019s 2026\u201327 budget is a troubling example and should become a gold standard in how […]<\/p>\n","protected":false},"author":1,"featured_media":3865,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[122,49],"tags":[1567],"class_list":["post-3867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-economy","tag-related-topics-economics-pennsylvania"],"yoast_head":"\nDid Pennsylvania really balance its budget? - Interstate Logistics Hub<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/interstatelogisticshubs.com\/?p=3867\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Did Pennsylvania really balance its budget? - Interstate Logistics Hub\" \/>\n<meta property=\"og:description\" content=\"Pennsylvania\u2019s newly enacted budget has been described as balanced.\u00a0\u00a0Legally and technically, that may be true, but economically, it is not.\u00a0Far from being balanced, it is an incredible masterpiece of financial deception. 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