Pennsylvania state budget
From Sunshine Review
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Pennsylvania faced a $2.0 billion budget deficit for fiscal year 2009 and an approximately $4.8 billion deficit for fiscal year 2010, according to the Center on Budget and Policy Priorities.[1] Reports in late May 2009 projected the FY 2009 budget gap closer to $3.2 billion, $1 billion more than Gov. Ed Rendell predicted three months prior. To quell the crisis the governor proposed a series of spending cuts, use of federal economic-stimulus money, taking money from the Rainy Day Fund and proposed limited taxes in order to quell the growing budget deficit. However, Gov. Rendell noted that he would only consider an income-tax hike if all other options failed.[2] He said the government's first job "is getting people back to work... We need to reduce our spending overall. We can't cut economic development."[3]
[edit] Finalized budget
[edit] Exceeds deadline
For the seventh year in a row Pennsylvania government failed to pass the budget by its deadline of June 30th. The Republican led Senate and Gov. Rendell cannot agree on how to close the budget shortfall of $3.2 billion dollars. Rendell is proposing tax increases, withdrawing from the Rainy Day Fund and the expansion of the General Fund by 2.5 percent.[4] Whereas, Republicans are calling for a 1.4 percent decrease in state spending.[4] Hospitals, nursing homes, doctors, mental health organizations and child welfare are among the organizations whose funding may be frozen until the new budget can be agreed on.[4] Rendell has said that as many as 800 layoffs could occur if he has to shave $72 million off his initial plan, yet the Senate is asking for an additional $1.5 million difference in order to balance the budget and not increase taxes.[5][6]
The Governor has hinted budget talks could go as late August.[7]
- Pennsylvania is withholding pay for 69,000 state employees for time worked after July 1 until a state budget is approved. However, approximately 80,000 state employees are already seeing smaller paychecks. In the early weeks of July some state employees received only partial paychecks.[8] Gov. Rendell said that a 2008 court ruling prevents the state from issuing payments to employees without a budget in place. The ruling is on appeal to the state Supreme Court.[9]
- In July, state workers protested state policy that requires them to work without pay, until a budget is passed, in front of state buildings.[10]
- Just before the fifth week of the budget stalemate, the governor said that he is looking for options in order to pay state workers. One such method, he said, would be to stop-gap funding legislation.[11]
- In budget negotiations, the governor said he continues to insist on increasing the state's personal income tax. Rendell argues that the tax increase is the "easiest and fairest" way to balance the budget, however, lawmakers said that they remain hesitant because they are concerned on its potential impact on the economy.[12]
[edit] Partial budget signed
On August 5, 2009, Gov. Rendell signed an approximately $11 billion "partial" state budget. Additionally, the governor vetoed $13 billion in expenditures. The signed budget includes includes $1.8 billion in federal stimulus money.[13] The signed partial budget restored paychecks that were previously being withheld due to the budget impasse. Paychecks are expected to be sent starting August 10, 2009.[14] However, during the same week, the governor announced that 255 employees will be laid-off. Lay-offs are expected to begin September 30 this year.[15]
According to state Democrats, Gov. Rendell's proposed income tax increase is "off the table." The income tax increase proposed raising the rate to 16 percent for three years. Shortly following the announcement, the governor's state aids confirmed the end of the tax increase debate. "But at every point in this process," Snyder said, "the governor has stressed his flexibility. He continues to believe that the (personal-income tax increase) is the fairest way to produce recurring revenue . . . but he has consistently said he is not wedded to it," said Gov. Rendell's spokesman.[16]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- In April 2009 seasonally-adjusted unemployment rate was 7.8 percent. Previously, Pennsylvania saw an increase in the unemployment rate for 14 consecutive months. In March 2009 the rate the number of unemployed people decreased by 3,000 to 6.4 million and has stayed steady throughout the month of April.[17]
- Proposed Senate Bill 850 attempts to reduce the state's budget deficit by closing approximately 35 Pennsylvania parks and 1,000 miles of state forest roads could close, according to the Department of Conservation and Natural Resources. The state has a grand total of 117 state parks and 2.1 million acres of state forests. The bill also proposes a cut of $19 million from the department, in addition to already proposed cuts in the state budget. The department estimates that closing the parks would turn away three million tourists and eliminate approximately $57 million in revenue.[18]
- Gov. Rendell wants to increase the state's Children's Health Insurance Program (CHIP) by $8 million in 2010, but some legislators want to keep the expense at the current 2008-2009 level. Currently there are 193,000 children enrolled. Without additional funding to the program the state is estimated to lose $17 million in federal CHIP aid, creating a waiting list. Senate Republican lawmakers said that they defend their proposal to keep CHIP at its 2008-09 level. Senate GOP spokesman Erik Arneson said that if a waiting list developed, a supplemental budget bill could be passed.[3]
- The state budget has exceeded the annual deadline and in early August, local county officials said they may have to furlough employees if a state budget is not approved soon.[19]
- Students at several state Universities were contacted told that there would not be any more admissions accepted into the University. They were not told this through the letters they received but by faculty who know what is really going on. Due to a budget not being passed, the Universities decided to freeze all admissions into both Undergraduate and Graduate programs.
[edit] Budget background
Pennsylvania's fiscal year begins July 1 and ends June 30 of the following year. According to the state constitution, every year the Governor must present a spending recommendation to the Legislature. Agencies prepare budget requests starting in August for the Governor to review prior to making his/her own recommendation in February. Between the months of February and June both the House and the Senate review the budget proposal before finalizing the budget for the upcoming fiscal year. The Governor may sign, take no action, veto, or line-item veto an appropriation bill. If the Governor signs a bill, it becomes law upon signature. A bill also becomes law if the Governor fails to take action on the bill within a time certain.[20]
[edit] Budget figures
The following table provides a history of Pennsylvania's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) | % of GDP |
|---|---|---|---|
| 2000 | $75.5 [21] | $389.6 [21] | 19.3789% |
| 2001 | $80.7 [21] | $406.7 [21] | 19.8426% |
| 2002 | $85.9 [21] | $423.1 [21] | 20.3025% |
| 2003 | $90.2 [21] | $440.7 [21] | 20.4674% |
| 2004 | $94.4 [21] | $459.9 [21] | 20.5262% |
| 2005 | $101.3 [21] | $482.4 [21] | 20.9992% |
| 2006 | $104.0 [21] | $508.8 [21] | 20.4403% |
| 2007 | $107.8 [21] | $531.1 [21] | 20.2975% |
| 2008 | $111.8 [21] | $548.7 [21] | 20.3754% |
| 2009 | $116.0* [21] | $547.8* [21] | 21.1756%* |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- On June 1, 2009 the Pennsylvania Revenue Department reported that Pennsylvania collected $1.6 billion in General Fund revenue in May, which was $287.5 million, or 15.1 percent, less than anticipated. Fiscal year-to-date General Fund collections total $23.3 billion, which is $2.8 billion, or 10.9 percent, below estimate. Sales tax receipts totaled $607.4 million, $106.4 million below estimate for the month. Personal income tax (PIT) revenue in May was $721.4 million, $55.7 million below estimate for the month. [22]
- Despite the price of gasoline dropping in 2009 from the 2008 price of $4 per gallon, officials noted a sharp revenue decline in the state’s motor license fund.[23] According to the department of revenue, the Motor License Fund received $186.3 million for the month, $31.7 million below estimate. Fiscal year-to-date collections for the fund total $2.4 billion, which is $137.2 million, or 5.4 percent, below estimate.[22] The state receives 31.2 cents for every gallon of gasoline at the pumps, while the federal tax is 18.4 cents. Approximately 60 percent of the motor license fund comes from fuels taxes. “People are driving less,” said Rich Kirkpatrick, PennDOT spokesman. “Tax collections are well below estimates for the entire fiscal year."[23]
[edit] Proposed actions
- Main article: Pennsylvania state budget proposals, 2009
[edit] Governor Ed Rendell
Gov. Ed Rendell talks about job lay offs in Pennsylvania and stimulus funds. |
Gov. Rendell has proposed a $29 billion budget that increases spending on economic development and education but makes cuts elsewhere.[24] In an effort to generate more revenue for the state the governor recommended a tax on smokeless tobacco and an increase in the state cigarette tax. All of which, he estimated will generate approximately $100 million in revenue. Additionally, the governor has called for a 0.5% point increase in the state's 3.07% personal income tax as an easy and fair way to balance the state budget.[25]
[edit] Republicans
In response to the Governor's proposed budget and the state's increasing budget gap Republican lawmakers proposed a budget that equals $27.3 billion, approximately $1.7 billion less than the Governor's budget recommendation. The proposal, also known as Senate Bill 850, includes no tax increases, but it calls for deep program cuts.
Republicans said that they will not support an increase in any broad-based tax and proposed tightening spending instead. In mid-July Republican legislators said that they approved of a $27.1 billion budget plan but the Gov. Rendell and other lawmakers said that that budget plan would require drastic cuts that they do not support.[25]
[edit] Democrats
In an effort to reduce the state's budget deficit, Democrats are proposing raising the income tax as a solution. The proposal has not been officially submitted but lawmakers stated that the increase would be the quickest way to raise millions for services like healthcare and education. Currently the income tax is 3.07 percent.
[edit] Economic Stimulus Package
Pennsylvania is expected to receive $16 billion from the $787 billion dollar economic stimulus.[26] All told, the federal stimulus plan would create or save 143,000 jobs in Pennsylvania, based on White House estimates.[27]
For more information on how the federal stimulus funds are being used in the state of Pennsylvania, visit the state recovery website.
According to preliminary reports, Pennsylvania is expected to receive:
- $4 billion towards health care[28]
- $2.56 billion towards education[29]
- $1.4 billion towards transportation infrastructure [30]
- $4 billion to help pay for health care costs for the elderly, disabled and poor families under the Medicaid program[31]
- $120 million for child care services and Head Start[31]
- $118 million for job training and improved unemployment services[31]
- $100 million for aid to indigent families[31]
- $523 million in funds for affordable housing construction[32]
- $223 million for drinking water and sewer system improvements[32]
- $373 million to promote energy independence[33]
[edit] Budget Transparency
- Main article: Pennsylvania Spending Transparency
Unfortunately, Pennsylvania is not yet transparent, despite testimony that it should be.
Despite the absence of a statewide site, there are several places to obtain the line items in the Pennsylvania budget online. As part of the new state Open Records law, the Pennsylvania Treasurer launched a database of state contracts. The Commonwealth Foundation's policy report titled Government on a Diet:Spending Tips 2009 identifies for citizens how the state spends their money on certain projects.
[edit] State budget websites and analysis
The Pennsylvania Office of the Budget has a several documents on Governor Rendell's proposed 2009-10 budget, including the line items of his revised Pennsylvania state budget proposal.
The Commonwealth Foundation has made an Excel version of the revised and proposed Pennsylvania budget available online.
For comprehensive look at Pennsylvania state spending (which includes "special funds" and federal funds spent by the state), see the Governor's Executive Budget.
Each of the four legislative caucuses has a budget page with spreadsheets and analysis:
- Pennsylvania House Democratic Appropriations Committee
- Pennsylvania House Republican Appropriations Committee
- Pennsylvania Senate Republicans
- Pennsylvania Senate Democrats
The Commonwealth Foundation has a 2009 report identifying what they view as wasteful spending in the Pennsylvania budget as well as additional analysis of the Pennsylvania budget.
The Pennsylvania Budget and Policy Center also offers analysis of Pennsylvania government spending.
[edit] See Also
Pennsylvania taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council
- Commonwealth Foundation for Public Policy Alternatives
- Allegheny Institute for Public Policy
- Governor's Office of the Budget, 2008-2009
- Pennsylvania state site
- Pennsylvania General Assembly
[edit] Additional reading
- Gov. Ed Rendell,"2009-10 Budget Address," February 4,2009
- Meadville Tribune,"Local state workers protest budget stalemate," July 16, 2009
- Philadelphia Business Journal,"Phila. state legislators back mayor on sales tax," July 27, 2009
- The Philadelphia Inquirer,"Rendell optimistic on budget; others less so," July 24, 2009
- Reuters,"Pennsylvania gets stop-gap budget, Philly left out," August 5, 2009
- Pittsburgh Tribune-Review,"Pennsylvania Governor Rendell doles out $361 million in borrowed money," August 9, 2009
[edit] References
- ↑ Center on Budget and Policy Priorities,"State Budget Troubles Worsen," May 18,2009
- ↑ Philadelphia Inquirer,"Projected Pa. budget gap grows to $3.2 billion," May 30,2009
- ↑ 3.0 3.1 Philadelphia Inquirer,"Rendell says he will offer more cuts," May 28,2009
- ↑ 4.0 4.1 4.2 Daily Pennsylvanian, State budget has yet to be passed, July 7, 2009
- ↑ Penn Live, 800 potential job cuts are above state jobs already frozen, governor's aide says, July 8, 2009
- ↑ Philadelphia Inquirer, Rendell: Budget process slowly progressing, July 8, 2009
- ↑ The Sentinel, Sentinel Morning Update: Rendell pushes budget plan at schools, July 8, 2009
- ↑ The Associated Press,"Rendell mulls skeleton budget to pay Pa. workers," July 27, 2009
- ↑ Pittsburgh Post-Gazette, "Budget strife may violate right to pay," July 25, 2009
- ↑ [Meadville Tribune,"Local state workers protest budget stalemate," July 16, 2009
- ↑ KYW,"Rendell Explores Ways to Pay State Workers and Vendors," July 27, 2009
- ↑ Associated Press,"Pa. governor insists income tax hike plan not dead," July 17, 2009
- ↑ Pittsburgh Post-Gazette,"Rendell's budget veto hurts Pa.'s 67 counties," August 12, 2009
- ↑ Associated Press,"Paychecks restored for Pa. government workers," August 5, 2009
- ↑ Associated Press,"Pa. lays off 255 as Rendell advocates spending," August 10, 2009
- ↑ The Philadelphia Inquirer,"Pa. House Democrats say income-tax rise dead," August 4, 2009
- ↑ Pittsburgh Business Times,"Pennsylvania unemployment rate at 7.8 percent for second straight month," May 21,2009
- ↑ NBC Philadelphia,"Budget Cuts Might Close 35 State Parks," June 1,2009
- ↑ York Daily Record,"'Crisis' for county if state budget impasse too long," August 8, 2009
- ↑ State of Pennsylvania,"The budget process in Pennsylvania," retrieved June 1,2009
- ↑ 21.00 21.01 21.02 21.03 21.04 21.05 21.06 21.07 21.08 21.09 21.10 21.11 21.12 21.13 21.14 21.15 21.16 21.17 21.18 21.19 US Government Spending,"Pennyslvania State and Local spending," retrieved May 31,2009
- ↑ 22.0 22.1 Pennsylvania Revenue Department,"PA Revenue Department Releases May Collections," June 1,2009
- ↑ 23.0 23.1 The Tribune-Democrat,"Revenue squeeze: As people drive less, gas-tax collections plummet," June 1,2009
- ↑ The Morning Call,"Rendell points out consequences of Pennsylvania GOP budget plan," May 16,2009
- ↑ 25.0 25.1 The Patriot-News,"Pennsylvania state budget makers enter talks today 'very far apart'," July 27, 2009
- ↑ Pennsylvania Recovery,"Welcome to recovery.pa.gov," retrieved May 31,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved May 31,2009
- ↑ Pennsylvania Recovery,"Health Care," retrieved May 31,2009
- ↑ Pennsylvania Recovery,"Education," retrieved May 31,2009
- ↑ Pennsylvania Recovery,"Transportation Infrastructure," retrieved May 31,2009
- ↑ 31.0 31.1 31.2 31.3 Pennsylvania Recovery,"Job Training and Relief for Pennsylvanians," retrieved May 31,2009
- ↑ 32.0 32.1 Pennsylvania Recovery,"Other Infrastructure/Housing," retrieved May 31,2009
- ↑ Pennsylvania Recovery,"Energy Independence," retrieved May 31,2009
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