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Pennsylvania's budget deficit larger than expected

| Friday, Jan. 16, 2015, 2:52 p.m.

Pennsylvania's looming budget deficit is worse than anticipated, Gov.-elect Tom Wolf's transition team officials said Friday.

The deficit is projected at $2.33 billion next fiscal year, according to Wolf's Budget Deficit and Fiscal Stabilization Task Force. The new projection is about $450 million higher than estimates from the nonpartisan Independent Fiscal Office in November.

Josh Shapiro, vice-chair of the team, said the fiscal picture calls for drastic changes in the way Pennsylvania builds its budget.

“We can't grow our way out of this mess; we need some serious structural change and realistic assumptions,” he said. “Simply relying on positive job growth is not going to solve the budget crisis and not allow us to dig our way out of the hole.”

This fiscal year, the state budget is $29 billion. The deficit projection is based on current-year budget figures and mandated cost growth before factoring in any new spending.

“This is the bare minimum spending, just to keep the government operations going,” Shapiro said.

The task force, charged with examining the scope of the deficit, found mandated expenses are expected to increase by $1.8 billion, and some one-time revenues assumed in balancing the 2014-15 budget are not expected to materialize.

As for solutions, Shapiro said those will be discussed when Wolf gives his budget address March 3. On the campaign trail, Wolf, a Democrat, proposed a 5 percent severance tax on natural gas drilling to help raise revenue, as well as raising the income tax on high earners. He outlined plans to increase public education and focus on employment efforts to boost the state's economy.

He must negotiate with Republicans who control both chambers of the General Assembly. Steve Miskin, spokesman for the House Republican caucus, said the caucus does not advocate new taxes or increases. Members would prefer to see the budget address cost drivers, such as public pension payments consuming more of the budget each year, he said. About $592 million of next year's mandated expenses are school pension costs, according to the task force report.

House Republicans have long championed selling off the state's liquor store system as a way to raise more revenue, Miskin said.

“The way to deal with it is prioritize what you want to spend for, what you want to spend taxpayer dollars on, and then deal with the cost drivers,” Miskin said.

Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412-380-8511 or mdaniels@tribweb.com.

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