The state budget shortfall doubled in size today, after Commonwealth Court ordered the state of Pennsylvania to pay more than $800 million from the general fund to an account that helps doctors and hospitals cover their malpractice premiums.
Last year, the General Assembly diverted surplus money from the Medical Care Availability and Reduction of Error Fund - known as MCare - into the general fund budget. The Commonwealth Court panel issued a 4-1 decision on Thursday requiring the state to return the money to the MCare fund, creating an $800 million shortfall on a budget which is already running a $700 million deficit.
Gov. Ed Rendell's office said the state will appeal the decision to the Pennsylvania Supreme Court.
"We believe the Commonwealth Court erred," said the governor's press secretary, Gary Tuma. "The General Assembly did act properly and within its authority for passing the budget for 2009."
The state Office of the General Counsel is expected to handle the appeal, but there is no indication if the appeal will be heard or decided before the budget deadline of June 30, said Mr. Tuma.
"Clearly this makes things more difficult," said state Sen. Jake Corman (R-Centre), chair of the Senate Appropriations Committee. "We're going to have to seriously look at cutting back on the governor's spending requests."
Mr. Corman said he was not going to rule out the possibility of passing a balanced budget by June 30.
The state is operating in a budget shortfall of $700 million due to lower than expected tax revenues during the current fiscal year. Last week's denial of tolls on I-80 opened another potential hole in next year's budget because the governor's proposed budget included assumed revenue generated from tolls on that highway.
"We have some serious problems, and it seems like we never get good news. It's been bad news, one after another, the last few weeks," said state Rep. William Adolph (R-Delaware), the ranking minority member of the House Appropriations Committee.
Barbara Fellencer, communications director for the state House Appropriations Committee, said the ruling created a larger shortfall, but not a budget hole since the new budget has yet to be passed.
"Don't get caught up in the rhetoric of holes and deadlines. June 30 comes and goes each year and we always have a budget." said Ms. Fellencer.
"We need to look at ‘what does Pennsylvania need?', and then we need to find the funds to provide for that," said Ms. Fellencer. "Our philosophy is that we look at the needs of the people and then we address those needs, because they are the ones paying the taxes."
The state has not passed a budget on time since 2002, under Gov. Mark Schweiker. This year, Mr. Rendell has proposed a $29 billion general fund budget, a $1.2 billion increase from the current fiscal year.
The House has already passed that budget, which Mr. Corman on Thursday called a "fake budget", which "was out of balance the day it was passed."
Eric Boehm is a reporter for Pennsylvania Independent. He can be reached at Eric@PAIndependent.com
