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Tags Posts tagged with "PA State Budget"

PA State Budget

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Yesterday, the General Assembly passed and the governor signed the remaining bills to enact the current fiscal year’s spending plan of $31.5 billion. To pay for the general appropriations bill, the Legislature adopted several tax increases and some new revenue streams. The cigarette tax was increased another $1/pack while e-cigarettes, roll-your-own cigarettes, and smokeless tobacco have now been added as taxable items.

Additionally, lottery winnings will now be assessed a PIT and a sales tax will be imposed on digital downloading of books, music, satellite radio, and streaming audio/video. The tax on table games was also increased by 2%, but will sunset in five years. Revenue streams for the fiscal year are also dependent upon several non-recurring sources; i.e., a number of transfers contained in the fiscal code such as transfers from:

  • The tobacco settlement – $28.5 million;
  • Recycling fund – $9 million;
  • The Building Pennsylvania program – $12 million;
  • The Volunteer Companies Loan Fund – $9 million;
  • The Alternative Fuels Incentive Fund – $5 million; and
  • Several gaming licensure fees.

Please contact Jack Phillips with any questions.

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Early yesterday evening, the Pennsylvania House of Representatives approved the changes made in the Senate by a 144-54 vote and sent SB 1073, the general appropriations (GA) bill, to the governor. The approved GA bill increases spending by $1.5 billion, or an increase of 5%. Even though the General assembly sent the GA bill to the Governor, the House and Senate still must come up with the revenues necessary to pay for the appropriations as set forth in the bill.

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Yesterday, the General Assembly passed budget bills to restore aid to the various programs that were vetoed by the governor back in December. The new budget bills authorize important funding for education, agriculture, and rural hospitals.

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Over the weekend, the House failed to pass SB 1071, which is the hybrid pension bill, by a vote of 52/149 with no support from the Democratic Caucus and over 60 Republicans. After the vote, numerous meetings were held among leadership. Once the meetings concluded, the House floated the possibility of forging ahead with some type of stopgap measure that would fund education and human services. However, the governor and Senate leadership indicated that a stopgap budget was a non-starter.

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According to sources, it appears the caucuses have a framework in place for the 2015/16 state budget. The proposed plan would spend an additional $350 million for basic education, an additional $50 million for special education, and a 5 percent increase in funding for higher education.

In the potential budget deal, there will be additional property tax relief. Terms were still being negotiated on how the additional education funding will be distributed. Additionally, officials are trying to impose caps on how much school districts can raise property taxes in the future.

The potential budget deal would include:

  • An increase in state spending up to $30.7 billion; that would be a 6 percent increase from last year’s approved budget.
  • $500 million in slot-machine gambling revenue that is currently passed along to homeowners as school property tax cuts. That money would be diverted into a restricted account to pay for public school employee pension obligations.
  • The loss of the slot-machine money for school property tax cuts would be replaced by about $2 billion expected from a state sales tax increase to 7.25 percent, up from the current 6 percent. The rate would rise to 8.25 percent in Allegheny County, where it is currently 7 percent, and to 9.25 percent in Philadelphia, where it is currently 8 percent.

The proposed budget would not include a new tax on Marcellus Shale; however, a cigarette tax and a tax on banks were still being discussed as potential revenue enhancements. Currently, there has been no specific mention of dollar amounts for health and human services, or providers being reimbursed by the Commonwealth for interest payments being made on loans that providers took out to continue health and human services.

Despite a possible agreement, legislators are still cautious about any last minute hiccups that might derail a potential budget deal. The budget deal could blow up if the governor and legislators cannot come to terms on how new money for schools and property tax cuts would be distributed to each district, and how to further limit the ability of school boards to raise taxes as part of the package of new money.

Some of the other budget highlights include:

  • On pensions, the traditional pension benefit would survive, but newly hired public school and state government employees would get a diminished traditional pension benefit, plus a new, 401(k) style plan with a 2 percent contribution. According to estimates, this plan would save the state $12.5 billion in the coming decades.
  • Changes to the state-controlled wine and liquor system were still under discussion, although the sides have agreed to make it part of an overall budget deal.

RCPA will provide updates on any budget deal, and encourages members to continue to contact the governor and state legislators to inform them why it’s necessary for them to pass a state budget sooner rather than later. Contact Jack Phillips with any questions.

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Last week, the State Senate passed two funding bills, SB1000 and SB1001, on party-line votes. These bills would authorize short-term funding for health and human service providers as well as education. The funding would be retroactive to July 1, the start of the current 2015/16 Fiscal Year, and would last until the end of October, 2015

After passing the Senate chamber, the two short-term budget bills were sent to the House. The bills are scheduled for final passage on Thursday, September 24, and then they will be sent to the governor for his signature.

According to the governor and Democrat leadership, the stopgap budget bills do not solve the problem. Democrats argue that the budget passed by Republicans in June was ineffective and the governor had every right to veto it. Furthermore, they assert that passing short-term funding bills based upon the vetoed budget is unwise, when the governor has proposed something comprehensive and even better. Democrats also contend that an approved stopgap would make it less likely for negotiations with Wolf, who has said he will veto the stopgap, to produce a full budget.

Republicans maintain that passing temporary funding for schools and human service agencies makes sense and negotiations would not stop just because stopgap funding was approved. Republicans are asking why those who need state dollars should be forced to wait for at least some funding while the Republicans and the governor work on a permanent budget.

RCPA has been, and continues to be, concerned about the effects of a late state budget on health and human service providers. The state budget stalemate between the General Assembly and Governor Wolf is having real and lasting effects on these providers and the people they serve across the Commonwealth.

RCPA supports the stopgap funding. The association has been in contact with the General Assembly and the governor’s office, encouraging them to pass and sign the stopgap funding bills into law, so health and human service providers can continue services to the most vulnerable individuals throughout Pennsylvania.

In anticipation of both bills’ final passage in the House, RCPA is strongly encouraging members to contact the governor today, to encourage him to sign the stopgap bills, as was done by Governor Rendell in 2003 and 2009, until a compromise can be reached on a permanent spending plan for FY 2015/16.

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