Budget chief Charles Zogby projects $500 million revenue shortfall in Pennsylvania’s general budget fund [The Patriot-News, Harrisburg, Pa.]

Dec. 21--Citing weak economic growth, Gov. Tom Corbett's budget secretary projected a $500 million revenue shortfall in the state's general fund budget Tuesday.

Secretary Charles Zogby said there's enough cause for concern that the administration will likely freeze some expenses.

Zogby said Corbett remains committed to addressing the state's fiscal challenges without increasing taxes. "I am not working under an assumption that I have additional revenue options. No tax increases," Zogby said.

He also said that after a year of cost cutting, the quest for efficiencies is still on, especially in programs such as public welfare and medical assistance programs.

"I wish I could stand up here and say that we have a robust economy with lots of growing revenues that we're going to be able to invest in areas like education or cutting taxes. But we're not in that position," Zogby said.

"So we have to deal with the reality of the world that we're in, not what we maybe would like to see."

Democrats quickly charged the Corbett administration with distorting reality to justify what they saw as politically driven spending cuts that have left some Pennsylvania residents without basic health insurance and forced many school districts to lay off teachers.

Senate Democrat budget analyst Randy Albright noted that through November, tax collections and other revenues are $212 million, or 2.3 percent, ahead of last year's pace. The administration's own financial forecasts assume revenue growth of 1.3 percent for the year.

"So, we're actually running a full percentage point above the rate our full-year estimate presumes," Albright said. "It's way too early to forecast that we're going to have a revenue shortfall. We're going to have to see."

Zogby, responding later, noted that Democrats pushed hardest for spending the unexpected $785 million revenue surplus the state turned last year. Corbett held most of that money in reserve.

"If we had taken their counsel, we would be in a much deeper fiscal hole today requiring much more dramatic cuts," Zogby said. "Thankfully, we didn't take their counsel. But they can't have it both ways."

Former legislative staffers from both parties said Tuesday's spin game reflects a long-standing tension between governors, who want to ensure that financial calamity doesn't happen on their watch, and lawmakers eager to bring home the bacon for their constituents.

The administration usually gives the more pessimistic spin, former Senate Democrat Appropriations Committee Director Paul Dlugolecki said, in part because "they want to contain the Legislature's appetite for spending."

Zogby said Tuesday that the $345 million revenue shortfall the administration has booked through November has led Corbett to task him with drawing up options for a midyear freeze on spending to keep the $27.1 billion spending plan balanced.

Zogby said decisions about a freeze will be made this month.

He also said $800 million in new expenses the state has to pay next year -- ballooning pension system contributions, rising welfare and medical-assistance costs and higher debt-service costs -- create a scenario in which few discretionary areas will see spending growth in fiscal year 2012-13, which begins July 1.

If revenues continue to lag projections and no steps are taken to adjust spending, Zogby said, the budget would start out $746 million in the red.

The administration has already asked state agencies to draft budget alternatives based on level funding and on a 5 percent cut to their bottom lines, to see what kind of an impact that type of cut would have.

"I think many folks thought that the budget that we just came through was a difficult one, and it was. I don't think any of us take any pleasure in what needed to be done to bring that budget into balance," Zogby said. "But in many respects 2012-13 is going to be an even more difficult challenge. The low-hanging fruit ... has been picked."

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