State Sen. Jay Costa (D-Allegheny) is supporting additional state spending controls in response to the continued decline in revenue collections as the economy struggles to rebound.
"I'm confident that the coming year will show growth in the economy and the outlook is getting better by the day, but you can't take confidence to the bank," Sen. Costa said. "We have no choice but to prepare for the worst that's why we need to freeze spending now."
Sen. Costa, the Senate Democratic Appropriations chairman, said state revenue collections are $217 million below projections as we near the midway point in the fiscal year, raising caution about whether the budget will regain its balance by the end of the year. If the trend continues, the deficit could reach $450 million by the end of the fiscal year in June.
"We are faring much better than most states through the difficult economy and that's because we've made some tough choices," Sen. Costa said. "Those choices have been validated by our position among states and our standing in the financial community."
Moody's Investment Services has continued Pennsylvania's AA bond rating, recognizing the legislature's "strong action" to shore up revenue and trim costs. Meanwhile, a new report from Pew Center on the States list Pennsylvania as the only large, industrial state to remain on solid financial footing.
"State spending is well below last year, only the third time that's happened in 50 years," Sen. Costa said. "At the same time we have maintained important investments in education and economic development, actions that give us confidence that our economy will improve in 2010."
Sen. Costa said the remedial budget steps, including freezing $100 million in grants and a cut back in spending on general government operations could be reversed or avoided if the economy improves.
The governor held his mid-year budget briefing and conferred with legislative leadership today in Harrisburg concerning his fiscal projections.