Pennsylvania State Capitol in Harrisburg. File photo.
The balance of Pennsylvania’s so-called Rainy Day Fund is at an all-time high of $7.04 billion, according to the Pennsylvania Department of Treasury.
The fund, created to alleviate the need for tax increases and cuts to discretionary programs during economic downturns, currently can cover 53.6 days of state general fund spending. Finance officials say this period is higher than the national median of 46 days.
Pennsylvania Treasurer Stacey Garrity (R) credited the new investment strategy for October 2023 with generating $400 million in revenue, $50 million more than expected.
“When I took office, the rainy day fund was basically depleted and we only had enough money to run the state for about 48 hours. I have been a strong advocate of building a reserve fund. But thanks to a number of smart decisions by the Legislature and the governor, we now have enough reserves to operate our state for more than 53 days, above the national median,” Garrity said.
Under the new investment strategy, 20 percent of the funds will be allocated to the state’s consolidated cash pool, with the remainder invested in U.S. Treasury and federal agency securities, investment grade corporate bonds, and other short-term fixed income assets with maturities of three years or less. , according to the Ministry of Finance.
Contributions to the fund have been made over the past four years, including $2.6 billion in September 2021, $2.1 billion in September 2022, $900 million in November 2023, and most recently It includes $737 million approved under the partisan 2024-2025 state budget.
The cash-rich budget was approved by Democratic and Republican lawmakers and signed into law by Democratic Gov. Josh Shapiro.
Officials say the fund’s growth has had a positive impact on the state’s credit rating, which is being watched by agencies such as Moody’s, S&P and Fitch.
Shapiro’s office estimated last year that the improved rating could save the state between $6 million and $12 million in interest on its 2023 bonds.
But the fund’s growth has not been without controversy.
During the drafting of the 2024-2025 budget, some Democratic lawmakers argued that the reserve fund should be used to increase spending on education and other programs.
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