Pa. top budget official predicts another tough year

HARRISBURG - There will be no break in the bad budget news that has been streaming from the Capitol for the last two years.

Pennsylvania's top budget official, Charles Zogby, painted a gloomy forecast Wednesday for the next fiscal year, citing looming increases in the cost of pensions and medical-assistance programs made worse by a dearth of reserves from which to pluck money.

"I think, in many respects, the '13-'14 budget is going to be the most difficult budget that we've had thus far in what have been two very difficult budgets," said Zogby, Gov. Corbett's budget secretary.

Given the Corbett administration's deep budget cuts over the last two years, that is saying something.

How that will play out when Corbett delivers his budget speech in early February remains a question mark. Zogby was circumspect when asked whether the administration would seek deep spending cuts for a third year in a row.

Instead, he noted that his office was predicting a $1.3 billion spike in the cost of funding, primarily pensions and Medicaid.

Then there is the uncertainty of mandatory federal spending cuts that could emanate from the fiscal cliff.

Although Zogby said the state's economic forecasting firm assumed that Republicans and Democrats in Washington would strike a deal, his office was calculating a loss of up to $300 million if there were no agreement. Among the biggest losers: special education and poor school districts, which receive the bulk of those dollars.

The state, Zogby said Wednesday, would not make up for the federal funding loss.

Corbett, who took a campaign pledge not to increase taxes, has said he would stick to the promise.

In his first two budgets, Corbett cut spending on education, social services, and aid for the poor to help balance the books.

His critics have noted that he did so while giving millions in tax reductions to businesses.

"Hundreds of millions of dollars in new business tax cuts enacted over the past two years are a major contributing factor to the gap between revenue and expenditures," said Sharon Ward, executive director of the Pennsylvania Budget and Policy Center in Harrisburg. "Lawmakers have dug a hole in the next budget with special tax breaks that have failed to create jobs but do threaten the state's ability to invest in the fundamentals that ensure long-term growth."

Earlier in the week, legislative Democrats also blasted away at the administration's budget stance, contending that Corbett and his top staffers have focused on cutting at the expense of finding ways to achieve growth through a formula they believe was more effective: investment in education, infrastructure, and transportation.

Zogby said he was trying to produce a budget plan that avoided deep spending cuts.

"I think we are working toward that," he said. "Whether it's achievable or not, I guess you will have to wait until Feb. 5 to see. The cake is not baked yet."