December 2, 2014

Wolf Transition: 4 Things To Remember Ahead Of Mid-Year Budget Briefing Tomorrow

Gov-Elect Tom Wolf’s Transition put out the following statement ahead of Wednesday’s mid-year budget briefing by Budget Secretary Charles Zogby--
Tomorrow, Gov. Corbett's Budget Secretary Charles Zogby will deliver the administration's mid-year budget briefing outlining Pennsylvania's dismal financial picture. This past summer, Secretary Zogby said, "I would never have guessed that our Year Four budget would be more difficult than what we faced in Year One. But that's where we are today."
In advance of Secretary Zogby's mid-year briefing, here are four things to remember that illustrate the depth of the fiscal hole dug by the Corbett Administration and left for the Wolf Administration:
1.  Gov. Corbett's Fiscal Year 2014-2015 budget was built on one-time revenue sources. It was only last month that we began to learn the extent of fiscal crisis facing the incoming Wolf Administration when the state's Independent Fiscal Office (IFO) released projections showing a multi-billion dollar budget deficit for the next fiscal year, as well as a long-term fiscal imbalance. The Pittsburgh Post-Gazette wrote that this hole was created "in part because of measures taken to balance the current year's state spending plan."
"The current 2014-15 state budget includes $572 million in non-recurring revenues, $619 million in one-time savings and $332 million in funding shifts, resulting in a 'snapback' of lowered revenues and increased spending for the fiscal year beginning July 1, 2015." [Post-Gazette, 11/15/2014]
"FY 2014-15 includes $572 million in non-recurring revenues, $619 million in one-time savings and $332 million in funding shifts. These measures exacerbate the structural imbalance in FY 2015-16, as the temporary measures are not repeated. The resulting ‘snapback' lowers revenues and increases expenditures for FY 2015-16." [IFO, 11/13/2014]
The AP also called the 2014-2015 budget, based heavily on one-time items, a "big gimmick."
"An approximately $29 billion state government operating budget under negotiation in the Legislature is likely to be based on a fast-growing amount of one-time cash items to avoid the prospect of a tax increase that would split the House's and Senate's Republican majorities. The one-time items -- derided by critics as gimmicks — include raiding off-budget programs, postponing bills and cleaning out reserves." [AP, 6/28/2014]
2.  Pennsylvania is projected to be cash-flow negative from January through March of 2015. In addition to the projected budget deficit, Gov.-elect Tom Wolf will enter office amid cash flow projections that indicate the state will be cash-flow negative from January through March.
3. The Corbett Administration has maxed out it's line of credit. Just last month, Pennsylvania's fiscal situation took another blow when it was announced that the Corbett Administration had maxed out the line of credit it was forced to take out just to keep the lights on.
"The governor's budget office is borrowing once more from the state treasury to meet operating expenses. The borrowing will avoid cash flow problems the treasury says were created by the state budget… The administration borrowed $700 million dollars in September, then another $750 million this week, with plans to take the $50 million remaining in the line of credit in the next week or so." [WITF, 11/13/2014]
4. Pennsylvania is 50th in the nation in job creation. Over the last four years, Pennsylvania has fallen from a top-ten state for job creation to dead last in the nation.
"Pennsylvania's rank for percent job growth since January 2011 has fallen to last place among states, based on employment data for September 2014 released [October 21, 2014] by the Bureau of Labor Statistics." [Keystone Research Center, 10/21/14]