Pennsylvania is facing a number of difficult budget challenges, both short- and long-term, according to the commonwealth’s Budget Secretary Randy Albright. The secretary and Sen. Pat Browne (R-Lehigh) addressed Realtors® at PAR’s Day on the Hill this week in Harrisburg.
One of the major debt issues Pennsylvania faces is the state employees/teachers pension fund. Albright said delaying making decisions on this issue continues to raise the debt pension level, which is currently at $62 billion.
Browne agreed, saying the state’s risk exposure was too high with the state pensions and it’s not in line with the private sector. “We need to make a real effort to move the commonwealth in that direction for the first time. It’s a burden that the state can no longer carry.”
“We continue to look at short-term fixes, but delay long-term solutions,” Albright said. “It’s those kind of funding decisions we can’t put off. We’ll need to work together as the legislature and the governor.”
The state has been facing an unexpected downturn in revenues, according to Albright. “The state missed $200 million in income last month and $680 million to date in this budget.”
“We’re working to find fresh ways to continue to deliver services,” Albright said. “We’re asking departments to take a hard look at what they’re doing now that we may not have to do.” Through those efforts, the state has identified $2 billion in savings by streamlining services.
“We’re working to maintain a level of service or providing an even better level,” he added.
An announced prison closing in Pittsburgh will save $100 million and combining four state human services agencies will save another $100 million.
Albright said they will look to close a loophole that allows businesses to avoid paying taxes on storage fees, as consumers are charged taxes.
Browne said the general assembly and the governor’s office have different approaches to the budget process. He said the budget has an approximately $3 billion hole.
“Our conversations need to be more than what’s needed to close this year’s budget,” he said. “Pennsylvania is carrying too much risk. And we need to address some of the long-term challenges.”
Browne said the Independent Fiscal Office estimates the state will face a $20 billion short fall in 2020, if some issues are not addressed.
He said one of the biggest challenges is human services, particularly with the growing number of senior citizens and their need for Medicare.
“It’s more expensive than what we can meet,” he said. “We need to provide services but get costs down.”
Browne added, “We need to make decisions to find a way to look toward the future. We want to continue to invest in our people.”