PA Budget: State Facing Shortfall Means Cuts for Programs

Yesterday, Pennsylvania Budget Secretary Charles Zogby announced that he anticipates at least a $500 million shortfall for General Fund revenues at the end of the fiscal year. The Commonwealth currently shows a shortfall of $345 million, and mandatory spending for items such as pensions and debt services will increase that amount going into the 2012-2013 budget.

With the lower-than-expected revenue, Governor Corbett is looking at options for a budgetary freeze. The freeze will actually be more like a cut to programs already facing shrinking funding, as frozen funds are generally not returned. According to the Secretary, everything is on the table to be cut, including reductions to education and public safety. This cuts only approach to the budget does not include discussion about any revenue options at this time.

As noted by the Pennsylvania Budget and Policy Center, recent tax cuts, both enacted and planned, are contributing to the short- and long-term problem. The Governor's budget guidance issued earlier this year called for $400 million more in tax cuts, which could contribute to more than half of the expected gap for next year.

Earlier this year, it was reported that Pennsylvania ended 2010-11 with a $1.1 billion surplus and expected to end the current year with $558 million. The revised outlook calls for $100 million to be cut from current year expenditures and $400 million of the surplus to be used, leaving a $168 million year-end balance. Since drastic cuts were made in this year’s budget event despite the existence of the surplus, it is unclear how the administration will move forward.

To view the Budget Secretary’s presentation click here.