IFO Shows Pennsylvania Budget Surplus to Disappear

The Independent Fiscal Office is warning that Pennsylvania’s general fund deficit is expected to grow to $3.4 billion for the 2025-2026 fiscal year and the commonwealth’s rainy day fund balance will be largely depleted by 2026-2027. The IFO notes that average spending growth signfiicantly exceeds revenue growth by 1.2%. 

The IFO blamed General Fund deficit spending due to spending policies pushed by Gov. Josh Shapiro. “About $1.9 billion of (the new deficit projections) is due to new policies that had not yet been enacted,” Knittel said. 

The government plans to spend $1 billion on education each fiscal year until 2028. Other factors include increased spending on the Department of Human Services and  

an expected drop in tax collections for 2025. Pennsylvania’s current budget surplus is due to federal COVID spending and post-pandemic economic growth. Federal spending cuts are a threat as is continued concerns with inflation. To watch the IFO presentation, click here. To read the presentation, click here.