On May 1, the Pennsylvania Independent Fiscal Office (IFO) released updated revenue estimates for the remainder of 2013-14 and its initial estimate for 2014-15. With General Fund revenues already a half a billion dollars short through April, it was expected by many budget watchers that revenue projections would be scaled back. The IFO forecasts a decrease of revenue of $568 million from official estimate for 2013-14 and for 2014-15, predicts a further decline of $768 million from the Governor’s Office estimates from February. This jeopardizes the increases proposed by the Governor for 2014-15, and could lead to budget cuts from 2013-14.
Governor Corbett’s budget proposal was already build on a fragile base, and with the IFO report, that foundation has crumbled. Back in February, Governor Corbett’s proposed 2014-15 budget projected ending 2013-14 assumed that revenue for the current year would meet estimates. The 2014-15 budget would increase spending by $825 million, but relied on optimistic revenue growth for next year (4.9%) including $225 million that was being transferred into the General Fund from other funds.
The new IFO figures scale back overall revenue growth to 3.5%, and overall tax growth in 2014-15 to 3.3%. These figures do not include the Governor’s proposed transfer of $225 million into the General Fund, as they have not been enacted into law.
The IFO’s reduced revenue forecast for 2013-14 and 2014-15 underscore the ongoing need for additional revenue sources. Without new revenue, $1 billion or more will be cut from Pennsylvania schools, hospitals, and human service providers. This will result in the loss of jobs and a further drag on our state economy.
There are sensible revenue and cost saving options available for state policy makers- including a severance tax on natural gas, smokeless tobacco taxes, and the immediate expansion of Medicaid.
Click for more on the IFO revenue estimates.