New IFO Report Emphasizes Need to Reform Spending

State Faces up to $900 Million Budget Hole This Year

November 16, 2016, Harrisburg, Pa.—Yesterday’s Independent Fiscal Office (IFO) mid-year report warned Pennsylvania could face a $900 million budget shortfall this year alone. By 2022, this deficit could reach $3 billion per year.

“These projections should surprise absolutely no one,” commented Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation. “When this year’s $31.5 billion budget was passed, it spent $1.1 billion more than available revenue. To make up the difference, Gov. Wolf and lawmakers relied on $650 million in new taxes, including unreliable tobacco and e-cigarette taxes, as well as revenue from online gambling, which hasn’t even been legalized.

“When you consistently spend more than you bring in and then try to patch the hole with questionable or non-existent revenue sources, you’re going to end up with a deficit.”

The Commonwealth Foundation recently released its November 2016 Pennsylvania Deficit Watch, which tracks the monthly budget shortfall. To date, revenue collections for the 2016-17 fiscal year are $182.4 million below estimates.

“The way out of a budget hole is not higher taxes,” Stelle continued. “Instead of continuing to spend beyond our means and expect taxpayers to foot the bill, Gov. Wolf and lawmakers must tackle our fastest-growing spending areas, particularly human services and public pensions. Additionally, in the short term, Harrisburg should stop doling out more than $800 million in arbitrary corporate welfare to politically connected businesses. This alone would nearly close this year’s projected budget deficit.”

Elizabeth Stelle and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or gld@commonwealthfoundation.org to schedule an interview.

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