Pa. has a surplus, and lots of budget patches, too

HARRISBURG, PA. >> In Pennsylvania, good fiscal times may not necessarily mean good fiscal condition.

The rage in the state Capitol right now is the surplus that state government rolled up in the almost-ended fiscal year, helped by unexpectedly strong corporate and sales tax collections.

That news alone is fueling requests from a legion of lobbyists with pet projects, but the momentary surplus has not necessarily changed views from the outside that Pennsylvania is a state with tall fiscal challenges.

“They’re not surprising to anybody,” said Montgomery County Rep. Matt Bradford, the ranking Democrat on the House Appropriations Committee. “I think anybody who knows the numbers knows the challenges are there.”

With the new fiscal year starting July 1, leaders of the Republican-controlled Legislature are drafting a counterproposal to Democratic Gov. Tom Wolf’s February proposal for $34.1 billion budget plan.

Wolf is seeking roughly $2 billion more in spending, or 6 percent more, counting his more recent request for $750 million to cover cost overruns in the current fiscal year.

The surplus is expected to cover the current year’s costs, ease the passage of an on-time budget and leave a respectable sum to deposit into a budgetary reserve that is relatively bare after a string of persistent deficits going back to the recession a decade ago.

Such a deposit hits on a key criticism of credit rating agencies: that Pennsylvania lacks reserve cash.

In the meantime, Pennsylvania remains among the lowest-rated states by credit-rating agencies, which tend to be critical of the state’s budgetmanagement practices.

One zinger earlier this month from Moody’s pointed to Pennsylvania’s public transit funding arrangement that is scheduled to shrink from $450 million to $50 million in 2022.

“The state has the capacity to fill this gap, but has routinely shown little willingness to enact structural solutions to its own budget challenges,” Moody’s analysts said in a research note.

Equally concerning to some state officials is the Pennsylvania Turnpike Commission’s rising tolls and deepening debt to supply the $450 million each year.

Wolf acknowledged that the transit funding arrangement is unsustainable and must be solved. But he otherwise flatly dismissed any suggestion the state has trouble managing its finances.

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