You are here:Home»News»History repeating? Pennsylvania may again be looking at state budget deficit, IFO reports

History repeating? Pennsylvania may again be looking at state budget deficit, IFO reports

Matthew Knittel, director of Pennsylvania's Independent Fiscal Office, testifies Feb. 20, 2018, before the Senate Appropriations Committee. Matthew Knittel, director of Pennsylvania's Independent Fiscal Office, testifies Feb. 20, 2018, before the Senate Appropriations Committee. Image courtesy of Pennsylvania's Independent Fiscal Office

Editor's Note: 
For those that don't remember, lawmakers in Harrisburg failed to pass a budget in 2016.  The following year, they passed a combination 2016-2017 budget.  Now, projections for 2018 indicate "potential budget imbalance of up to $1.71 billion in the upcoming fiscal year." (Related: Why Pennsylvania's Governor Hasn't Signed a Budget in 3 Years)

Original Article

Pennsylvania’s Independent Fiscal Office is pretty much what it sounds like – an agency outside the Treasurer’s Office and the Department of Revenue tasked with taking an unbiased view of the state’s financial picture.

The IFO, staffed with economists and analysts, releases dry, analytical reports designed to help guide lawmakers to make good policy decisions. IFO reports are generally not prone to making inflammatory remarks.

Nevertheless, the IFO’s recently released projection for the next five years was accompanied by an alarming phrase: “Updated revenue and expenditure estimates suggest policymakers could face a potential budget imbalance of up to $1.71 billion in the upcoming fiscal year.”

That can only be unwelcome news to state legislators who breathed a sigh of relief this past June when they easily completed their budget cycle after years of partisan standoffs, and missed deadlines.

“Expenditures are expected to increase by $2.70 billion in FY 2019-20, which is roughly $1.70 billion more than the projected increase in net revenues,” IFO Director Matthew Knittel said in a news release accompanying the report. “The factors driving the unusually large growth in expenditures in the budget year are associated with more than $1.0 billion in one-time funding sources used to balance the FY 2018-19 budget, as well as FY 2019-20 increases in state costs associated with health and human service programs.”

As if that wasn’t concerning enough, the release indicates that the forecast represents a “best-case” economic scenario for the next five years, assuming no recession and steady growth.

“However, the report includes a cautionary note on the economic and revenue implications of a recession,” the news release states. “A recent survey of economists by the Wall Street Journal indicates that most economists believe that a recession is more likely than not to occur over the next three years.”

In the report, the IFO makes clear that the numbers represent a projection, not a forecast, since unanticipated changes in policy at the state or federal level could lead to wide swings in outcomes.

A number of demographic trends had to be taken into consideration. The IFO assumes that Pennsylvania will continue to see slight population growth, about 0.1 percent a year, which would amount to an increase of 151,000 people by 2025. The population will continue to age, with the school-age share decreasing by 117,000 people and the working-age group declining by more than double that number.

“The forecast projects that the working age population will contract from 2017 to 2025 (-251,000, -3.3 percent cumulative),” the report states. “If labor force participation rates do not increase, then this trend will constrain economic and revenue growth.”

The nonprofit Commonwealth Foundation, which advocates for small government and free market solutions to induce economic growth in Pennsylvania, has argued that a “Taxpayer Protection Act” is the best way to address the state’s recurring budget crises and ensure that public sector growth doesn’t imperil the private sector.

“The TPA caps spending increases based on a formula determined by inflation + population growth,” the foundation wrote this past spring. “If spending limits had been enacted in 2003, the state would currently be spending $2 billion less. And rather than talking about a deficit, lawmakers could be debating how to use the state’s budget surplus.”

The state’s budget-making process will begin next year with hearings by the House and Senate Appropriations Committees, as lawmakers hear testimony from the leaders of each agency about their budget requests.

Submitted By:



Please send any submissions or corrections via e-mail.

Nate Covington (about me)

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.

Please note that this is NOT a contact form. Comments are held for moderation and will be visible on this website upon approval.

Community E-Newsletter

  • Subscribe to the Barrett Community newsletter by entering your name and email below. 


Community Login

Get Social!


Buck Hill Falls



Are you ready?


Prepare for a disaster in 3 easy steps:
In an emergency, knowing what to do is your best defense. Start now by learning the risks, making an emergency plan and getting involved to help others.
[Read More at]

You may also be interested in joining our Local Community Watch

Are you drinking clean water?
If you're not sure, get your water tested by a local, accredited lab.


Join the Discussion!


Support Local Businesses!

  • Fairway Grille Restaurant
    Fairway Grille Restaurant Open to the public - For all your catering and party functions - Full Bar Service Please call ahead as we may be closed for…
  • Live Internet Radio: Rock and Roll Ranch
    Live Internet Radio: Rock and Roll Ranch is looking for advertisers.... We make the Commercial, you set up a plan how much you want it aired.... You even can come on one…
  • APR Supply Co. (Pocono Branch)
    APR Supply Co. (Pocono Branch) *1/4 mile east of the Rts 191 and 940 Junction; Joint Venture branch with Schaedler Yesco and APR Supply Company Your full service distributor of…
  • SMP Computers
    SMP Computers Computer repair, services and upgrades and custom computers. Office equipment repair, copy center, fax and notary services.


    TAKE NOTICE that on January 7, 2019 at 9 a.m., at the annual reorganization meeting of the Board of Supervisors of Barrett Township at the Barrett Township Municipal Building,…
  • New Township Auditor
    New Township Auditor I have recently been appointed auditor by the Barrett township board of supervisors.   What’s going on with the Barrett Township auditors?   Recent history: Note: Revised 12/5/18…
  • 2019 Township Budget - to be adopted December 2018
    2019 Township Budget - to be adopted December 2018 (Note: PDF budget available in the attachments area below) THE BOARD OF SUPERVISORS OF BARRETT TOWNSHIP, pursuant to Section 3202 of the Second Class Township,…
  • Christmasville 2018
    Christmasville 2018 Goodbye Scarewcrowville, Hello Christmasville! Pack up your scarecrows, roll out the twinkly lights and Santa's sliegh because Christmasville is coming to town! Decorate your home or…