Press Release
Independent Fiscal Office Shows Shapiro’s Budget Will Deepen the Deficit
IFO’s new Long-Term Budget Outlook Update illustrates Pennsylvania’s economic peril in light of Governor Shapiro’s 2025 budget proposal.
Harrisburg, Pa., February 11, 2025 — Today, Pennsylvania’s Independent Fiscal Office (IFO) released its 2025 Long-Term Budget Outlook Update in response to Gov. Josh Shapiro’s recent budget proposal.
IFO’s update confirms the damaging effects of Shapiro’s three-year trend of dramatic overspending. As revealed in IFO’s findings, Pennsylvania’s fiscal future is bleak under Shapiro’s proposed budget.
Key Takeaways from IFO’s Report:
- The IFO projects Pennsylvania will face a $6.0 billion budget deficit in fiscal year (FY) 2025–26, reaching $7.6 billion in FY 2027–28. IFO’s deficit projections do not include new revenue sources from Shapiro’s budget proposal, including taxes on skill games and marijuana.
- Shapiro’s executive budget underestimates expenditure growth to hide the true cost of his fiscally irresponsible plan. Compared to IFO projections, Shapiro’s proposal undervalues future spending growth by a total of $3.3 billion from FY 2026–27 to FY 2027–28.
- Shapiro also projects baseline revenue growth of $2.3 billion more than the IFO projects over the next three years. In other words, the commonwealth’s fiscal position is $6.6 billion worse than Shapiro’s estimate.
- IFO’s projections reveal Pennsylvania will exhaust its General Fund balance in FY 2025–26 and (illegally) drain the Rainy-Day Fund’s balance in FY 2026–27.
Based on these more realistic spending and revenue projections, Pennsylvania families would face a tax hike of at least $1,900 per family of four to cover the cost of Shapiro’s multi-billion dollar deficit.
Commonwealth Foundation Policy Analyst Andrew Holman issued the following in response:
“IFO’s recent report only further confirms what we already know—Governor Shapiro’s fiscal irresponsibility is making Pennsylvania go broke.
“Shapiro hides his overspending by underestimating spending growth, and relying on theoretical revenue sources, like combined reporting, new gambling taxes, and legalization of marijuana, which have not passed Pennsylvania’s divided legislature.
“Even worse, Shapiro wants to take our General Fund savings down to zero by June of 2026 and drain the Rainy Day Fund, the state’s emergency account, to fill the deficit by June of 2027. Pennsylvania will have no economic safety net under Shapiro’s plan.
“Governor Shapiro’s budget proposal is not just bad policy—it is poisonous to Pennsylvania’s fiscal future.”
For more analysis on Governor Shapiro’s 2025 budget proposal, please review the resources below:
Governor Shapiro’s 2025 Budget Proposal: An Extreme Spending Binge
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