HARRISBURG - Pennsylvania got a double whammy of bad news Thursday in separate reports, one projecting a nearly $2 billion budget deficit, and another saying the state had maxed out its borrowing.
The Independent Fiscal Office, in its long-term economic and budget outlook report, estimates a $1.85 billion shortfall in fiscal year 2015-16, based in large part on reliance on onetime revenue sources.
"The non-recurring revenues and one-time costs savings employed in the FY 2014-15 budget contribute significantly to this deficit," said Matthew Kittel, the fiscal office's director, adding that rising pension costs also are a factor in the poor fiscal outlook.
Meanwhile, Treasurer Rob McCord said the state will soon max out a $1.5 billion line of credit that precipitated credit downgrades with rating agencies.
So far this year, the state has borrowed $1.45 billion from the treasury to address cash-balance shortfalls and next week, it will use the last $50 million, McCord said in a news release.
"We see a deteriorating financial scenario that casts serious doubt on Pennsylvania's ability to balance its budget this year," McCord said. "The state's fiscal health remains precarious."
Gov. Corbett signed a $29 billion budget in July, but it was balanced with more than $2 billion in onetime savings.
Gov.-elect Tom Wolf, a Democrat, called the fiscal report bad news for Pennsylvania and said the depth of the budget hole could worsen.
"Today's report showing a multi-billion dollar budget deficit is a stark reminder of the dire fiscal situation my administration will face," Wolf said in a statement. "As bad as today's news is, what lies ahead could be worse."
Sen. Vincent Hughes (D., Phila.), the ranking Democrat on the Senate Appropriations Committee, blamed Corbett for giving tax breaks to corporations and not imposing a shale gas tax.
Corbett spokesman Jay Pagni said the governor tried to address pension costs and generate new revenue through the sale of state liquor stores and lottery management, but those ideas were rejected.
The bleak picture will pose challenges for the new Democratic governor who takes office just as the makeup of the Republicans in the General Assembly leadership ranks takes a shift to the right.
The shortfall may provide some leverage for Wolf to get an agreement with the GOP-led legislature on a shale tax, a campaign promise he pledged to fulfill.
But it could hamper his efforts to put more money into education. Democrats contend - after budget cuts imposed during the Corbett administration - there is no place left to cut in state government.
BY THE NUMBERS
expected annual Pa. revenue growth over next five years.
expected annual costs growth over next five years.
amount left on state's
line of credit.
SOURCE: Pa. Independent Fiscal Office