Despite recent projections from the state’s Independent Fiscal Office that the Commonwealth faces an up to $1.7 billion deficit headed into 2019-20 budget discussions, the tone from the state’s outgoing Budget Secretary is one of optimism for Pennsylvania’s fiscal health.
At a mid-year budget report press event last week, Sec. Randy Albright pointed to months of higher than projected revenue collections, rising gaming revenue and no sharp spikes in required pension payments as a sign that Pennsylvania will “end the year with not just a balanced budget but a surplus,” adding that “we don’t think we face a $1.5 billion deficit for the proposed budget year.” He did admit, however, that the state might need supplemental appropriations to pay for health care entitlement spending that is the result of transitioning to its new managed care system, PA Health Choices. Albright also expressed that increasing human services costs, re-negotiating state labor contracts, decreasing reserves from the Pennsylvania High Education Assistance Agency and increasing State Police funding are all issues that could pose problems for an on-time budget deal.
According to a story in the PLS Reporter, Republican House Appropriations staffer John O’Brien, who works for House Appropriations Chairman Stan Saylor, R-York, agreed that the IFO’s estimate is extreme (though IFO Executive Director Matthew Knittel continues to stand by his numbers). O’Brien told the media outlet that the IFO’s projections are based on a 10 percent spending increase – which he said the General Assembly will not allow. He added that Albright’s positive picture is based on a growing economy with decreasing unemployment, which makes the case for fair and predictable tax policy choices in order to maintain economic momentum. Republican state legislative leaders have been stressing to reporters in the weeks leading up to swearing-in day that they are taking a hard stance against any new taxes in the new fiscal year.
Notably, Albright also announced during the event that he will be departing his post at the end of the month. The first member of Gov. Wolf’s Cabinet to announce that they won’t be returning to their post when the new term begins in January, Albright served all four years of Wolf’s first term. He will be replaced by Jen Swails, who has more than 19 years of fiscal and policy experience in state government. Her most recent role is that of fiscal management director for the new Shared Services Budget Office, which oversees budgets for the Depts. of Aging, Health, Human Services and Drug and Alcohol Programs.