Rendell predicts modest Pa. deficit next year

    Governor Ed Rendell says Pennsylvania will likely face a modest deficit next year.But that won’t make life any easier for Governor-elect Tom Corbett and incoming legislative leaders.Halfway through the fiscal year, the estimated budget deficit is just $63 million compared with the hundreds of millions and billion-plus shortfalls predicted halfway through the last few budget years.Rendell pointed out Thursday that next year’s budget will still be a financial minefield.”Mandatory costs for health care, prisons and debt service will continue to increase,” he said. “Contractual salary increases and pension funding obligations will continue, and there’s no way those can be legally terminated. There was a contract salary increase in October, and one in January this year.”Another factor is the more than $2 billion in stimulus money that will disappear.Sales  tax and corporate tax revenue is up, but income tax figures are lower than expected.Pennsylvania added jobs last month, but Rendell said the growth is likely coming too late in the fiscal year to turn around income tax figures.

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