Budget outlook gloomy

The hopes for sunnier fiscal days after years of gloomy weather appear to be fading fast after the latest report on state revenue.

Now the fiscal forecast has the feel of early April. It’s slightly better than the cold of winter, but no one will be basking all day in a T-shirt and shorts.

The Department of Revenue said Wednesday that General Fund income in April was slightly better than expected 10 months ago but far short of the rosier forecast the Corbett administration had issued in February. Pennsylvania collected $3.6 billion in April or about $31.7 million more than first anticipated.

And fiscal year to date, General Fund revenues are running $67.2 million above those initial estimates. That’s good, but when Gov. Tom Corbett’s proposed his budget for the next fiscal year in February, it was based on ending the current fiscal year on June 30 with a $230 million surplus.

Everyone seems to agree: That isn’t going to happen, largely because sales tax receipts are $309 million less than anticipated.

State Revenue Department spokeswoman Elizabeth Brassell summed it up saying, “In terms of our prediction of a $232 million surplus in February, we now can see that is unlikely, mostly due to sales tax” shortfalls. “There are two months left in the fiscal year, and it is looking unlikely we will see any significant revenue increases for this year,” Capitolwire reports.

It actually could be worse. The Independent Fiscal Office said it expects the current $67 million surplus will disappear by June 30 and is predicting that revenues in the next fiscal year that starts July 1 will be $520 million less than Corbett predicted in February.

That’s going to make coming up with the next budget much more challenging, especially given the reductions the administration and Legislature have made in the past couple of years to avoid ending in the red, which they constitutionally are not allowed to do.

Further complicating the picture is that the state will face higher costs in some areas where the state has little control the level of spending.

In December, when the Corbett administration was trying to point out the need for pension reform, it said the state would have $1.3 billion in new costs in just four areas: $511,342 more in pension costs, $650 million in medical assistance largely because of long-term care expenses for the elderly, $89 million more in debt service and $65 million to run the corrections system.

It will be much harder to cover these costs without the anticipated revenue surpluses. It appears likely that 2013-14 will prove fiscally challenging, requiring difficult choices.

Like the weather, Pennsylvanians individually don’t have control over General Fund revenue.

But by paying attention to the forecasts, they can best prepare themselves and their families for the less ideal conditions that appear heading their way.