Fact Sheet
Optimizing State Spending
Summary
- Pennsylvania faces a $3.6 billion structural budget deficit in Fiscal Year (FY) 2024–25. The Independent Fiscal Office (IFO) calculates Gov. Josh Shapiro’s FY 2025–26 budget proposal would increase the deficit to $6 billion and deplete the Rainy Day Fund to cover ongoing overspending.
- Lawmakers must control spending growth to bring the budget closer to balance and protect Pennsylvania families from multi-billion dollar tax increases. This means optimizing state spending, prioritizing economic growth, and rejecting spending increases.
- Ending corporate welfare subsidies and using the savings to cut taxes could save the average Pennsylvania family of four $508 annually or reduce the Corporate Net Income Tax by 2.65 percentage points.
- Pennsylvania has over one hundred “Other Special Funds,” many of which have significant cash balances. Reducing fund balances to a maximum of one year of expenditures and freezing fund balance increases would allow the state to draw an estimated $2.89 billion.