The Commonwealth Foundation has criticized the enacted $27.799 billion state General Fund Budget deal for taxing too much, spending too much, and putting Pennsylvania on an unsustainable path in the future.
Two scenarios follow. The first is based on historic revenue and expenditure assumptions. The second is based on "best case" assumptions. Unfortunately, even if the Pennsylvania economy recovered to unprecedented level in next two years, there is no way it could possibly produce enough tax revenue to bridge the budgetary canyon that will emerge when 1) the federal stimulus money drops in 2010 and then disappears in 2011, and 2) the pension obligations for PSERS and SERS come due in 2012.
In the historic case scenario, a projected $460 million budget deficit will likely emerge next year, a $4.3 billion budget deficit in 2011, and a $12.8 billion budget deficit in 2012.
Even in the best case scenario, a projected $4.2 billion budget deficit will emerge in 2012.
Budget Analysis: Why it is Unsustainable
Historical Case Scenario Assumptions
| General Fund Revenue Sources | 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 |
| General Fund Revenue Projections | $24,255,000 | $24,255,000 | $24,982,650 | $25,981,956 | $27,281,054 |
| CSFT Increase | $374,000 | $550,600 | $572,624 | $601,255 | |
| Cigarette Tax Hike | $97,000 | $146,000 | $151,840 | $159,432 | |
| Table Games License Fees and Tax | $200,000 | $100,000 | $104,000 | $109,200 | |
| Small Cigar Tax | $16,100 | $25,300 | $26,312 | $27,628 | |
| Redirect of Cigarette Tax from HCRPA | $171,000 | $176,130 | $183,175 | $192,334 | |
| Redirect of Drivers Fines | $44,000 | $45,320 | $47,133 | $49,489 | |
| Eliminating Tobacco Cessation | $16,000 | $16,000 | $16,000 | $16,000 | |
| Suspension of Tax Credits | $39,000 | $75,000 | $75,000 | $75,000 | |
| Medicaid MCOs | $528,500 | $529,500 | $550,680 | $578,214 | |
| Oil and Gas Lease Fund | $208,000 | $30,000 | |||
| One-Time General Fund Revenue Sources | $2,140,000 | $184,000 | |||
| NOL/SSF Changes | ($74,000) | ($76,220) | ($79,269) | ($83,232) | |
| Total State Revenue & One Time Sources | $24,255,000 | $28,014,600 | $26,784,280 | $27,629,451 | $29,006,374 |
| Federal Stimulus Funding | $1,083,000 | $2,621,179 | $1,900,000 | $0 | $0 |
| Fund Balance + Prior Lapses | $585,000 | ($2,400,830) | $435,091 | ($459,678) | ($4,302,335)) |
| TOTAL General Fund REVENUES | $25,923,000 | $28,234,949 | $29,119,371 | $27,169,773 | $24,704,039 |
| Historic Revenue Assumption | 0% | 3% | 4% | 5% | |
| TOTAL General Fund EXPENDITURES | $28,323,830 | $27,799,858 | $29,579,049 | $31,472,108 | $33,486,323 |
| PSERS/SERS Pension Increase (State Share) | $4,065,246 | ||||
| $37,551,569 | |||||
| Historic (Rendell) Average Expenditure Assumption | 6.4% | 6.4% | 6.4% | ||
| TOTAL General Fund BUDGET SURPLUS/(SHORTFALL) | ($2,400,830) | $435,091 | ($459,678) | ($4,302,335) | ($12,847,530) |
| UNREALISTIC REVENUE GROWTH TO AVERT ADDITIONAL TAX INCREASES or SPENDING CUTS | 13.66% | 13.70% | 19.32% |
Budget "Deal" Analysis: Why it is Unsustainable
Best Case Scenario Assumptions
| General Fund Revenue Sources | 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 |
| General Fund Revenue Projections | $24,255,000 | $24,497,550 | $25,477,452 | $26,751,325 | $28,356,404 |
| CSFT Increase | $374,000 | $550,600 | $578,130 | $612,818 | |
| Cigarette Tax Hike | $97,000 | $146,000 | $153,300 | $162,498 | |
| Table Games License Fees and Tax | $200,000 | $100,000 | $105,000 | $111,300 | |
| Small Cigar Tax | $16,100 | $25,300 | $26,565 | $28,159 | |
| Redirect of Cigarette Tax from HCRPA | $171,000 | $177,840 | $186,732 | $197,936 | |
| Redirect of Drivers Fines | $44,000 | $45,760 | $48,048 | $50,931 | |
| Eliminating Tobacco Cessation | $16,000 | $16,000 | $16,000 | $16,000 | |
| Suspension of Tax Credits | $39,000 | $75,000 | $75,000 | $75,000 | |
| Oil and Gas Lease Fund | $208,000 | $30,000 | |||
| Medicaid MCOs | $528,500 | $529,500 | $555,975 | $589,334 | |
| One-Time General Fund Revenue Sources | $2,140,000 | $160,400 | |||
| NOL/SSF Changes | ($74,000) | ($87,700) | ($92,085) | ($97,610) | |
| Total State Revenue & One Time Sources | $24,255,000 | $28,257,150 | $27,246,152 | $28,403,990 | $30,102,769 |
| Federal Stimulus Funding | $1,083,000 | $2,621,179 | $1,900,000 | $0 | $0 |
| Fund Balance + Prior Lapses | $585,000 | ($2,400,830) | $677,641 | $1,189,939 | $101,060 |
| TOTAL General Fund REVENUES | $25,923,000 | $28,477,499 | $29,823,793 | $29,593,929 | $30,203,828 |
| Robust Revenue Assumption | 1% | 4% | 5% | 6% | |
| TOTAL General Fund EXPENDITURES | $28,323,830 | $27,799,858 | $28,633,854 | $29,492,869 | $30,377,655 |
| PSERS/SERS Pension Increase (State Share) | $4,065,246 | ||||
| $34,442,901 | |||||
| Conservative Average Expenditure Assumption | 3.0% | 3.0% | 3.0% | ||
| TOTAL General Fund BUDGET SURPLUS/(SHORTFALL) | ($2,400,830) | $677,641 | $1,189,939 | $101,060 | ($4,239,073) |
| UNREALISTIC REVENUE GROWTH TO AVERT ADDITIONAL TAX INCREASES or SPENDING CUTS | 8.70% | 10.32% | 16.78% |
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RELATED : PENNSYLVANIA STATE BUDGET