Plunge over fiscal cliff would result in $300M loss for state
State budget officials sound like corporate America when they discuss fiscal issues these days.
On Wall Street and in the statehouses, there's great concern about what will happen if Washington doesn't find a way to avert by year's end the "fiscal cliff," the combination of deep federal spending cuts and automatic tax hikes designed to achieve deficit reduction.
This angst turns up in The Fiscal Survey of States released earlier this month by the National Governors Association and National Association of State Budget Officers.
"The uncertainty surrounding federal efforts to cut its debt and the implications this has on states leaves governors with their hands tied," said NGA executive director Dan Crippen.
"Money is still expected to be very tight," said NASBO executive director Scott Pattison. "There are not enough state dollars to meet all the challenges from rising health care and education costs and other expenses like corrections and infrastructure."
In Pennsylvania, the Corbett administration estimates a loss of $300 million in federal funds if Washington goes off the cliff.
The cuts would hit federal aid for special education, workforce training, Title I education funds and block grants for small communities and social services.
A panel of Pennsylvania mayors said that cities, school districts and counties would feel a trickle-down impact as well.
"Unless the (federal) budget deal includes significant new revenue, it will result in an enormous cost shift to Pennsylvania cities, municipalities and school districts," said Philadelphia Mayor Michael Nutter. A potential 8 percent cut in Title I money would cost Scranton City School District, $300,000; Wilkes-Barre School District, $277,000; Hazleton Area School District, $281,000; Shamokin Area School District, $75,000 and Pottsville Area School District, $77,000, according to the Pennsylvania Budget and Policy Center, a Harrisburg think tank that opposes state spending cuts.
The $300 million estimate must be measured against a total $27 billion Pennsylvania budget supported with state tax dollars. Meanwhile, state tax revenue collections are running above estimates, meaning the specter of recession-fed red ink that gripped state finances from 2009 through 2001 is receding.
Still, Budget Secretary Charles Zobgy said Harrisburg isn't in a position to make up for any federal cuts. Additional costs for Medical Assistance, corrections and pension obligations are eating up the extra revenue, he added.
(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. E-mail: email@example.com.)