Pennsylvania won’t ring in happy new year

The “Happy New Year” greeting on the lips of Pennsylvania residents six weeks from now won’t be appropriate for state government in Harrisburg, if the Legislature’s independent budget analyst is correct.

According to an article in Wednesday’s Mirror, the Independent Fiscal Office has warned that the commonwealth could be facing a $1.7 billion shortfall for the 2017-18 fiscal year that begins July 1 — partly because measures approved for the current fiscal year have had only limited success in reducing state government’s long-term deficit.

Meanwhile, the fiscal office is projecting big deficits for the next several years at least, as well as a shortfall of more than half a billion dollars in the current $31 billion state spending package.

Those projections won’t improve the commonwealth’s bond rating, which credit agencies have downgraded due to years of Harrisburg’s failing to come to grips with its fiscal problems.

Pennsylvania’s bond rating now is among the lowest of the 50 states.

Common practice in Harrisburg is to “kick the can down the road” and hope for a financial miracle.

State government has insulated itself with unrealistic money projections, and state lawmakers haven’t yet finished all of the 2016-17 work that was supposed to help balance this year’s budget.

Rather than toasting each other with New Year’s greetings, lawmakers and the governor need to get to work without delay, and in a spirit of compromise, not partisan obstruction.

During the two most recent fiscal years, state government wrestled with shortfalls in the range of $2 billion, so perhaps there’s been some progress in addressing the structural deficit.

But clearly, whatever the progress — if there truly was any — must be characterized as anemic.

Now there’s more troubling reality besides what the Independent Fiscal Office has projected. The state might need to find hundreds of millions of additional dollars because the current state budget funds prisons and Medicaid programs at more than $300 million below what Gov. Tom Wolf had said would be necessary to cover costs.

There’s no optimism in the fact that tax collections through October were running behind projections, and even behind collections through the same point last year.

That shows that the $1.3 billion election-year enhanced-revenue package approved earlier this year hasn’t met Harrisburg’s expectations.

Part of the blame rests with Harrisburg’s failure to approve a gambling expansion that actually must be characterized as not really within the commonwealth’s overall best interests.

At the same time, the Legislature plugged into the current budget $200 million in “incoming revenue” that was in fact a loan from a state medical malpractice insurance fund.

That’s $200 million that the state will have to find for 2017-18 for the loan to be repaid.

A major additional expenditure for the future will be paying for hundreds of thousands of people newly eligible for medical care under an expansion of Medicaid guidelines that took effect last year.

Commendably, the state has been able to “get by” without most of the tax-increase proposals Wolf has put forth. But minus a significant economic boost that greatly increases revenue for state coffers without upping tax rates, the question becomes how much longer Pennsylvania will be able to muddle along without  stabilizing the commonwealth fiscally once and for all.

“Happy New Year?”

For Harrisburg, it seems likely to be anything but that.

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