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From PA Chamber of Business & Industry
Last week, the state’s Independent Fiscal Office released its Five Year Economic and Budget Outlook and while revenue collections continue to come in strong, the agency warns that the state is facing potential budget deficits in the near future.
For the current 2019-20 Fiscal Year, the IFO is projecting that the state could face a potential $409 million shortfall, with that number growing to $1.3 billion for the 2022-23 Fiscal Year. The IFO takes a variety of factors into consideration when creating its future projections, including: mandatory and non-mandatory expenditures; economic forecast projections; and changing demographics – particularly the state’s aging population. Additionally, the use of one-time revenue sources to balance that annual state spending plan; as well as supplemental budget requests also play a role in the structural imbalance.
According to the IFO, the state’s mandated expenditures are expected to outpace revenue collections for each of the next five years.