An Act providing for limit on fiscal year spending, emergency spending and requirement for raising revenue; and establishing the Commonwealth Reserve Fund.

PRINTER'S NO. 2456
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1947
Session of
2025
INTRODUCED BY T. JONES, KAUFFMAN, STAMBAUGH, GREINER, ROWE,
LEADBETER, BERNSTINE, HAMM, RAPP, ZIMMERMAN, KUZMA AND
BARGER, OCTOBER 15, 2025
REFERRED TO COMMITTEE ON APPROPRIATIONS, OCTOBER 16, 2025
AN ACT
Providing for limit on fiscal year spending, emergency spending
and requirement for raising revenue; and establishing the
Commonwealth Reserve Fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Responsible
Budgeting Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Emergency." A sudden, urgent, unforeseen and temporary
situation that requires an immediate expenditure of funds to
preserve the health, safety and general welfare of the residents
of this Commonwealth.
"Enacted spending." General Fund expenditures that are used
as a basis to consider and build support for other funding
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sources to support State government operations.
"Fund." The Commonwealth Reserve Fund established under
section 5.
"Gross State product." The total economic output of this
Commonwealth, which encompasses the final goods and services
produced within this Commonwealth, as estimated in the United
States Bureau of Economic Analysis.
"Revenue." Money required by law to be paid to the
Commonwealth and collected lawfully by the Commonwealth. The
term does not include borrowed funds or receipt of money
transferred from the Federal Government.
"Spending." Money in the State Treasury expended by the
Commonwealth. The term does not include the expenditure of money
in the State Treasury that was transferred from the Federal
Government.
Section 3. Limit on fiscal year spending.
(a) Calculation.--The limit on fiscal year spending shall
equal enacted spending in the prior fiscal year increased by the
structural balance factor under subsection (b).
(b) Structural balance factor.--The structural balance
factor shall be the difference between:
(1) the average rate of growth of gross State product
during the five calendar years preceding the regular
legislative session; and
(2) the deficit brake under subsection (c).
(c) Deficit brake.--The deficit brake shall:
(1) Have an initial and a minimum value of 0.
(2) Increase by 0.2 percentage points, cumulatively, for
the upcoming fiscal year after a fiscal year when the dollar
amount of spending exceeded the dollar amount of revenue.
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(3) Decrease by 0.2 percentage points, cumulatively, for
the upcoming fiscal year after a fiscal year when the dollar
amount of spending did not exceed the dollar amount of
revenue.
(d) Adjustment.--The General Assembly may adjust the limit
on fiscal year spending to:
(1) reflect enacted changes in the dollar amount of
revenue collected; or
(2) provide for emergencies under section 4.
Section 4. Emergency spending.
(a) Authorization.--The General Assembly may authorize
spending in excess of the limit on fiscal year spending under
section 3 through legislation that includes an emergency
declaration describing the situation and which obtains the vote
of two-thirds of the members present and voting in the Senate
and the House of Representatives.
(b) Offset.--Emergency spending shall be offset by equal
reductions in the limit on fiscal year spending for each of the
subsequent six fiscal years.
(c) Effect.--Neither emergency spending nor its subsequent
offset shall otherwise affect the basis for calculating
subsequent limits on fiscal year spending under section 3.
Section 5. Commonwealth Reserve Fund.
(a) Establishment.--The Commonwealth Reserve Fund is
established in the State Treasury. The money in the fund is
appropriated on a continuing basis to the Treasury Department
for the purposes provided in subsection (c).
(b) Fund sources.--Budget surpluses shall be deposited into
the fund. Interest and other earnings on the fund shall accrue
to the fund.
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(c) Spending support.--The fund and current revenue shall
support spending within the limit on fiscal year spending
established under section 3, including emergency adjustments.
(d) Rebates and other uses.--When the fund equals 15% of the
current spending limit, at least 50% of further surpluses shall
be rebated by the State Treasurer, in consultation with the
Department of Revenue, to taxpayers in proportion to taxes paid,
and the remainder shall reduce general debt or, as the General
Assembly may direct, other liabilities of the Commonwealth.
Surplus revenue used for rebates or to reduce Commonwealth
liabilities shall be excluded from the limit on fiscal year
spending under section 3.
Section 6. Automatic spending levels.
If the General Assembly does not enact the General
Appropriation Act for the upcoming fiscal year by the end of the
current fiscal year on June 30, the funding levels under the
General Appropriation Act for the immediately prior fiscal year
shall take effect beginning July 1 and shall remain in effect
until the General Appropriation Act is enacted for the current
fiscal year.
Section 7. Applicability.
This act shall apply to the fiscal year that begins not less
than 60 days following the effective date of this section and to
each fiscal year thereafter.
Section 8. Effective date.
This act shall take effect immediately.
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