Government facing more projected deficits

Fiscal office director: Bail action approved in July has made limited progress

HARRISBURG (AP) — Pennsylvania state government received sobering fiscal news on Tuesday as the Legislature’s independent budget analyst projected more big deficits in the coming years, including a shortfall

this year.

The Independent Fiscal Office’s director, Matthew Knittel, said a package of more than $1 billion — including a cigarette tax increase — approved in July to bail out the current year’s deficit had made limited progress in chipping away at the state

government’s long-term deficit.

The Republican-controlled Legislature has rejected Democratic Gov. Tom Wolf’s efforts during the last two years to fill a stubborn deficit with a multibillion-dollar tax increase.

Another fight is likely next year, as budgetmakers confront what the Independent Fiscal Office projected to be a $1.7 billion in the 2017-18 fiscal year, which starts July 1. The deficit is expected to continue growing every year after that, according to the office.

Wolf’s spokesman Mark Nicastre said in a statement Tuesday: “The governor has been working with the legislature to address the structural deficit, and it is even more clear now that we cannot kick the can down the road.”

Wolf, he said, “has remained steadfast in his belief that Harrisburg has to make the difficult decisions to put its fiscal house in order.”

The Independent Fiscal Office also projected a shortfall of more than $500 million in the state’s current $31 billion budget. Tax collections through October were running behind expectations, and even behind collections through the same point last year.

In addition, the state may need to scrounge hundreds of millions of dollars more because this year’s budget funded state prisons and Medicaid programs at more than $300 million below what the Wolf administration had recommended would be necessary to cover costs.

In the future, average costs will rise by a percentage point per year faster than tax collections over the next five years, the office said. Years of deficits have cost Pennsylvania credit rating downgrades, leaving its bond rating among the lowest of states.

In the current fiscal year, Wolf and lawmakers sought to wipe out a projected $1.8 billion deficit with a $1.3 billion election-year revenue package that hinged on a $1-per-pack cigarette tax increase.

The hard-fought revenue package also authorized a $200 million loan from a state medical malpractice insurance fund and counted on an expansion of casino-style gambling to casino-run websites to contribute about $100 million, mostly from lucrative one-time license fees. But the Legislature has yet to come to an agreement on a bill to authorize such a gambling expansion.

Knittel said the state’s growing costs in the future include a bigger role in paying for hundreds of thousands of people newly eligible for medical care under an expansion of Medicaid guidelines that took effect last year in Pennsylvania.

Copyright 2016 The Associated Press.