Friday, December 17, 2010

How a Democrat Leaves Things for a Republican

Edward G. Rendell and Mary A. Soderberg. 2010-11 Mid-Year Briefing. Commonwealth of Pennsylvania, Office of the Budget. December 16, 2010.

The 2010-11 General Fund budget, as enacted was set at $28.03 billion. Within this, there were $2.8 billion of Federal fiscal relief funds that are terminating during this budget year. In addition, there were $750 million in revenues anticipated for this fiscal year that are one time revenues. Thus, $3.5 billion of funds in this year’s budget are not available for next year’s budget.

The basic education subsidy increased 4.5%, or $250 million. This held off property tax increases.

2.1 million people were served by state health care and social services.

November 2010 saw sales and use tax revenues as 8.6% larger than what was collected during November 2009. It is hoped this signals a continuing increase in such revenues. The amount collected in General Fund revenues in total is 2.1% more, or an additional $71 million, that what was initially forecasted for this budget. In addition, corporate tax revenues are 8% larger, or an additional$45 million, that what was forecast for this budget. Yet personal income tax and realty tax collections are lower than expected. In sun, the General Fund, for July through November 2010, is 0.15% above what was forecast for this budgtet.

FMAP funds from the Federal budget were $280 million less than initially budgeted. In response, $200 million of spending was canceled. This year’s budget began with a $12 million surplus. Safety next enrollments were higher than expected, at an increased cost of $65 million. In sum, the General Fund is running at a $63 million deficit.

The Motor License Fund revenues are $43.5 million more than was forecast.

The Rendell Administration, over eight years, has reduced administrative line items by 14%. There are 6%, or 4,875 fewer state government employees. As of November 2010, there were 76,782 state employees.

Annually, from eight years ago, Commonwealth costs are $639 million less due to administrative and operational cost controls, $382 million less due to program efficiencies, $317 million less due to procurement practices, $255 million less due to complement control and related expenses, and $161 million is due to revenue collection and generation.

The state’s Moody’s credit rating is As1 and Fitch rating is AA+. These are the second best credit ratings.

Recently enacted increases in retirement age and vesting years plus lower benefits, all for new employees, are predicted to reduce pension payments for $16 billion over 25 years.

Medical assistance pharmaceutical efficiencies, stricter fraud and abuse enforcement, and increased third party liability collections saved $2.1 billion over the past eight years. Revenue initiatives provided $784 million more to medical assistance.


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