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PA’s Independent Fiscal Office Presents State Budget Outlook; Notes Imbalance

November 16, 2018

While the official presentation of the Independent Fiscal Office (IFO) was cancelled due to weather, the office did release its “Economic & Budget Outlook: Fiscal Years 2018-19 to 2023-24” report.

Pointing to temporary savings and other one-time measures used to balance the fiscal year 2018–2019 state budget, and an increase in costs associated with health and human service programs, the IFO’s analysis shows an imbalance of $1.71 billion for the upcoming fiscal year.

The IFO noted that the imbalance is described as “potential” due to the tools available to policymakers to “control expenditures on a temporary or permanent basis.”

One of those one-time payment measures included the sale of bonds backed by the commonwealth’s Tobacco Settlement Fund. For the 2019–2020 budget, the IFO assumes an $89 million reduction for special funds receiving monies through the Tobacco Settlement Fund. This is due to the debt service requirements associated with the sale of the bonds in the 2017–2018 budget.

Additionally, the IFO did not factor in a forecasted recession that many economists believe will occur during the next three years. Therefore, this report is meant to describe the “best case scenario” for the fiscal health of the commonwealth.

HAP will be working with the administration and the legislature to address the reduction of funds in the Tobacco Settlement Fund and other budgetary issues of concern to the hospital community.

HAP will provide a more detailed analysis of the report to member hospitals and health systems during the coming weeks.

For additional information, please contact Stephanie Watkins, HAP’s vice president, state legislative advocacy; Jolene Calla, Esquire, HAP’s vice president, health care finance and insurance; or Jeff Bechtel, senior vice president, health economics and policy.

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