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BUDGET SECRETARY HERSHOCK RELEASES FUNDING RESERVE LIST

 BUDGET SECRETARY HERSHOCK RELEASES FUNDING RESERVE LIST
 HARRISBURG, Pa., Nov. 22 /PRNewswire/ -- State Budget Secretary Michael H. Hershock today released a list of appropriations from which $130 million in state funds will be placed in reserve as a contingency against a worsening recession.
 In a memo to Gov. Robert P. Casey, Hershock said that of the $130 million placed in reserve, $79.5 million, or about 61 percent came from spending proposals for operations at state agencies and facilities or from grants which were recommended in the governor's February budget submission. The remaining $50.6 million, or 39 percent, was reserved from spending proposals added above the governor's budget request by the General Assembly.
 Hershock noted that these reserves are not adequate if the General Assembly passes tax repeals that have been discussed by legislative members. If the recession deepens or tax repeals were enacted, Hershock warned that these reserves would need to be expanded, that non-preferred appropriations may be subject to a pro rata reduction and the budget office would probably be required to begin lapsing funds immediately.
 Last week, Casey directed the budget office to identify at least $130 million in state funds for reserve after he was advised in a memo from Hershock that the economic outlook remained uncertain. Hershock informed the governor that while recent economic and revenue trends were on target with the 1991-92 budget forecasts, a number of factors could cause fiscal problems for the state including:
 1. The $74 million drafting omission of electric utility companies from the gross receipts taxes.
 2. Supplemental funding for the year is currently projected to be approximately $60 million, with about half needed to assist that lottery fund.
 3. A double dip recession could cause actual revenues to fall below revenue estimates and cause expenditures to exceed estimates.
 4. Actual collection of the new tax rates and changes in the tax base, most notably taxes on service industries, will not materialize until December or January.
 "I remain hopeful, as I indicated in the four-month budget review provided last week, that none of these precautions will prove to be necessary." Hershock said. "It is prudent, however, to prepare for these uncertainties."
 Several criteria were used in selecting funding to set aside in reserve. Specifically targeted were discretionary spending items and spending for which there is no fixed timetable.
 /delval/
 -0- 11/22/91
 /CONTACT: Sue Grimm of the Commonwealth News Bureau, 717-783-1116/ CO: Office of the Governor ST: Pennsylvania IN: SU:


MP -- PH031 -- 6430 11/22/91 13:49 EST
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Publication:PR Newswire
Date:Nov 22, 1991
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