An Important Lesson From Past Budget Impasses

In February, Gov. Josh Shapiro proposed an unserious $51.5 billion budget. Based on the latest revenue estimate from the Independent Fiscal Office of a net $45.6 billion, this would balloon the structural deficit to a whopping $7 billion.  

Last week, Shapiro leaked a “compromise” of $49.9 billion (“don’t call it $50 billion”) with no significant policy reforms.  

This budget still spends $5.3 billion more than it generates in revenue. It would require draining reserves and implementing tax hikes of $1,600 per family of four to balance the budget. 

These are the gimmicks Shapiro plays—propose an absurd budget, then attempt to seem reasonable with a still-extreme spending binge, without compromising on policies to make Pennsylvania more competitive. Shapiro’s radicalism is why there’s a state budget impasse. 

Lawmakers have seen and fought off this extremism from governors before. In 2015, Gov. Tom Wolf vetoed the entire state budget passed by the General Assembly, leading to the longest budget impasse in Pennsylvania history. 

Wolf had proposed a $4.5 billion tax hike—the largest in Pennsylvania’s history, and larger than proposed tax hikes in 49 other states combined. 

For months, Wolf refused to compromise. But lawmakers stood firm, passing a stopgap budget that Wolf again vetoed and then a spending bill in December 2015, when Wolf line-item vetoed $6 billion in spending.  

The standoff ended in March 2016, when the General Assembly passed a full-year budget, and Wolf—lacking support even among his own party—allowed it to become law without his signature. 

The outcome was a clear policy win: 

• By standing firm, lawmakers prevented a $4.5 billion tax hike. 
• The final spending package was $3.7 billion less than Wolf proposed, and $100 million less than the budget he vetoed. 
• Wolf was rendered ineffective and forced to compromise on other issues he had previously vetoed, including pension reform and allowing wine in grocery stores. 

It was good politics, too. Fiscal conservatives who stood their ground were rewarded—not a single one lost reelection in 2016, a strong year for Republicans in Pennsylvania. 

Today, history is repeating itself. Just as Wolf overreached in 2015, Governor Shapiro and Pennsylvania House Democrats are dragging out the process by demanding higher spending —and Pennsylvanians are noticing.  

According to a brand-new Commonwealth Foundation poll, a majority of voters say Shapiro and Democrats should be responsible for ending the current state budget impasse. More than 64 percent oppose Shapiro’s proposed spending increases, while 65 percent oppose raiding the state’s emergency Rainy Day Fund to cover them. 

Likewise, lawmakers need to fight for real policy wins to help kids, families, and small businesses and make Pennsylvania open for business. These include: 

• Enacting substantive regulatory reform to keep pace with our neighboring states. 
• Blocking Shapiro’s energy taxes. 
• Empowering parents with educational choice through direct funding for students to find a better education.  
• Reforming welfare by encouraging work and protecting programs for the truly needy. 
• Protecting taxpayers from overspending and an unbalanced budget.  

The lesson from 2015 is clear: When lawmakers stand firm for taxpayers and fiscal restraint, they win—both on policy and with the public.