Budget Negotiations Continue as Fiscal Office Predicts $48 Million Revenue Drop.

By Peter L. DeCoursey
Bureau Chief

HARRISBURG (June 12) – Pennsylvania state government will finish this year with $419 million more in state revenues than Gov. Tom Corbett predicted in February, although still $300 million under last June’s revenue estimate for the fiscal year ending June 30, according to the Independent Fiscal Office.

In addition, the state will add $348 million in new revenues next year, compared to the governor’s revenue estimate from February, the IFO predicted.

The IFO estimate, due Friday, was moved up three days so it did not come out when members would be out of town, and because no new useful data will come out that could change it before then, said IFO Director Matthew Knittel.

Despite the lower projection of revenue, Senate staff from both parties said they did not believe it would strengthen Corbett’s hand in asking for a lower spending total.

They also were not surprised by it. Economic assumptions very similar to the IFO report released today were already part of the House-Senate GOP proposal presented to the governor last week, said Senate Appropriations Committee Chairman Jake Corman, R-Centre.

The governor said Tuesday he had made a new offer to the Legislature, that sources said offers a slightly higher spending total and some demands for passage of legislation. Further particulars were not immediately available.

Corman said the discussions now were solely on the balance sheet and overall spend, and that discussions of legislation would come later.

Corbett’s initial offer was a $27.14 billion budget. That rose to nearly $27.5 billion in last week’s budget talks, a figure that would allow the state to finish the year with a $500 million surplus to deal with sharply spiking pension, prison and welfare costs.

The House and Senate GOP responded with a budget that called for more than $27.7 billion in spending. That budget presumed finishing the upcoming budget year with $267 million left over and was based on revenues similar to those in the IFO report, Corman said.

Therefore it will not change the budget talks much, he said, also noting that “now we are at the point where the governor’s office will officially certify the revenues and so while we are grateful that the IFO got us here, and I think the governor’s office numbers will be very close to theirs, now we deal with the governor’s numbers.”

After Corbett sent over his new offer Tuesday, House and Senate GOP leaders met at 4 p.m. to discuss it.

Budget negotiators said the offer represented a small step towards the House-Senate GOP position by the governor, and they were hopeful it was the next step towards reaching an overall agreement.

But Democrats said it was not nearly enough. After the May 1 IFO revenue estimate came out, House and Senate Democratic leaders said the state could afford to spend $1.1 billion more than Corbett proposed, counting the $300 million in surplus this year and the proposed $800 million revenue increase for next year.

The House-Senate GOP proposal’s spending increase is about $700 million more than the governor’s proposal, because it does not contain revenue measures the governor proposed.

“Given their decision to essentially stick with their original forecast, I think it can only strengthen the argument for an increased spend,” said Randy Albright, Senate Democratic Appropriations Committee director. He added: “We said the year-end revenue shortfall would be less than $300 million, and we still believe that.”

House Appropriations Committee Minority Chairman Joe Markosek, D-Allegheny, said, “I’m pleased to see the IFO is, again, backing up our own projections that clearly show Gov. Corbett’s numbers were way off. Clearly, there are hundreds of millions of dollars more that can, and should, be invested in education, health care services, environmental protection and job training that people need.”

Markosek continued, “It’s difficult to determine how budget negotiations might be affected because the governor and GOP leaders are holding those negotiations behind closed doors and with no input from House Democrats.”

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