Pennsylvania needs immediate action from Congress to pass the American Rescue Plan
It’s been one year since the first known coronavirus deaths in the United States, and half a million Americans have lost their lives to the pandemic, including nearly 24,000 in Pennsylvania. Millions more have been sickened, putting intense pressure on our health care system and the frontline workers who staff it—and COVID continues to have a devastating impact on our economy and the financial security of American households and small businesses. President Biden’s American Rescue Plan, which is currently being considered by Congress, provides the level of assistance necessary to respond to a crisis of this magnitude.
The pandemic has taken a significant toll on Pennsylvania workers and businesses, and in turn, the state budget, so we need our 18 U.S. representatives and Senators Casey and Toomey to advocate for this crucial relief package.
An analysis published recently by the Keystone Research Center found that the state’s economy remains in a deep hole, having recovered only about half of the jobs lost during the first two months of the pandemic, and small business revenues remain over 25% lower than where they were at the beginning of 2020—a stunning, Depression-level collapse. From February to April of last year, Pennsylvania lost over 1.1 million jobs, and while the state regained a lot of jobs from April to August, job growth has stalled since then—and by December, we still had half a million fewer jobs than in February of 2020.
When workers are unemployed or underemployed, and when businesses see their profits plummet, the revenue collected by the state—through personal & corporate net income taxes, sales & use taxes, and other taxes and fees—declines as well. At the same time, the demand for public assistance programs increases. Our state government, and local governments across the Commonwealth for that matter, can neither print money nor operate with a deficit, so the only options are to slash vital services and jobs or to raise taxes.
So far, Pennsylvania has been able to avoid making significant cuts to essential services and jobs that are funded by the state. This has been possible largely because of the funding assistance provided by the federal government early in the pandemic, as well as the transfer of funds within the state government. Unless there is additional, robust fiscal aid from the federal government, however, Pennsylvania government officials will be forced to make difficult and counter-productive decisions that would prolong and deepen the economic recession and increase suffering for people across the Commonwealth.
In January, the state’s Independent Fiscal Office presented its Economic and Budget Outlook for Fiscal Years 2020-21 to 2025-26 report, forecasting a sizable structural deficit in the coming fiscal years. Without additional federal aid, the IFO predicts that the structural deficit for the 2021-22 fiscal year—which begins on July 1st of this year—will be $2.5 billion. The PA Budget and Policy Center estimates that the state will lose at least $5.1 billion in revenue over three fiscal years (2019-20, 2020-21, 2021-22). In addition, state expenditures have increased to meet health care and other costs created by the pandemic. The state may see continued lower revenues and higher expenditures in subsequent years, as the IFO forecasts that the economy will not fully recover for some time.
Without substantial assistance from the federal government, Pennsylvania could be forced to cut funding for education (pre-K, K-12, and higher education), health care, public safety, vital support services for seniors and persons with disabilities, and the protection of our environment.
That’s why it’s essential for Congress to pass President Biden’s American Rescue Plan, which includes $350 billion in direct assistance to state, local, and territorial governments to keep frontline workers employed, distribute the vaccine, increase COVID testing, reopen schools, and maintain vital services. There’s also $20 billion for the hardest-hit public transit agencies to help avert layoffs and the cutting of routes, which are essential to getting workers to their jobs and reducing air pollution. The plan would provide an additional $170 billion to K-12 schools, colleges, and universities to help them reopen and operate safely or to facilitate remote learning.
We at the Pennsylvania Budget and Policy Center estimate that our state government would receive $7.349 billion from the American Rescue Plan and local governments across the Commonwealth would receive $5.756 billion for a total of more than $13 billion. Additionally, Pennsylvania’s schools would receive $5 billion to safely reopen classrooms and educate our children. This assistance would avert financial disaster and enable our state to recover more quickly from the current public health and economic crisis we’re experiencing.
The need for action on the relief legislation is urgent, as previously enacted assistance for jobless workers expires in mid-March and state lawmakers are now considering the state budget for FY2021-21, with a $2.5 billion structural deficit looming on the horizon.
Send a message to your member of Congress and to Senators Casey and Toomey using our online tool, urging them to act quickly to pass the American Rescue Plan. And then amplify your impact by using the tool to submit a letter to the editor of your local newspaper, making your message to your U.S. representative public.