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Politics & Government

State Faces Nearly $2 Billion Deficit Next Year, Fiscal Office Says

Pennsylvania's nonpartisan agency for budget analysis is pinning a number on the anticipated budget deficit next year: $1.85 billion.

The Independent Fiscal Office's figure comes in a report that clearly outlines what has been referred to in generalities since the passage of this year's roughly $29 billion state budget in July.

"This pretty much substantiates what the Democrats were saying, both Senate and House Democrats were saying back in June - that this was a paper budget, it was full of a lot of assumptions," said Sen. Vincent Hughes (D-Philadelphia), ranking Democrat on the Senate Appropriations Committee.

The IFO points to a few short-term causes for the hole. Its report finds that the current budget uses $572 million in one-time revenues and $619 in one-off cost savings. Another $332 million was siphoned from other special funds outside the main budget.

Such maneuvers compound the structural imbalance of the state's budget, said the IFO. The state Treasury said the same on Thursday when it announced that the Corbett administration is engaging in more internal borrowing to deal with cash flow problems.

The IFO report also cited long-term factors aggravating the state's fiscal situation, like rising state pension costs, "normal" growth of expenses, and a "slowly" shrinking tax base.

The agency's five-year budget outlook report comes as Republicans have grown their majorities in the Legislature, with many members intent on limiting tax increases and holding the line on spending.

Governor-elect Tom Wolf, meanwhile, is seeking to hike education spending by increasing taxes.

"Today's report showing a multi-billion dollar budget deficit is a stark reminder of the dire fiscal situation my administration will face," said Wolf in a written statement released by his transition team. "As bad as today's news is, what lies ahead could be worse."