State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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Dueling revenue projections may not align for months

Written by Mary Wilson, Former Capitol Bureau Chief | Feb 10, 2014 10:57 PM
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Photo by G.R. Wilson

Lawmakers are scratching their heads over two different economic analyses key to forming a state budget, with a proposed spending increase of more than $900 million at stake.

The Corbett administration has projected a four percent revenue increase next year. The nonpartisan Independent Fiscal Office is more pessimistic, with revenue projections that come in about $375 million below the governor's for the next year-and-a-half.

IFO Director Matthew Knittel on Monday chalked the dueling projections up to his agency's relative pessimism about the labor market.

"What we've seen, over the past two or three years, is that we receive a forecast that has very optimistic job gains in it and then one year later, we're backing off of that forecast," IFO Director Matthew Knittel said. "That's happened since I've been here, in this capacity for two and a half years. So, for that reason, we're a little more cautious on the labor market."

The Corbett administration defended its own projection. Revenue Secretary Dan Meuser said the IFO's forecast doesn't consider certain factors.

"One of them is the commonwealth's transportation bill that will have some positive revenue effects and some real positive economic effects," Meuser said. He said the estimated revenue growth is based on the prediction that increased spending on infrastructure maintenance and construction will result in $41 million dollars coming into the commonwealth's coffers.

Lawmakers may not know until May just how much the transportation bill will boost state revenues - that's when the IFO plans to release a report studying the legislation's impact.

"It could be a wash," said Knittel, adding that greater state spending could be offset by a drop in consumer spending due to higher gas prices. The funding measure uncapped a tax on wholesale gas.

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