Independent Fiscal Office: Deficit days ahead for Pa.
The Independent Fiscal Office on Thursday released its updated long-term economic and budget outlook for the commonwealth, which looks at Pennsylvania's fiscal position through 2018-19.
The report, which considers demographic, economic, revenue and expenditure trends that might affect fiscal position, projects a long-term structural deficit starting with the 2014-15 budget deliberations.
That’s because surplus funds carried over from 2010-11 have been steadily consumed and will be nearly exhausted by the end of the current fiscal year, according to the IFO.
Mandated employer contributions for pensions and health care inflation will continue to drive much of the expenditure growth in the five-year projections.
The unfunded liabilities of the Public School Employees’ Retirement System and the State Employees’ Retirement System are more than $47 billion.
The IFO is projecting population growth of 4.3 percent between 2010 and 2020.
However, the 19-and-under population is projected to decline by 1.8 percent. The working age population is not projected to grow, while the 65-plus group is slated to increase by 29.2 percent, according to the IFO.
These demographic trends threaten to diminish tax revenue and place additional pressure on expenditures such as medical assistance, according to the report.
As a result, economic output might be constrained.
The IFO is projecting the year-end general fund balance to be $530 million in the hole. That deficit grows to $839 million in 2014-15 and more than $2 billion by 2018-19, according to the report.