Gov. Shapiro Cannot be Allowed to Tap Pennsylvania’s Rainy Day Fund
Gov. Josh Shapiro has a spending problem, and he wants to smash open Pennsylvania’s piggy bank to placate his expensive habits.
In February, Shapiro proposed a $51.5 billion spending plan — an 8% increase from the previous fiscal year.
However, the governor’s proposal relies on fuzzy math. Pennsylvania’s Independent Fiscal Office crunched the numbers, and it turns out that Shapiro exaggerated revenue by $4 billion over the next three fiscal years. Even worse, that office projects about $44.6 billion in net revenue for Pennsylvania in the 2025–26 fiscal year — about $7 billion less than Shapiro’s proposed expenses.
To make up for the difference, the governor proposed siphoning $1.6 billion from the commonwealth’s rainy day fund, officially known as the Budget Stabilization Reserve Fund.
But this isn’t what the rainy day fund is for. The fund was not designed to finance the political whims of a spendthrift executive. Instead, it exists to protect the commonwealth from genuine fiscal emergencies.
Not only is the governor’s proposal fiscally irresponsible, but it also strikes us as blatantly unlawful. Lawmakers can only use the rainy day fund when one of the following two scenarios occurs: (1) An emergency affects Pennsylvanians’ health, safety or welfare or (2) a downturn in the economy results “in significant unanticipated revenue shortfalls.” If lawmakers cannot address either of these extreme scenarios using the traditional budgeting process, they can consider using the rainy day fund.
Neither of these scenarios is applicable. Currently, the economy and inflation are stable. Plus, there is no emergency. In fact, Pennsylvania didn’t even tap into the rainy day fund during the COVID-19 pandemic.
Despite not meeting any of these legal requirements, the governor wants to move forward with his reckless spending proposal.
This is a dangerous precedent. If Shapiro is allowed to access the rainy day fund under these conditions, the current statutory guardrails might as well not exist. Any governor facing an imbalanced budget could drain the fund for pet projects or political cover.
Raiding the rainy day fund does not solve Pennsylvania’s structural deficit — it hides it. According to the Independent Fiscal Office, long-term living assistance and medical assistance programs alone are expected to grow by 37% and 23%, respectively, over the next five years. Meanwhile, revenue growth tops out at about 11%. Simply put, this is unsustainable. Only prudent leadership and fiscally responsible policies can safeguard the commonwealth’s tax base.
Notably, credit-rating agencies are watching Pennsylvania closely. All three major agencies — Moody’s, Fitch and S&P Global — have explicitly warned that tapping into reserves to balance the budget could downgrade Pennsylvania’s credit rating. That would mean higher interest payments on state debt, further burdening taxpayers.
To make matters worse, Shapiro’s plan does little to address the issues that everyday Pennsylvanians face. The governor’s plan doesn’t address educational choice, leaving thousands of students stuck in Pennsylvania’s underperforming schools. Also, analysis by the Commonwealth Foundation and Always On Energy suggests that Shapiro’s energy mandates — dubbed his “Lightning Plan” — would more than double household electricity bills over the next 10 years. Plus, almost two-thirds oppose Shapiro’s proposal to raid the rainy day fund, according to recent polling conducted for the Commonwealth Foundation.
Pennsylvania lawmakers must hold the line. Transferring any funds from the rainy day fund requires the approval of two-thirds of both legislative chambers of the General Assembly. That legal requirement ensures bipartisan scrutiny and protects against exactly this kind of executive overreach. Instead, Pennsylvania legislators should pass a truly balanced budget that controls spending and avoids draining reserves.
Our state treasurer, Stacy Garrity, must also continue to stand ready to protect the commonwealth’s fiscal nest egg. Garrity should keep standing firm and refuse to execute any transfer of rainy day fund dollars without proper legislative authorization.
Finally, if all else fails and the transfer moves forward, the courts must step in to enforce the law and stop the governor from using the rainy day fund to fund his spending spree.
Renowned investor Warren Buffett once famously wrote, “Predicting rain doesn’t count. Building arks does.” Pennsylvania has spent years rebuilding its current robust financial foundation, and now Shapiro wants to undo that hard work with the stroke of a pen. Cutting into Pennsylvania’s current savings infrastructure risks the commonwealth’s fiscal future. If the rainy day fund is gone and a real storm hits, Pennsylvania will be underwater.
Stephen Bloom, a former state representative, is the vice president of the Commonwealth Foundation, Pennsylvania’s free-market think tank.
