Pennsylvania state budget

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Pennsylvania's legislature passed its $28.05 billion FY2011 budget on June 30, 2010, marking the first time in eight years that the state has met its fiscal deadline.^[1][2] Gov. Ed Rendell Gov. Rendell signed the budget into law on July 6, 2010, after a dispute regarding over the establishment an Independent Financial Office which left the state to start FY2011 without a budget.^[3]

The state was facing a $250 million budget shortfall^[4] when Congress H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[5] Pennsylvania will receive approximately $1 billion total^[5], with $668 million to help pay for Medicaid and $387.8 million to save K-12 education jobs.^[6] The funding was less than the state had budgeted, leaving Pennsylvania with a $280 million hole and Gov. Rendell called for additional budget cuts.^[7]

See also: The Pennsylvania State Budget on State Budget Solutions

[edit] Fiscal Year 2011

The Senate voted in favor of the FY2011 budget 37-13. Then the House passed the budget with all Democrats and more than a dozen Republicans saying yes in the 117-84 vote.^[1]

The FY2011 state budget is 0.6 percent higher than that for FY2010. The spending plan includes no tax increases. Basic education and economic development are two areas that will see increased funds; most of all other areas are subject to cuts. Areas with spending reduced by 7 percent or more include libraries, state parks, the Department of Environmental Protection, the Department of Agriculture and the Department of Labor and Industry.^[1] Republicans criticized the budget because it increases spending in difficult and uncertain economic times. Democrats countered that by saying the budget is $1 billion less than what Gov. Ed Rendell requested in February.^[1]

[edit] Federal Funds

Congress approved nearly $1 billion in funds for Pennsylvania for Medicaid and education.^[5] That amount, however, was not enough for the state, which had relied on more when budgeting. After the bill was signed giving the state $668 million to help pay for Medicaid and $387.8 million to save K-12 education jobs, Gov. Rendell called for cutting nearly 2 percent from most state agencies, trimming education funding, and using new natural-gas tax revenue to close the remaining $280 million gap.^[7]

Gov. Rendell also suggested ending the vendor discount under which the state gives retailers a discount for timely remitting their state sales tax revenue. The discount amounts to $75 million in revenue the state forfeits. Mr. Rendell said it makes no sense for the state to let retailers have that money when it could be used to preserve jobs.^[4][7]

[edit] Spending Cuts

After the amount of federal funding became clear in August 2010, Gov. Rendell proposed a budget cutting plan to the legislature on August 11, 2010, which included trimming 1.9% from state agencies, the legislature, judiciary, and independently elected offices such as attorney general and treasurer and also cutting $50 million from the basic state aid to school districts.^[7] The cuts must be approved by the legislature because the governor controls only the state agency funding.^[7][8]

[edit] Job Cuts

Gov. Rendell said that only 100 state employees would be laid off due to the state's budget problems.^[9] He had previously estimated a much higher number when the budget was passed, saying 700 jobs would be cut if federal funds are received, and more if not.^[10]

[edit] WAMs

The budget includes up to $100 million in discretionary spending, otherwise known as WAMs ("walking around money") or legislative initiative grants.^[11][12] Included in the funds is $10.6 million for "urban development," $2.4 million for "cultural activities" and $500,000 for zoos.^[11]

"It was insisted upon by the Legislature and was part of the arrangement," Rendell said. "If I were king, (WAMs) wouldn't be there, but I'm not."^[13]

[edit] Capital Budget

Of the $600 million capital budget, the governor gets to designate half the amount borrowed for his favored construction projects. The governor's portion of the capital budget for FY2011 is $298 million, which is financed by state-issued construction bonds. It includes $10 million each for the Arlen Specter Library to be built at Philadelphia University and the John P. Murtha Center for Public Policy would be at the University of Pittsburgh at Johnstown.^[14]

$141 million in the governor's pot this year has been designated for projects in Philadelphia and the four suburban counties.

Read more: http://www.philly.com/inquirer/front_page/20100707_Uproar_follows_new_Pa__budget.html#ixzz0tznB22HF Watch sports videos you won't find anywhere else

Traditionally, the governor gets to designate half the amount borrowed for his favored construction project. Auditor General Jack Wagner said July 6, 2010, that he was considering performing an audit of the capital budget and the process around it, perhaps before Rendell leaves office in January.^[14]

[edit] Shale Tax

State officials have been unable to agree on a tax on natural gas extracted from deep underground areas of Marcellus Shale.^[15] The FY2011 budget included the deadline of Oct. 1 for enacting such a tax.^[15] The governor plans on $70 million being generated by the Marcellus Shale tax in FY2011 to help ease a $282 million budget shortfall.^[15] The governor wants a tax that imposes a 5% levy on the value of the natural gas that's sold, plus an additional $0.047 cents for each 1,000 cubic feet of gas produced, but some Marcellus gas producers think that's too high, and say the tax shouldn't be prohibitive when the industry is just getting started.^[15] Rendell disagrees, saying, "Pennsylvania is the 15th largest production state for natural gas, but is the only major fossil fuel producer that does not levy a tax on natural gas extraction. That's just not fair."^[15]

[edit] Fiscal Year 2010

The budget for FY 2009 came 101 days late, and most do not expect this year’s budget to be passed by the July 1, 2010 deadline. Since the FY 2009 budget passed, Pennsylvania is facing a revenue shortfall including an approximately $1.1 billion dollar general fund deficit.

Pennsylvania also faces rising pension costs and the disappearance of federal stimulus dollars. The state’s “Rainy Day” fund has also been exhausted.

Governor Rendell proposed a $29 billion General Fund budget for 2010-11, that increases businesses taxes, imposes new taxes on natural gas and tobacco products, and expands the sales tax to many goods and services currently exempt.

The House Democrats latest attempt is a $28.2 billion proposal came on June 23, 2010, and is $700 million more than Senate Republicans had put on the table the prior day. The House Democrat's plan would raise new revenues and boost the basic subsidy for public schools by $300 million, whereas the Senate Republican does not.^[16]

State and Local Debt per capita^[17]

Debtor	Debt Outstanding	Per capita
State	$41,186,955,000	$3,313
Local	$78,773,223,852	$6,336
Total	$119,960,178,852	$9,649

[edit] Fiscal Year 2009

Pennsylvania was the last state in the country to finalize its FY 2009 budget on October 9, 2009, a record setting 101 days past the start of the fiscal year on July 1, 2009.^[18] Gov. Edward G. Rendell pushed for a $28.8 billion FY 2009 general fund budget with 16% increase in individual state income taxes to balance the $3.2 billion deficit. The Pennsylvania General Assembly was divided between the Democratic dominated House and Republican Senate, the later which approved a $27.3 billion general fund budget without income tax increases in May of 2009. The lvania House belatedly approved the Senate's budget plan after the July 1 fiscal deadline passed to get it to Gov. Rendell for a veto and to start "real negotiations."^[19]

Gov. Rendell vetoed half of the budget that contained program cuts on August 5, 2009 sent to him while signing the items to keep general government services operating and pay state workers who had not been paid since the July 1 fiscal year started.^[20] The deadlock continued into September as Gov. Rendell said he would veto a bipartisan $27.9 billion budget proposal.^[21] The leaders of the House Democrats and both parties in the Senate stood by the $27.9 billion plan in a news conference on September 11, 2009 and encouraged their members to support it, admitting Gov. Rendell was not on board, but hopeful they could gain his approval through that process.^[22]

Gov. Rendell finally agreed to a budget $100 million less than the September bipartisan plan with his signature on October 9th and refrained from holding a public signing, instead putting his stamp on the plan behind closed doors, because in his words, "I believe there is little reason to celebrate."^[23] Gov. Rendell said in an October 23, 2009 interview that the FY 2010 budget will include layoffs for some of Pennsylvania's 76,600 state employees, but will be in the hundreds and not thousands as previously discussed. 293 state positions were cut in August and September 2009 with state agencies still determining the total number of positions that will need to be cut.^[24]

[edit] Budget Background

The $27.8 billion General Fund budget for FY 2010 is $1.9 billion lower than FY 2009 and $524 million smaller than FY 2009 when federal stimulus dollars are included. Education receives a $300 million increase for a total of $5.5 billion. While the plan does not have a broad-based tax increase, it does include 25 cents per pack increase on cigarettes and projects a $350 million year-end balance as a hedge against economic uncertainties.^[25]

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.^[26]

[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 [27]	$389.6 [27]	19.3789%
2001	$80.7 [27]	$406.7 [27]	19.8426%
2002	$85.9 [27]	$423.1 [27]	20.3025%
2003	$90.2 [27]	$440.7 [27]	20.4674%
2004	$94.4 [27]	$459.9 [27]	20.5262%
2005	$101.3 [27]	$482.4 [27]	20.9992%
2006	$104.0 [27]	$508.8 [27]	20.4403%
2007	$107.8 [27]	$531.1 [27]	20.2975%
2008	$111.8 [27]	$548.7 [27]	20.3754%
2009	$116.0* [27]	$547.8* [27]	21.1756%*

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Pennsylvania state budget (2009-2010) for more details.

[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 A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania identifies for citizens how the state spends their money on certain projects. The Commonwealth Foundation has a number of other research pieces detailing Pennsylvania's 2010-2011 Budget on its budget resources page.

Commonwealth Foundation budget research:

• A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania
• Budget Facts 2010

[edit] Economic Stimulus Transparency

• Pennsylvania will receive approximately $209 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[28]

• Pennsylvania received an estimated $5,766,142,442 from the American Recovery and Reinvestment Plan of 2009.^[29]

• The economic recovery website to show how legislators and government officials in Pennsylvania are spending Federal funds is available here.

Several Pennsylvania projects were noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. One project gave Pennsylvania $62 million for the North Shore Connector, which would extend the city’s light rail under the Allegheny River to the new casino and two sports arenas, a project plagued with problems since its inception.^[30]

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[31][32]

The ARRP website reported that nearly $2 million was directed towards Pennsylvania's 21st District, which ceased to exist after the 2000 census. Almost $1.5 million was sent to another retired District, the 23rd, which was done away with after the 1990 census.

There were $12.6 million distributed to six districts, which do not exist.^[33]

[edit] State budget websites and analysis

The Pennsylvania Office of the Budget has several documents on both Governor Rendell's proposed 2010-11 budget and the enacted 2009-2010 budget.

The Commonwealth Foundation has put together several resources for the proposed 2010-2011 budget. Some of these resources include an overview of the state budget, data on spending increases by each department, and links to several other useful budget resources. Additionally, they have written A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania. This report identifies opportunities to cut over $4 billion in wasteful state spending in Governor Rendell's proposed FY 2010-11 budget and offers a series of recommendations for resolving the current revenue shortfall and for reducing the size and burden of government on Pennsylvanians. In 2009, the Commonwealth Foundation wrote a similar report that identified wasteful spending in the Pennsylvania budget.

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 Pennsylvania Budget and Policy Center also offers analysis of Pennsylvania government spending.

See also: Evaluation of Pennsylvania state website

[edit] Accounting Principles

Pennsylvania Department of the Auditor General has been the commonwealth's fiscal watchdog since 1809, when it was created by an act of the General Assembly. The auditor general was appointed by the governor until 1850, when the position became an elected office. State and local audits reports are published online. Jack Wagner was elected Auditor General in 2004 and re-elected in 2008.^[34]

The Institute for Truth in Accounting (IFTA) rates Pennsylvania “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Pennsylvania's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[35] Pennsylvania's CAFRs are annual publications of the Pennsylvania Office of the Budget. The Office of the Budget is authorized by the Administrative Code of 1929; it is under the direct supervision of the Secretary of the Budget, who reports to the Governor. Anna Maria Kiehl has been Chief Accounting Officer for Office of the Budget since December of 2007 and Mary A. Soderberg has been Secretary Office of the Budget since her appointment in July of 2008.^[36]

Credit Rating	Fitch	Moody's	S&P
Pennsylvania[37]	AA	Aa2	AA

Main article: Pennsylvania Spending Transparency and Pennsylvania government accounting principles

[edit] See Also

• Pennsylvania taxpayer-funded lobbying
• Pennsylvania public employee salaries
• Pennsylvania budget facts (2010)

[edit] External links

• State Budget Solutions, Pennsylvania
• Model transparency legislation from the American Legislative Exchange Council
• Commonwealth Foundation for Public Policy Alternatives
• A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania
• 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

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