State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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Pa. budget chief: $1.4 billion shortfall next year

Written by Mary Wilson, Former Capitol Bureau Chief | Dec 18, 2013 8:00 PM
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The state's top numbers cruncher says that if the current financial picture holds, the commonwealth could face up to a budget shortfall in the next fiscal year of up to $1.4 billion.

The deficit is due largely to rising health care and pension costs. A reduction in federal funds for medical assistance and an increase in costs within the state's prison system are also contributing to the gap.

Budget Secretary Charles Zogby is used to being the bearer of bad news. Last year around this time, he was issuing a similarly bleak picture. This year, Zogby was emphatic that further cuts are pretty much off the table.

"You know, members, the governor at the top of the list, have been exhausted by cuts," he said. "And I think we're trying to have a budget that makes the kind of investment that the governor wants to see and looking at ways to generate revenue - small games of chance being an example."

Small games of chance were legalized in bars and taverns last month. The change is estimated to bring in about $150 million to the state annually. Zogby urged lawmakers not to rule out other revenue-raising measures, except for broad-based taxes.

"My message to lawmakers is, we've got a very challenging year ahead of us," Zogby said. "And I think at this stage we should not be in a position where we just dismiss options out of hand."

The news of the large shortfall comes at the mid-point of the fiscal year, less than two months before the governor is scheduled to propose next year's spending plan.

"It's like, how many times can you be hit over the head before you wake up and realize that something can be done differently?" said Democratic Senate Minority Leader Jay Costa.

Senate Democrats say the mid-year budget briefing shows that the Corbett administration's policies have failed.

His caucus is pushing its own menu of revenue-raising measures, like taxing smokeless tobacco and halting the phase-out of the capital stock and franchise tax. The single largest money-maker on their list is a proposal to expand Medicaid under the Affordable Care Act, a non-starter with Corbett, who is pursuing overhauling the program to extend health insurance to low-income Pennsylvanians.

The budget secretary's warning to lawmakers to look for extra revenue comes as the state Senate is mulling legislation to expand the state lottery, and looks to squeeze more money out of the gambling industry by way of casinos and, potentially, online gambling.

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