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IFO Releases State Economic Picture; Hospital QCA Assessment Increase Too High

June 19, 2018

The Pennsylvania Independent Fiscal Office (IFO) released its June 2018 revenue forecast, which points to a more stable state economic picture.

The forecast notes:

  • An upward revision in 2018 real gross domestic product growth pf 2.3 percent
  • Lower consumer price inflation at 1.8 percent
  • A stronger growth in 2018 wages of 4.3 percent
  • Stronger job gains estimated to be more than 60,000

The IFO’s forecast includes economic growth partly due to the tax reductions in the federal Tax Cuts and Jobs Act of 2017. The impact of this act is expected to be higher during 2018 and to have less of an impact longer term.

The IFO estimates that Pennsylvania’s personal income tax is expected to grow by 4.9 percent during 2018, and the sales and use tax by 4 percent. Both of these changes reflect a more stable revenue base for the state. The IFO is estimating that the state will have $33.9 billion available in revenue for fiscal year 2018–2019. Therefore, legislative leaders are indicating that the General Appropriations Act will include some limited spending growth.

This more stable state economic picture further supports HAP’s and the hospital community’s advocacy request for only a $30 million increased contribution from the statewide hospital Quality Care Assessment to the general fund. The $30 million request would replace the $130 million called for by the Governor.

The Governor’s proposed increase of $130 million is unsustainable and will harm hospitals’ ability to serve patients. More than one third of Pennsylvania’s hospitals have negative total margins. This challenging fiscal situation makes it difficult for hospitals to address social problems impacting health status, including hunger, violence, and housing insecurity; to respond to the state’s opioid crisis; and to recruit and retain specialists.

For additional information, contact Stephanie Watkins, HAP’s vice president, state legislative advocacy; Tim Ohrum, HAP’s vice president, grassroots advocacy; or Scott Bishop, HAP’s senior vice president, legislative advocacy.

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