Wolf Administration Reports Fiscal Turnaround, Contradicts IFO Projections

Dec 15, 2017

After several years of shaky finances, Governor Tom Wolf’s administration says Pennsylvania’s fiscal health is now the best it has been since the Great Recession.

In his annual mid-year briefing, Budget Secretary Randy Albright said his office is predicting a roughly $30 million surplus at the end of this fiscal year—enough to start putting some money back into the commonwealth’s long-neglected rainy-day fund.

While that’s small relative to the state’s $32 billion operating budget, it’s better than the $1.5 billion shortfall lawmakers had to fill at the end of last fiscal year.

The state’s Independent Fiscal Office—which is nonpartisan—agreed that this year will probably end with a surplus, estimating it would actually be a few tens of millions higher than the administration’s number.

But when it comes to next year’s fiscal situation, the predictions diverge.

The IFO’s latest report, released last month, says lawmakers should account for about a $1 billion imbalance in their 2018-19 budget, which they’ll start publicly negotiating in February.

That would mean coming up with $1 billion in new revenue—something the state has lately struggled to do.

However, Albright has a different view of the fiscal situation.

He wouldn’t say specifically what size imbalance the administration is anticipating for the 2018-19 year, but indicated he thinks it might be negligible.

“We don’t agree at all with the IFO’s forecast,” he said. “We think those forecasts overestimated expenditures by several hundred million dollars, and likewise underestimated revenues in a like amount.”

IFO Director Matthew Knittel is standing by his numbers.

He said he thinks the administration is banking on too much money from a gaming expansion, among several other things.

“The administration has [gaming] generating about $200 million. We have it closer to $100 million,” he said.

Albright stressed, a key reason the fiscal picture has improved is the roughly $2 billion the state has saved through measures like reducing state worker complements and prison populations.