Budget Alert: State Budget in Crisis
Pennsylvania is in a crisis. As our
revenues continue to come in far less
than expected and the budget deficit
continues to swell, the time is now to
educate our citizens on what this may
mean for many of the programs they’ve
depended upon for years.
We are at a critical juncture. According
to the Governor’s office, the current
revenue deficit is in excess of $1.1
billion and could grow to as much as
$1.5 billion by the end of the fiscal
year.
Our fiscal situation is dire, especially
now that we have used much of our
reserve funds to balance last year's
state budget, including the Rainy Day
fund, HCPRA Fund, Tobacco Endowment,
Tobacco Cessation, Oil and Gas, State
Stores and Auto CAT fund. By
transferring all of the funds to address
last year’s nearly $2 billion shortfall,
there are few reserve funds remaining.
In light of huge revenue losses that
seemingly get worse each month, it is
time for the legislature to take a
serious look at what can be done to stop
the hemorrhaging of dollars from the
state coffers and preserve the programs
important to our vulnerable citizens.
Where we stand:
-
We are facing a
shortfall of over a billion dollars
with little to no funds to offset
this deficit.
-
The state fiscal
stabilization (stimulus) and
enhanced FMAP funds will expire in
2011. The expiration of these funds
alone creates a $2.3 billion gap
that will need to be closed through
service efficiencies, program cuts
and increased state revenue.
-
Medical
Assistance payments—due to health
care inflation—continue to consume
large portions of our state budget.
-
The pension
crisis is spiraling out of control,
which could potentially cripple our
already dire fiscal situation.
-
With the federal
government’s rejection of tolling
I-80, our crumbling infrastructure
will continue to suffer from a loss
of an estimated $472 million that
tolling would have generated and
mass transit systems such as SEPTA
will be grossly underfunded.
In February Governor
Ed Rendell proposed a $29 billion state
spending plan. This plan was a good
first step even in the midst of severe
revenue shortfalls. Yet, because of
declining revenues additional calls have
been made to slash the budget even more.
The $1.1 billion revenue shortfall means
that without additional taxes, more
programs will have to be cut.
Protecting the most
vulnerable:
Last year, the Senate
Republicans cut the governor’s budget
drastically when they offered up their
own spending plan (S.B. 850).
This proposal gave us
a glimpse of a draconian spending plan.
If passed, their plan would have been
devastating to Pennsylvania’s hospitals
and health care programs, ruined
economic development in the state and
sent property taxes through the roof for
most school districts. The same thing
could happen this year.
Pennsylvanians need
to understand the dire situation we face
this year. The fact is more than 90
percent of the state’s spending plan is
formula driven or established as a part
of a pre-determined state/federal
funding mix.
We are in the midst
of extremely tough fiscal times. And, we
have few options if revenues do not
materialize. Funds must be dispersed to
dedicated funding, entitlements and
formula-driven expenditures giving us
little leeway for discretionary
spending.
With very little
money available, we must ensure that the
essential programs are funded and the
needs of all citizens are addressed.
We recognize that in
this time of economic distress that
there are great sacrifices that must be
made, but we cannot needlessly burden
our most needy citizens with drastic
cuts to the budget.
Our priority must
continue to be preserving our safety net
while we help business create jobs.
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