State analyzes its budget outlook
State tax revenues have exceeded budget estimates so far this fiscal year, but Pennsylvania continues to face challenges going forward, according to the Office of the Budget's mid-year briefing.
Released Monday, the briefing outlines the state’s current fiscal position as well as factors affecting budget planning for 2013-14. Budget Secretary Charles Zogby is scheduled to present the briefing this afternoon at the Capitol.
The state collected $9.79 billion in taxes and other revenue in the first five months of 2012-13, which was $59.1 million or 0.6 percent more than expected, the budget office said. Corporate taxes were 18.3 percent above estimates, the office said. The state’s fiscal year runs July 1 to June 30.
The bond issue undertaken this year to fund the state’s unemployment compensation debt will save the state $380 million annually and save employers $150 million, the briefing said. The state also has saved money by cutting 1,811 government positions since Gov. Tom Corbett took office, the document said.
However, personnel costs will stress the budget going forward, the briefing said. On average, state employee benefits costs will rise 16.5 percent in 2013-14, driving a total average compensation increase of 7.9 percent, it said.
Pension, welfare and corrections costs will be major issues for 2013-14, the budget office said. Corbett remains committed to balancing the budget without new taxes, it said.
Lastly, the briefing touched on the fiscal cliff. The impact on Pennsylvania if the impasse in Washington, D.C., is not resolved could be about $300 million, primarily due to cuts in education, workforce investment, social services and community grants, the budget office said.