Finance - December 20, 2013

Budget Secretary holds midyear briefing

Budget Secretary Charles Zogby held his midyear budget briefing this past week and noted there is projected to be a $1.2 billion to $1.4 billion hole in the budget for the 2014-15 fiscal year.  Secretary Zogby announced that Pennsylvania is on track to end this fiscal year in a balance but the Commonwealth faces significant challenges for the next fiscal year.  That projected hole takes into account growth for the some 2,000 line items in the budget with no new spending.  In years past state employees have been cut along with administrative costs being reduced; there isn’t much room for further reductions in those areas.  Corbett continues to pledge no new taxes as part of re-election strategy; leaving the administration to look for other ways to drive revenue and reduce costs.  The state is on the hook to contribute $610 million to two pension funds next year and Corbett is looking to address the pension issue moving forward.  That $610 million will account for a large part of the projected revenue growth.  As far as new revenue, the state legalized small games of chance for bars and taverns this year which could generate as much as $156 million.  Senate Democrats also pitched their plan to raise revenue recently; which included expanding Medicaid under the Affordable Care Act, taxing smokeless tobacco, and making changes to hiring and pricing laws at the PA Liquor Control Board.


PA House votes to reduce size of legislature

The Pennsylvania House of Representatives in a landmark vote this week, approved legislation that would reduce the size of the Pennsylvania legislature.  The bill to reduce the size of the House was approved by a vote of 148-50 and one to reduce the size of the Senate was approved by a vote of 150-48 after a lengthy floor debate.  The Senate would still need to approve both bills and would then be put before the citizens of the Commonwealth for final approval.  The arduous process; if all goes well, would take more than ten years to actually reduce the number of legislators.  Both bills would need to be passed this session and identical bills would need to be passed next session, in 2016-16.  Voters would then need to approve the referendum “in the election immediately following” the final legislative vote; November 2015 would be the very earliest opportunity for that referendum.  The process is designed to prevent hasty changes to the state constitution and has only been done eight times in Pennsylvania history.  2022 would be the earliest election that could see a reduction in legislators as new legislative boundaries would be drawn after the 2021 redistricting after the 2020 census.   Senate Majority Leader Dominic Pileggi has indicated interest in the idea of reduction even though the Senate has not moved similar legislation thus far.


Happy Holidays and Happy New Year from The Winter Group

We'll be back in 2014!