PA’s Independent Fiscal Office / State Employee Lay-offs

According to Pennsylvania’s Independent Fiscal Office (IFO), the state will face a structural deficit of $1.7 billion for the 2017 fiscal year.  That deficit is projected to grow to $3 billion by 2021. 

Democratic lawmakers blame a lack of tax revenue, Republicans blame government over-spending.

The IFO report points to the costs of human services including public pensions and Medicaid expansion – services whose expenditures are expected to grow as the state’s senior population continues to grow.

As Governor Wolf prepares the 2017-2018 annual budget, the stage is being set in the legislature for a fiscal brawl.  Added to this is the potential of a low-tax climate precipitated by the incoming Trump Administration.

Matthew Knittel, director of the Independent Fiscal Office will join Tuesday’s Smart Talk to discuss the numbers and how they will be used to craft policy in Harrisburg.  We will also look at how the state’s economy is measuring up in the national picture and some prognostications about what can be expected from the next president.

Also, the state senate failed to pass a budgeting bill that would have infused the Department of Labor and Industry with $57.5 million for unemployment call centers.  As a result, nearly 600 state employees working within the unemployment division will find themselves unemployed by the end of the year.

Opponents of the budget bill were critical of what they felt were previous misappropriations of funds.  Republican State Senator Scott Wagner of Spring Garden Township told the York Dispatch “They [the Department of Labor & Industry] didn’t get the job done and need to be held accountable. Let them close down.”

Conversely, Department of Labor & Industry Secretary Kathy Manderino said in a press release “The Senate put politics before people and now 600 employees will be without a job just before the holidays.  It’s beyond disappointing; it’s disgraceful.”

We’ll discuss the problems facing the public employees who work in the unemployment division with WITF Capitol Bureau Chief Katie Meyer.

EMAILS

on state budget:

– As a recent arrival to Pee from Virginia, I am astounded by the poor fiscal situation in Pennsylvania.

The state is rated as having one of the worst tax systems in terms of who it taxes; the most wealthy pay a lesser rate than middle and low income earners.  Yes, higher income earners pay more in actual dollars, but they have way more disposable income left.

It is no wonder that younger people are fleeing the state, wages are lower, taxes are higher.

It is a shame that taxes have been so demonized.  Taxes should be efficient and fair, but we have needs— and these are people with needs— and we are facing a structural problem that may ruin the state. – Laura

– Please ask him about cost of bloated state legislature and how that affects budget. Pennsylvania rated 4th from bottom in efficiency by Fiscalnote.inc.    – David

– The tax rate:

3% of 100,000 = 30,000 = $70,000 left over

3% of  10, 000  = 3,000 = $7,000 left over

The wealthy pay a lower rate in terms of their income and have sufficient resources left.  The poor take a huge hit.   – Laura

on state lay-offs:

– The lay-off of state employees is just the latest cutback that will keep Pennsylvania from being competitive in the 21st century.  Most agencies, especially DEP, are already operating without sufficient resources.  Instead of more cutbacks, legislators should have the courage to enact a natural gas severance tax and tax on pipelines like other states before considering other taxes that affect working people.  The price of natural gas is low so the impact to users is not substantial.  We’ve already lost 10 years of revenue from this valuable resource that has significant cost impacts for state government in monitoring and clean-up. – Gloria