Governor Ed Rendell says Pennsylvania will likely face a modest deficit next year.
But that won’t make life any easier for Governor-elect Tom Corbett and incoming legislative leaders.
Halfway through the fiscal year, the estimated budget deficit is just 63 million dollars, compared to the hundreds of millions and billion-plus shortfalls predicted halfway through the last few budget years.
Rendell points out next year’s budget will still be a financial minefield, though.
"Mandatory costs for health care, prisons and debt service will continue to increase. Contractual salary increases and pension funding obligations will continue, and there’s no way those can be legally terminated. There was a contract salary increase in October, and one in January this year."
Not to mention more than two billion dollars in stimulus money that will disappear. Sales tax and corporate tax revenue is up, but income tax figures are lower than expected.
Pennsylvania added jobs last month, but Rendell says the growth is likely coming too late in the fiscal year to turn around income tax figures.
Rendell’s budget secretary, Mary Soderberg says the Corbett Administration will need to come up with a lot of money, just to produce a status quo budget.
"It’s going to be somewhere between 3.2 to 3.8 billion, depending on what their assumptions are on the expenditures side."
Republicans say they plan on cutting spending when they take power next year.