Overview of needs and challenges:
Successful completion of a state budget for FY 2017-2018 will be a monumental challenge for both the Governor and the legislature. Since July, state revenues collected have been over $300 million below revenues projected for the current year’s budget. And a recent report issued by the state Independent Fiscal Office ISO) not only projected a $700 million revenue deficit for the current fiscal year, but also continued deficits in upcoming fiscal years under current sources and rates of tax revenue and estimates of expenditures. ISO’s 5-year outlook projected the annual budget deficit could reach $3 billion by 2021. Without serious corrective measures, Pennsylvania could find itself in drastic financial shape, with even greater tax revenues being diverted to not only pay for the current deficit and increased deficits for upcoming years but also to pay for the additional costs of financing the debt resulting from likely downgrading of the Commonwealth’s credit rating.
Something has to give. Either existing taxes need to be increased, new sources of tax need to be created, or existing lines and appropriations need to be seriously reduced to meet Pennsylvania’s budget challenge. And someone will have to feel the pain of any final resolution of the fiscal and budgetary challenges faced by Pennsylvania in the current and future fiscal years, either in the form of higher taxes being paid by Commonwealth citizens or serious cuts in programs that have been historically funded, or both.
The Governor’s proposed budget cuts over $2 billion in spending and proposes to raise revenue by about $1 billion without an across the board tax hike in income or sales tax. Proposed cuts in agricultural priorities include discretionary lines under the Pennsylvania Department of Agriculture being zeroed out such as agricultural research, Centers for Dairy and Beef Excellence and PA Preferred as examples. Also, $30 million in funding cuts for PennVet is proposed by the Governor and Farm Bureau is concerned about the impact on the shortage of large animal veterinarians in the state. On the positive side of the proposed budget, the Pennsylvania Department of Agriculture is proposed to receive a $2.2 million boost in their operations, and Penn State Agricultural Research and Extension funding remains unchanged along with other priorities such as the Animal Health Commission and labs.