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FEBRUARY 6, 2012 | Policy Points by COMMONWEALTH FOUNDATION
Pennsylvania State Budget Toolkit
2012 Budget Resources
The FY 2011-12 total operating budget of $63.4 billion, which included $27.1 billion in General Fund spending, represented the first year-to-year reduction in state spending in at least 40 years. However, as the economy continues to struggle out of a recession and with increasing costs in public welfare, corrections, pensions, and debt, the FY 2
FEBRUARY 2, 2012 | Commentary by RICHARD DREYFUSS
Will our Grandchildren be Budget Losers?
As the Governor's state budget address approaches, there is no shortage of speculation surrounding various fiscal austerity proposals and which departments and programs will likely be the ultimate budgetary "winners and losers."
JULY 6, 2011 | Commentary by NATHAN BENEFIELD
Corbett's First Inning Scorecard
July signals the coming of two breaks in Pennsylvania—Major League Baseball's All-Star break and the end of the state budget season. Having endured his first budget as the commonwealth's chief executive, Gov. Tom Corbett has effectively finished the first inning of a nine-inning baseball game. The question is, how did
Recent Blog Posts
FEBRUARY 1, 2012
Criminal Justice Reforms to Reduce Spending & Crime
Change is on the horizon for Pennsylvania's Department of Corrections - now the third-largest state agency in the General Fund budget - which along with state debt, pensions and welfare threatens to bankrupt the state if left unchecked.
Last week, Gov. Corbett launched Pennsylvania's Justice Reinvestment Initiative (JRI), a working group tasked with controlling correction costs while maximizing public safety and reducing recidivism. The new panel has support from the Council of State Governments Justice Center and the Pew Center on the States; both experienced at helping states develop meaningful criminal justice reforms.
The JRI is a step in the right direction for the commonwealth, which needs to replace ineffective policies with those that lower crime rates, reduce re-offending, and control spending. To learn more about correction reforms, see our see our criminal justice recommendations.
posted by KATRINA CURRIE | 08:00 AM | 0 comment
JANUARY 20, 2012
Fiscal Outlook for Pennsylvania: Not Too Rosy
This week the new Pennsylvania Independent Fiscal Office held its first annual seminar on the state economy and revenue. After a series of presentations on the state of the economy and state budgeting/revenue from a national perspective—all with the perspective that robust growth is unlikely and risks to the economy persist—the IFO presented on future budget trends and released its five-year fiscal outlook.
Here are some highlights (or lowlights, to be accurate):
- Pennsylvania's population will continue to age, with an estimated 25 percent increase in senior citizens, and a 1.8 percent decline in working-age population.
- This translates into slow revenue growth: Estimated annual growth in General Fund Revenue is projected to average 1.6 percent annually for 2011-14, and 4 percent annually from 2015-17.
- This is in contrast to General Fund expenditures, which are expected to grow absent significant policy changes. The big categories of growth are Public Welfare (driven by Medicaid), Corrections, Pensions, and Debt.
- General Fund Public Welfare spending is expected to go up by 8 percent per year from 2011-14. As noted, federal policy (stimulus and Affordable Care Act) is driving this growth—increasing Medicaid eligibility and preventing state reform through the "Maintenance of Effort" requirement.
- Commonwealth debt payments will grow by 7.3 percent per year from 2011-14.
- Pennsylvania's corrections spending is expected to grow 6.9 percent per year from 2011-14.
- Commonwealth pension contributions will skyrocket by 40 percent per year over the next three years. As a share of General Fund spending, pension payments will rise from 4.2 percent for FY 2011-12 to 11.6 percent for FY 2016-17.
- The IFO projects education spending will decline by 1 percent per year from 2011-14—this forecast is based on expected enrollment declines, rather than anticipation of legislative priorities.
All these forecasts are based on current policy, i.e., no changes to current programs. But it should be blatantly obvious that reform must occur. Lawmakers must tackle the big cost drivers. Pension reform, Medicaid and welfare reform, criminal justice reform, and reducing our debt burden must be budgetary priorities. Moreover, to improve the revenue picture lawmakers must focus on policies that promote prosperity.
posted by NATHAN BENEFIELD | 04:34 PM | 0 comment
JANUARY 5, 2012
Pennsylvania Budget Freezes in Perspective
Yesterday, Gov. Corbett and the Office of the Budget released a list of 2011-12 budgetary freezes—reductions in spending from the enacted General Fund budget—due in part to revenue shortfalls. I fully expect these reductions to be labeled "draconian." Here's some information to put the budgetary freezes in context.
- General Fund Revenue Collections are $486.8 million behind forecast for the fiscal year, through half the year.
- The enacted budget already spent more than the projected revenue collections: $27.1 billion to $26.6 in net collections, using the prior surplus to make up the gap.
- The proposed freezes of $222 million represent less than 1 percent of the enacted GF budget. The portion the Governor can actually freeze (as the legislative and judicial and other requested freezes may not materialize) represents only a 0.57 percent reduction. And the General Fund represents less than half of total state spending, so it is important to keep these cuts in perspective and to consider the entire budget: i.e., if lawmakers think these programs are critical, perhaps they should reevaluate how other funds are spent.
For more, see our publication Understanding the Pennsylvania State Budget.
posted by NATHAN BENEFIELD | 10:41 AM | 0 comment
