During his mid-year budget briefing Wednesday, Budget Secretary Charles Zogby said the state is still projecting to end the FY 2014-15 budget year in balance with perhaps a slight $1 million surplus.
Secretary Zogby said fiscal year-to-date General Fund collections total $10.6 billion, which is $109 million, or 1 percent, above estimate. He noted an additional $80 million in revenue is expected in transfers to the General Fund from the Liquor Control Board.
The non-partisan Independent Fiscal Office reported in November Pennsylvania faces a $1.85 billion shortfall in revenue-- $171 million for FY 2014-15 and $1.679 million in FY 2015-16. Click Here for a copy of the full report. Click Here for a copy of the presentation.
At the same time, Secretary Zogby identified $285.75 million in revenue the state knows will not be available for the current fiscal year, but were included in the original state budget enacted in July.
The revenue includes: $125 million in gaming license revenue, $95 million in non-impact Marcellus Shale drilling on DCNR lands, $51.25 million in supplemental appropriations for the Department of Corrections and a reduction of $14 million in revenue as result of passing the special Philadelphia cigarette tax.
Secretary Zogby also said there are other potential weakness in revenue: revenue from the new Banks Share Tax provisions, weakness in state lottery revenues and higher than expected tax refunds. No specific amounts were offered.
With respect to the FY 2015-16 budget, Secretary Zogby identified an estimated $1.7 billion in increased pension, human services and corrections costs built into the next fiscal year budget and $2 billion in one-time revenues that will not be available for the next budget.
Secretary Zogby said human services costs will increase over $900 million next year, pension costs by over $600 million and Department of Corrections costs will increase $200 million in FY 2015-16.
The Secretary also noted two other issues that will affect next year’s budget: all of the state employee union contracts will end at the end of FY 2014-15 and what he says is weakness in revenue growth from the Liquor Control Board due to increase operational costs, particularly employee cost increases.
He said all the talk about the temporary borrowing in anticipation of tax revenues and the state being maxed out on its line of credit is a “cheap political shot” because every Administration has engaged in this practice. “The campaign is over, now it is time to govern,” he added.
Asked to explain the difference between the Independent Fiscal Office estimate of an ending deficit of $171 million in FY 2014-15 and his expected $1 million surplus, Secretary Zogby said the IFO was looking at more a cash flow accounting.
Gov.-Elect Tom Wolf put out a statement on the state’s fiscal health Tuesday ahead of Secretary Zogby’s mid-year briefing pointing to four key facts about the state budget: the FY 2014-15 was built on one-time revenue sources, the state’s cash-flow will be negative at the beginning of 2015, the state’s has maxed out it’s line of credit and Pennsylvania is 50th in job creation. Wolf is expected to hold a press conference later Wednesday on budget issues.Secretary Zogby’s mid-year budget briefing material is available online.