Last week, the Pennsylvania Independent Fiscal Office released its long-term budget outlook for FY 2024-25 to FY 2029-30. The outlook considers the state’s current and future fiscal condition over the next five years using data from various nonpartisan sources.

The report’s executive summary finds that the state has an operating deficit of $3.4 billion which will expand to $6.7 billion by FY 2029-30, as projected expenditure growth (3.5 percent per year) outpaces revenue growth of 2.2 percent per year.

The report assumes that national and state economies will expand at rates consistent with pre-COVID long-term trends, inflation will revert to 2 percent, and the state will avoid a recession.  The report also assumes no change to federal tax or spending – while understanding the uncertainty that exists regarding future federal fiscal policy.

The report also notes population trends, working age ratios, and revenue outlooks, including an updated General Fund forecast of $45.89 billion – an increase of $125 million from the IFO’s Official Revenue Estimate released in June 2024. It also finds a net gain of 138,000 payroll jobs and assessments of the General Fund surplus ($6.6 billion at end of FY 23-24) and the Rainy Day Fund ($7.0 billion) under current law and policies.

The report acknowledges that several studies find that COVID-related stimulus savings are now depleted, and that middle- and upper-income consumers are largely doing well due to steady gains in the stock and housing markets.

The full report is available here.