Growing state surplus demands rethinking of budget priorities

Posted by By at 1 June, at 20 : 41 PM Print


State Rep. Frank Dermody
House Democratic Leader

HARRISBURG, June 1 – House Democratic Leader Frank Dermody said the state saw even stronger revenue collections in May, further discrediting the Republican budget strategy of saving unanticipated revenue for a “rainy day” while cutting education and health care by more than $1.7 billion.

“With only one month to go in the fiscal year, the governor and many House Republicans would rather stick their heads in the sand than acknowledge the fiscal reality that’s as clear as the nose on my face,” Dermody said.

“This revenue surplus is not just a one-month blip or a result of corporate accounting practices. It is the cumulative figure for more than 90 percent of the current fiscal year and it reflects the growing strength of Pennsylvania’s economy.

“But the recovery is not reaching everybody yet,” Dermody said, “and the Republican refusal to use this extra revenue makes no sense when we are contemplating deep cuts to schools that teach our children, hospitals and nursing homes that provide life-saving care, and universities and community colleges that train our workers. To add insult to taxpayers everywhere, the Republican budget plan would force bigger hikes in local property taxes.”

State revenue collections for May were $33.8 million (2 percent) more than estimated, bringing the working budget surplus for 2010-11 to almost $540 million. This continues a trend begun in the summer of 2010 with state revenue consistently being higher than expected.

“Even before he became governor, Tom Corbett made a beginner’s mistake and put himself into a box by committing for political reasons to an artificially low spending number for the General Fund budget,” Dermody said.

“The facts on the ground have changed as this surplus has built up month after month after month. The Senate and the House will have an opportunity in June to help the governor recover from his error by making a sensible choice to use this extra revenue in next year’s budget.

“The taxpayers of Pennsylvania produced this large revenue surplus,” Dermody said, “and yet the taxpayers are the ones hurt most by the proposed Republican cuts to education and health care. Where is the fairness in that?”

Dermody explained that not only is the $540 million surplus available for use in the 2011-12 budget that is now being prepared, but the increase in revenue collection this year establishes a higher base to use in figuring state revenue for next year. In effect, the “unexpected” revenue that came in this year becomes “expected” revenue for next year, funds for which the House-passed budget bill did not account.

Therefore, even before June revenues are collected to finish out the current fiscal year, Pennsylvania can conservatively count on almost $1.1 billion in unplanned additional revenue for the current year and next year combined.


CONTACT: Bill Patton
House Democratic Leader’s Office
Phone: 717-787-3566

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