Economy
5:44 pm
Tue December 20, 2011

Dire Cuts Predicted for 2012-2013 State Budget

State-funded programs and departments should brace for impact when the Pennsylvania budget is passed next summer.

The state budget for 2012-2013 will make cuts much deeper than those used to balance the current spending plan, according to predictions from the Corbett administration.

Budget Secretary Charles Zogby said on Tuesday that the state is facing a revenue shortfall of at least $500 million in the current budget year, which will carry over into next year's fiscal plan, creating a massive financial gap.

Combining that with a rise in pension payouts and other mandated costs, Governor Tom Corbett and the General Assembly are faced with a predicted deficit in 2012-2013 of at least $750 million.

Zogby said that Corbett is determined not to raise taxes for individual residents.

"We're going to have to find it somewhere in the enterprise, through efficiencies, through cuts, through other things that will bring this into balance, but that's what we're committed to do, and I think ultimately our Commonwealth and our fiscal state will be stronger for it." said Zogby.

"These are decisions that have been deferred for too long," he added, emphatically.

Citing an "erosion" of revenue estimates, Zogby said that his office is also working to put several proposals for a budget freeze on Corbett's desk before the year's end, as per the governor's order.

"I expect that we will have options for the governor, and that the governor will act on those options by the end of the calendar year," said Zogby.

Zogby pointed to several coalescing financial factors: a rise in pension obligations next year, especially for retiring school employees; an increase in federally-required welfare spending; and of course, a generally tepid economy that's resulted in a lack of expected revenues.

The state is $345 million shy of its revenue expectations so far this fiscal year. The official estimate is for a shortfall of half a billion dollars by the end of the fiscal year in June, but Zogby said that his personal prediction is for a substantially larger deficit.

The Budget Secretary praised Corbett's ability to trim spending in the current budget, and said that the governor is now asking the various departments of his administration to think of creative ways to absorb across-the-board cuts of about five percent.