The Good News, Bad News on Pennsylvania's Revenue Picture

General Fund revenue collections have been doing better than expected in the past few months, with January numbers reported Tuesday showing another month of healthy receipts.

The result is a General Fund revenue surplus of $264 million for the 2010-11 Fiscal Year, which ends in June. That's good news and a positive sign of the state's slow fiscal recovery, but much bigger fiscal challenges loom large on the horizon.

As the Pennsylvania Budget and Policy Center notes in its Revenue Tracker for January, revenue growth alone will not be enough to offset the loss of $2.8 billion in federal recovery funds that expire with this budget.

So as lawmakers prepare to take up the 2011-12 budget plan in the coming months, they will face a choice: make deep cuts to education, health care, public safety and other services — or take a balanced approach that includes new revenue as well as budget savings.

A balanced approach will put the state in a far better position as the economy continues its slow recovery. Investing in opportunities for the next generation, quality affordable health care and infrastructure are going to be critical to Pennsylvania’s long-term economic success.

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