Fiscal watchdogs warn of Medicaid-induced deficit

(The Center Square) — Pennsylvania’s financial future could get complicated as one group warns of an approaching budget deficit.

During a Wednesday preview of Gov. Shapiro’s budget, the Commonwealth Foundation predicted that state overspending has created a structural deficit in the budget.

“We don’t have a surplus, we have a deficit,” Commonwealth Vice President Nathan Benefield said. “There’s a $1.1 billion deficit this year…worse yet is the outlook in the future. If we don’t right the ship by 2026, it will require tax hikes with current spending growth.” Benefield noted that the Independent Fiscal Office predicts a $4 billion deficit that will drain the general fund balance by 2026.

Pulling data from the IFO’s five-year budget outlook, Commonwealth estimated that a $624 million budget deficit in 2023-24 would grow to $3.3 billion by 2026-27 and $4 billion by 2028-29.

A major driver of that deficit, the foundation argued, was Medicaid spending
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