Having read The Patriot-News’ recent characterization of tax collections as a budget “surplus,” I’m compelled to remind readers that while we’re encouraged that tax revenues are nearly $540 million over estimate through May, it’s misguided to talk in terms of surplus when we’re facing a $4.2 billion deficit.
The reality is that nearly half of that $540 million, $260 million in one-time payments, is revenue that won’t likely recur next year. Additionally, accelerated sales tax payments this fiscal year will provide one-time revenues that won’t happen next year, and bonus depreciation further reduces next year’s budgetary baseline. All of that is to say that next year’s budget estimates won’t vary much from what we’ve already forecast because we can’t count on money that might not be collected.
Real downside risk and volatility continue to plague the economy’s subdued recovery. Additionally, uncertainty with regard to unemployment, oil prices, inflation, the stock market, interest rates, the housing market and consumer confidence make a $27.3 billion budget the responsible revenue projection.
Simply put, this administration will not build a budget on anything but reality. To do so would risk falling into the same trap the federal stimulus led us into: spending one-time money as if it would always be there.
As the governor campaigned and continues to reinforce throughout budget negotiations, Pennsylvania does not have a revenue problem, we have a spending problem.
PA Department of Revenue