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Budget Secretary: No Tax Increases Or Revenue Enhancements Needed To Balance FY 2018-19 Budget

During his mid-year budget briefing Thursday, Budget Secretary Randy Albright said they do not believe there will be a need for increasing taxes or for any major revenue enhancements to balance next year’s budget, other than the adoption of a natural gas severance tax.

Putting recent budget actions in context, Albright said the Wolf Administration inherited a state budget that was balanced with one-time gimmicks and in the worst shape since the 2008 recession.

Albright said he was pleased to report today the state’s fiscal condition has significantly improved over the last year.

As a result, Albright said they believe, because of $2 billion in cuts and savings by the Administration and new recurring revenue, the structural deficit built into the state budget is all but gone.  He also pointed out complement reductions have resulted in the lowest number of employees-- about 73,000-- he had seen in his lifetime.

At the same time, Albright noted there has been significant investment increases in education, to address the opioid epidemic and other priorities.

With respect to the current year, Albright said they feel the FY 2017-18 budget year will end with a “modest” $32 million budget surplus and without the need for any supplemental appropriations.

The surplus, however, includes the lease-back of the Farm Show Complex Gov. Wolf proposed, but no proceeds from his proposed securitization of Liquor Control Board revenues.

Click Here for a copy of the slides used in the briefing.

$1 Billion Difference

Secretary Albright’s outlook on the FY 2018-19 state budget is in stark contrast to the projections made by the Independent Fiscal Office in mid-November.

The IFO said Pennsylvania’s General Fund budget will run a deficit starting at nearly $1 billion in FY 2018-19 rising to over $2.1 billion in FY 2022-23.

Specifically, the IFO projects deficits of $988 million in FY 2018-19; $1.865 billion in FY 2019-20; $1.774 billion in FY 2020-21; $1.784 billion in FY 2021-22; and $2.189 billion in FY 2022-23.

In response to a question about the differences, Albright said, he believes the IFO is missing the mark on estimating expenditures and underestimated revenues. reported IFO Executive Director Matt Knittel defended his agency’s forecast when asked his take on Albright’s claims.

“Based on the trends from the past month, I do not think our revenue outlook would change much,” explained Knittel. “We do have concerns about the JUA (the Pennsylvania Professional Liability Joint Underwriting Association) transfer, but we will not change our assumption that we will receive those monies unless new information is made available.”

“Since we released our report in November, we have not received any new information that would cause us to adjust our projections,” Knittel said. “For FY 2018-19, we projected a deficit of $1.0 billion, but on a cost-to-carry basis, it was closer to $600 million. We are still comfortable with those projections and our revenue estimate continues to hold up well.”

Knittel admitted it’s possible the Budget Office is privy to some more up-to-date spending information, but the IFO gets most of what Albright’s shop has.

“Regarding access to information: we largely have access to the same information for revenues, but for expenditures, the administration will be in close contact with the agencies on a weekly and even daily basis, and so could anticipate some savings or expenditures that we would learn about only after a delay,” Knittel said.


Haggerty Absence In Harrisburg May Have Prevented Gas Severance Debate

Editorial: Haggerty’s Absence Help Kill Severance Tax

Meyer: Wolf Admin Reports Fiscal Turnaround, Contradicts IFO Projections

Meyer: How 6 House Bills Could Change The Way PA Budgets Are Done

[Posted: Dec. 14, 2017]


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