Finally, some good news on the state budget?
News blogs, sports blogs, entertainment blogs, and more from Philly.com, The Philadelphia Inquirer and the Philadelphia Daily News.
Finally, some good news on the state budget?
Could there finally be light at the end of the state budget tunnel? That's the question we're asking since Gov. Ed Rendell announced that the projected budget deficit for the 2010-2011 fiscal year is only $53 million. That might sound like a lot of red ink, but it's nothing compared to the multibillion dollar gaps that have plagued the state for the past couple of years.
The bulk of the good news comes from data on tax collections. According to the Department of Revenue, taxes are coming in about $14 million higher than originally estimated. The biggest increase is in corporate taxes, which are nearly 8 percent higher than was projected at the beginning of the year. The state sales tax is also bringing in about 2 percent more than expected.
This is a positive development and not just because it means state government could have more money. It's also a sign that the sluggish economy might finally be showing signs of real growth. The increase in corporate taxes means that companies are starting to become more profitable and that could lead to more hiring in the near future. And the increase in sales taxes means that people are finally spending again.
However, there is also some bad news. The personal income tax remains relatively flat, which means that people's incomes are still stagnant. The income tax is one of the biggest sources of revenue for state government, so the budget picture won't substantially improve until that starts to increase. And since sagging tax revenue is the biggest driver of the past few years of budget deficits, that's an incredibly important part of the state's overall recovery. And the fact that there is a mid-year deficit means that Rendell will likely have to take some kind of action to fill the hole.
So what does this mean for incoming Governor Tom Corbett? The $53 million figure is the current budget deficit, not next year when Corbett will be in the driver's seat. Thanks to a combination of factors-- including the stimulus funds running out and disappearance of other one time revenue sources-- the state will still face a big deficit in the next fiscal year, perhaps as high as $4 billion.
Still, the news that some tax revenue is coming in higher than expected could mean that Corbett will face less pressure to make deep cuts in state spending or find other ways to generate revenue, such as selling off the state liquor stores. That will make it easier for him to keep his campaign promise not to raise taxes.
Of course, if we've learned anything about government finances over the past year, it's that these things are very unpredictable. So, while there may be a light at the end of the tunnel, Pennsylvania is hardly out of the woods yet.
Follow us on Twitter and review city services on our sister site, City Howl.
Comment removed.
Ben,
To refute someones argument you cite inflation as a reason for the increase in budgets. This make sense. Then you say that the sales tax collection increase is due to people spending more. Perhaps it is due to the same inflation that you cited in your argument. Which one is it.— zumper- Comment removed.
- Ben, Does the budget numbers you discuss include the increase in borrowing under Rendell, or does it just include the debt service. I do not know the answer, but if it only includes the debt service then it may be misleading.— zumper
- As is typical of this board, the "we hate Ed" contingent is light on actual facts. The truth is that PA is in much better shape than many other states, despite a national economic downturn that started during the Bush mis-administration.
Ironic, isn't it, that the party that wants to give millionaires a tax break by further running up the national deficit has the temerity to complain?— Speakingtruth - Comment removed.
- Comment removed.
- There have been countless studies that show more tax dollars flow from the so-called "blue states" to the so-called "red states." That's partially true because so many millionaires (and billionaires) live in places like New York City, Boston, SF, LA, etc. And not so much in Arkansas, Alabama, and Mississippi.
Frankly, I think it's kind of a bogus argument. We're one country and we do better when EVERYONE does better.— benwaxman - The Democrats have held national and local office for years in various states. None of those states is gone, so lying about Democrats running things into the ground is just lazy.— HandNik
- Ben: Does Fast Eddie ever take questions from you stenographers [aka the media] and if so, what is the toughest question you ever asked him about his increasing state spending by 45% in his 8 years as governor?— justablogger99
- Well, the general fund in 2002 was $20.7 billion. Rendell's last budget was $28.03 billion. That's a 35 percent increase. So, no, I've never asked him about your imaginary number. — benwaxman
- Also, $20.7 billion, adjusted for inflation, is about $24 billion. That's the normal increase of the cost of doing business, including paying salaries, healthcare (which has increased a lot more than inflation), materials, and other costs. That was going to happen no matter who was governor. Now, I'm not going to argue Rendell hasn't increased spending-- he has, especially in basic education-- but the idea that he's hiked spending by 45 percent or even 35 percent is pretty misleading. — benwaxman
- Ben - you're wasting your time trying to explain reality to people who long ago decided they were entitled to their own partisan math/facts. Critical analysis is simply not part of their intellectual capacity. — Speakingtruth
- The good news is Ed Rendell is too occupied chasing leggy blondes to mess up the Commonwealth more than he has.
Talk about a failure as governor.— Rollie Kenmore 
The Fy 2010-2011 revenue budget was balanced with a $500 million+ increase in non-tax revenues ($460.6 to $1,025.4. Y-t-d non tax revenues are below estimates and the bulk of the big increase was back loaded to June 2010. $311.5 million labeled "miscellaneous" and $304.5 million labeled "transfers". In Fy 2010 the numbers were $30.8 and $22.8 million respectively. Think this revenue will materialize or will it be Ed Spendell's final slap at the taxpayers?- Comment removed.
- isn't a large portion of that $4 bn a one time payment for "borrowed" unemployment? if so, selling the plcb is looking more and more attractive as the state doesn't need a huge, new recurring revenue source?— dreinterests
