The Pennsylvania Independent Fiscal Office presented its fiscal outlook for 2018-2019 through 2023-2024. And although Pennsylvania's October revenue report showed positive returns overall, the IFO data points to concerns about deficits and difficult budgets ahead. 

According to the IFO, expenditures are expected to increase about $2.7 billion in FY 2019-2020, while revenues are projected to increase by about $1 billion. Some of the cost increases are human service related, including a lower federal participation rate for CHIP, increased costs associated with expansion of the HealthChoices program, and a change to how Medicaid managed care organizations are taxed by the state. Reinstatement of General Assistance is anticipated to cost $150 million. The use of one-time revenue sources in recent budgets is also expected to add to the budget hole in future years as those funds won't be available again. 

Although the IFO report did anticipated increases in both mandatory and discretionary spending, it also concludes that if discretionary spending did not grow, new revenue will be needed just to meet increases in mandatory spending and the cost-to-carry budget starting in FY 2019-2020. The revenue collections for 2018-2019 are expected to be sufficient to balance the state budget for the current fiscal year. 

As of the end of October, the PA Department of Revenue reported that collections for the month were 1.2 percent more than anticipated. For the year to date, PA has collected $238 million, or 2.4 percent more than estimated. For the year to date, the sales tax and corporate income taxes are outperforming expectations, while personal income tax collections are lagging estimates by 1 percent. 

On the unemployment front, Pennsylvania's unemployment rate is stagnant from September to October, holding at 4.1 percent. This is .7 percent lower than the unemployment rate one year ago. Over the past twelve months, PA jobs increased 1.5 percent, while the national average is 1.7 percent.