June 30, 2017

House, Senate, Governor Agree On $31.996B Spending Plan With $2 Billion Hole To Fill

The Senate, House and Gov. Wolf reached a bipartisan agreement Thursday on a $31.996 billion General Fund budget-- House Bill 218 (Saylor-R-York)-- which the Senate and House passed Friday and sent to the Governor.
The budget includes more money for schools, pension obligations and services, but demands across-the-board cuts state government agencies and in Medicaid.
The General Assembly also agreed to combine the departments of Human Services and Health, but it does not include the departments of Aging and Drug and Alcohol Programs.
They will also combine the Department of Corrections and the Office of Probation and Parole.
But, the spending plan has a $2 billion hole to fill and there is no agreement on how to fill it.  The revenue plan will have to wait until after July 4.  The Senate is likely to come back to session July 5 and House July 6, but both chambers adjourned to the call of the chair.
All the same revenue options are still on the table-- massive state borrowing, gaming expansion, further liquor privatization and Tax Code.  In more detail they are--
-- Borrow $1.5 billion against tobacco settlement revenue or securitize some other revenue stream to pay for paperclips and fill the General Fund revenue hole;
-- Approve 40,000 video gaming terminals for everyone with a liquor license (bars, nursing homes and churches);
-- Extend the state Sales Tax to warehousing and storage;
-- Redirect the local share of the present casino tax revenues to the state General Fund, along with adopt new casino license fees;
-- Authorize beer, wine and spirits sales in more private outlets;
-- Shift the Sales Tax on bottles of wine and spirits from the bottle bought by liquor license holders to the individual drink bought by consumers;
-- Sell or lease out state assets like the Farm Show Building or something else;
-- Special Fund transfers to the General Fund that House or Senate members believe are just sitting there “flush with cash” and not doing anything better.
Gov. Wolf proposed a $32.3 billion budget in February and the House Republicans passed a $31.52 billion budget in April, the same total as in FY 2016-17.
Interestingly, the House and Senate give themselves a 4.8 percent raise over last fiscal year.  That means their budget has increased 77 percent since FY 1994-95-- $182.9 million in 1994-95 to $325.2 million in the new fiscal year ($142.3 million) and 26 percent since 2002-03 from $258.1 million to $325.1 million ($67 million).
Gov. Tom Wolf Friday said this on the compromise, bipartisan General Fund budget passed by the  House and Senate— “Over the past two years, Republicans and Democrats have worked together to make progress for the people of Pennsylvania.
“After decades of failure, we passed pension reform that will put Pennsylvania on the path to a sustainable fiscal future, save taxpayers billions, and reduce payments to Wall Street fund managers. This budget fully funds our pension obligations.
“We passed the most significant liquor reform since prohibition. We set our differences aside, and made real changes for customers and taxpayers.
“After years of devastating education cuts, we have restored more than $800 million in education funding. I am going to keep fighting to fix our schools, but this budget represents one of the most significant investments in schools in our lifetime. And we passed a fair funding formula, taking Pennsylvania off a shameful list of states without a way to fairly fund their schools. This budget keeps investing in schools.
“Together, we’ve fought the heroin and opioid crisis that continues to plague our communities. We have developed treatment options and provided lifesaving medicine, but we know the crisis has not abated so we’re continuing to fight by making drug courts available to low level offenders so those who are struggling can get treatment.
“Today, we finalized a general appropriations bill. It’s a start, and it’s not everything I wanted or everything Republicans wanted, but unlike D.C., we can compromise and get things done just like when we passed bipartisan pension reform and bipartisan liquor reform.
“This budget includes much of the savings, efficiencies, and cuts I proposed in February in my budget address. But we avoided deep, indiscriminate cuts that would have endangered our ability to deliver services to the people of Pennsylvania.
“This budget invests over $175 million more in our schools. Over the past two years, we’ve restored more than $800 million in cuts to schools.
“This budget helps those in Pennsylvania who need help the most. It reduces the waiting list for those with intellectual disabilities; this budget makes additional investments in our efforts to fight the opioid epidemic; this budget invests in key programs to create manufacturing jobs in Pennsylvania, and allows the commonwealth to team up with businesses and institutions of higher learning to create jobs and a strong workforce.
“And it builds on our efforts to make government more efficient and responsive. We consolidated IT and HR functions, and through an internal team focused on finding efficiencies and making government more effective, we have saved over $150 million and improved customer service at places like DMVs.
“I have rolled up my sleeves and worked with employees throughout the commonwealth to deliver change and efficiencies, and I am heartened that the legislature has joined my efforts.
“But there is still work to do: We need a sustainable revenue package that gets Pennsylvania on track. For too many years, Pennsylvania has lurched from crisis to crisis.
“We began to address it with pension reform, and by fully funding our pension obligation, we have taken another important step.
“But Pennsylvania cannot get ahead if we do not take our responsibility for long term financial stability seriously. Let’s redouble our efforts, and continue to show people the progress we can make by working together.”
Senate Republican Reaction
Senate President Pro Tempore Joe Scarnati (R-Jefferson): “This year’s budget required many difficult decisions to be made. While the reality of our fiscal situation makes some spending reductions necessary, we were able to restore a portion of funding to budget lines that are important for all Pennsylvanians. Our goal continues to be protecting taxpayers from broad-based tax increases that have been detrimental to Pennsylvania in the past.”
Senate Majority Leader Jake Corman (R-Centre): “The budget adhere to what has been demanded by taxpayers - controlling state government spending while still providing historic education funding and money for other priorities. By putting taxpayers first, we have held the spending increase to less than 1 percent. We have done this in the face of significant fiscal challenges and growth in mandated spending. We look forward to continuing the talks to achieve a revenue package that moves toward bringing more fiscal stability to state government.”
Senate Appropriations Committee Chair Pat Browne (R-Lehigh): “In recognizing the financial challenges the Commonwealth continues to face, this budget provides a fiscally-responsible spending plan with a modest increase in funding for vital state programs and services, while still protecting hard working individuals and job creators from onerous tax increases. This budget also continues the state’s dedication to providing a quality education for all Pennsylvania students as it increases funding for basic education, special education, early childhood education and early intervention to unprecedented levels.”
Senate Democrats
“This budget is the result of a concerted effort to move Pennsylvania forward thoughtfully and responsibly,” said Vincent Hughes (D-Philadelphia), Minority Chair of the Senate Appropriations Committee. “Given today’s economic and political environment, we decided to work together to get something positive done.”
“The governor proposed an austere budget that was modest and it attempted to address our social and political reality. Throughout the budget process, we had significant conversations with all parties to get us to a point where we came close to the governor’s proposal,” Hughes said. “We restored cuts made in the House Republican plan, we were thoughtful about how we restructure government and we presented a foundation for the future.”
Some other budget highlights include--
-- Dept. of Education--
-- Community Colleges same as last year $232.1 million
-- Community College Capital Fund same as last year $48.8 million
-- Regional Community College Services increase from $3 million to $6.75 million
Click Here for the FY 2017-18 budget spreadsheet.  Click Here for summary of DCNR, DEP budget.  Click Here for Agriculture budget summary.  Both from Senate Democratic Caucus.