Government & Politics
7:40 am
Mon August 11, 2014

PA's Revenue Estimates Need Improvement, Policy Researchers Say

Creating a viable state budget depends heavily on knowing how much money will be available to spend. According to a recent report by the left-leaning Center on Budget and Policy Priorities (CBPP), Pennsylvania’s annual revenue estimate is one of the least accurate among the 50 states.

The report evaluated states by identifying five “best practices” that supposedly create reliable revenue estimates to guide state spending. PA scored a two out of five, and ranked below 38 states.

According to the report, Pennsylvania needs to create a revenue estimate with greater consensus between the Legislature and the governor’s office, rely more on experts and make the process more transparent and open to the public.

Sharon Ward, director of the Pennsylvania Budget and Policy Center, said PA’s current estimation system leads to conflict and confusion.

“Right now, the Department of Revenue generates an estimate,” Ward said. “There’s also an additional body, the Independent Fiscal Office, and that office also creates a revenue estimate. There are two different estimates, and state lawmakers can pick whichever estimate they want.”

The Department of Revenue and the Office of the Budget are both part of the executive branch. The Independent Fiscal Office was created in 2010 as a non-partisan financial analysis body.

State Secretary of the Budget Charles Zogby said the CBPP does not have all the information when it comes to Pennsylvania’s estimating process.

“I think what the report doesn’t recognize is the fact that there already is a fair degree of cooperation that’s built into the process currently,” he said. “There’s a fair amount of cooperation and dialogue and interaction that takes place in the process currently that maybe isn’t fully appreciated or recognized in the center’s own report.”

However, Ward pointed out that having two different revenue numbers from two different groups caused confusion during the creation of this year’s budget.

“There was a lot of discussion in this year’s budget about the revenue estimate, and I think it’s fair to say that there’s a lot of concern about the final revenue estimate that was used, which was not either the governor’s initial estimate or the Independent Fiscal Office’s final estimate,” Ward said.

Ward suggested that Pennsylvania improve its revenue projection system by producing one estimate each year through cooperation among the Department of Revenue, the Budget Office and the Independent Fiscal Office. She also recommended that those organizations make estimate-creating meetings more open to the public to increase trust in the process.