The Lead

State budget agency projects billion-dollar plus deficits in early 2020’s — and that’s without a recession

By: - November 15, 2019 3:13 pm

Better get used to budget fights.

Pennsylvania’s fiscal watchdog agency is predicting deficits in the hundreds of millions of dollars annually over the next five years — some topping a billion dollars in the early 2020’s.

The Independent Fiscal Office, a state agency tasked with analyzing economic and budgetary data for the General Assembly, predicted that the state would face a $409 million shortfall during next year’s 2019-20 budget.

The 2020-21 and 2021-22 fiscal years would have deficits just under a billion dollars, at $926 and $959 million respectively.

The 2022-23 budget deficit would then peak at $1.33 billion, according to the IFO. The 2023-24 and 2024-25 deficits would decline somewhat, to $1.16 and $1.06 billion, respectively.

At least one legislative Republican took notice on Twitter:

Such deficits could lead to protracted funding fights, like the ones that dominated Gov. Tom Wolf’s first few terms as governor. 

The Democrat faced off with a Republican-controlled General Assembly that boasted large majorities, leading to numerous one-time budgetary moves — such as gambling expansion, partial liquor privatization, and borrowing.

“Although annual state budgets were brought into balance using temporary one-time measures, the underlying structural imbalance remains and is carried forward into future years,” IFO director Matt Knittel said in a press release.

Wolf and legislative Republicans have had relative budget peace for the past two years, passing two on-time spending plans that were buoyed by higher than expected revenue numbers.

The report points to the increasing demand for the state’s services to the elderly, combined with a shrinking labor force of younger adults, which “suggests that real per capita tax levels … must increase to keep pace with the anticipated increase in demand for healthcare and other services.”

Knittel also pointed out that part of the early 2020’s budget spike is a $470 million transfer of state revenue to replace lost transportation dollars coming from the Turnpike. If a solution to the state’s transportation funding woes is reached, the deficits would look a lot smaller.

The IFO added that the projected deficits are a best-case scenario, and do not take into account a potential recession.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.