Looking ahead to the fiscal challenges the Commonwealth faces in FY 2013, our Preview shows that the budget deficit will be well over $1 billion. That shortfall can be traced to three things:
Tax Revenues have fallen sharply. Not just because of the Great Recession--which has reduced revenues since 2008--but also because of tax cuts and other declines in tax receipts over the last twenty years which are costing the state over $3 billion in annual revenue.
The cost of government programs has grown. Overall inflation and health care cost growth both increase government spending. As does the current economic downturn--because more people rely on our social safety net.
We have to address a $550 million deficit carried over from FY 2012. A series of temporary measures helped to fill the gap in this year's budget. As we move into FY13, that gap will return.
Our Preview evaluates each of these factors in greater detail. And it paints a very stark picture of the difficult choices ahead.