Though the 2012-13 fiscal year is less than two months old, the recently published administrative circular is already looking ahead to expected cost increases in next year’s budget, forcing many parts of state government to tighten their belts even further. The document warns that budget planning for 2013-14 should be predicated on the fact that Pennsylvania’s economy is still in a period of recovery from the “Great Recession.”
“Continued increases in pension obligations and other cost drivers, such as Medical Assistance, prison costs and debt service obligations, are projected to consume an even greater share of the commonwealth’s budget next year,” the guide warns.
Further complicating the commonwealth’s fiscal woes is the fact that the state budget spends more than revenue next year. A handy guide to the budget financial statement (embedded below) prepared by Pennsylvania House Democratic Appropriation Committee staff illustrates this.
The General Fund balance declines from $1.1 billion beginning the 2011-12 fiscal year to $219 million at the end of 2012-13 (based on forecasts). That is, the state will have spent $900 million more than revenues over the past two years.
Legislators and Gov. Corbett deserve much credit for practicing restraint the last two years and not spending every last dollar given the fiscal fires facing the state. But clearly, more has to be done to fireproof our economy and address long-term budget imbalances.