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2016-17 PA Budget

In his budget address to the General Assembly on February 9th, Governor Tom Wolf outlined his perspective on the fiscal challenges facing the commonwealth, the shortcomings of the budgets passed by the General Assembly and the choices that lay in front of state elected officials. He also called on the House and Senate to make the difficult decisions he believes are required to move Pennsylvania forward.

Traditionally, budget addresses outline the spending priorities of an Administration, containing new and/or innovative prospects, perhaps a reinvigoration of existing programs or a bold pass with something controversial.  However, we are in unchartered territory, with the Governor proposing a 2016-2017 budget without the 2015-2016 budget complete.

Governor Wolf offered two possible paths from which to choose. One, he characterized as the right path: to invest in human services and education, to eliminate the structural deficit, and to do so by raising revenue. The other path would result in what he characterized as devastating cuts to services which will hurt Pennsylvanians. He described failure to address the deficit as a failure to meet the core functions of government.

Background about the 2016-2017 Proposal
  The usual comparisons about the overall spending amount versus the year prior do not apply here, because the 2015-2016 budget is incomplete. Instead, the Governor framed all of his asks around the “framework’s” funding levels.  The “framework” agreement was announced in late fall of 2015 and has since been renounced by Republican leaders. The spending level for his 2016-2017 proposal is generally agreed to be between $32.2 and $33.3 billion. The 2015-2016 budget, which was passed by the House and the Senate and partially vetoed by the Governor, had a spend level of approximately $30.2 billion before the Governor’s line item veto. The tax increases proposed total about $2.72 billion in recurring revenue.

Gov. Wolf proposed revenue sources including the following:

  • A 6.5% severance tax on natural gas drillers
  • An increase in the personal income tax to 3.4% (from 3.04%), which would be retroactive to January 1, 2016. This tax would also be applied to lottery winnings.
  • The sales and use tax would be expanded to apply to cable television, movie tickets and digital downloads.
  • Tobacco taxes – the cigarette tax would be increased and a tax would be applied on smokeless tobacco.
  • An assortment of other revenue from a surcharge on certain insurances, a new tax on promotional play for gaming, and an increase to the bank shares tax.

The Governor’s budget also proposed the following spending, which impacts some of United Way and our partners’ legislative priorities:

  • $120 million over two years for increased access to Pre-K and Head Start (this includes the $30 million that was included in the partial budget signed in Dec.)
  • $200 million proposed for basic education building on the proposed $377 million for 2015-2016 year.
  • $11.6 million for Industry Partnerships, nearly doubling the investment from the 2015-2016 budget
  • There is not a specific line item for 2-1-1 in the budget proposal, and we are still working to determine whether support for 2-1-1 has been included in another line item.
  • Restoring another third of the cut to county-funded human services, in addition to his proposal to restore one third last year.

The administration also presented a narrative about what will happen if the state budget goes down the second path he asked the legislature to avoid. He characterized that path as resulting in $600 million in cuts to human services, and $1 billion in cuts to Education. The scenarios outlined by the administration to begin to work toward $600 million in reductions focused on areas of the DHS budget, which the administration characterizes as discretionary:

  • Reduce funding for the child care subsidy by $40 million.
  • Reducing $200 million in pharmaceutical and prescription assistance for seniors and individuals with disabilities.
  • Reducing $180 million in services to individuals with mental illness and intellectual disabilities.
  • Reduce domestic violence and rape crisis service funding by $11.5 million.

Additional 2016-2017 Budget Resources

  • If you would like to dig deeper into line item funding amounts, a spreadsheet is available here.
  • The budget in brief, which outlines the major initiatives of the Governor’s budget, is available here.

What’s next?
There will be several weeks of Appropriations committee hearings with heads of the state agencies to review the Governor’s spending plan. The UWGPSNJ Public Policy Committee will be meeting and part of their discussion will be on where UWGPSNJ should be positioned with budget advocacy for the ongoing 2015-2016 and new 2016-2017 budget proposal.

If you have any questions about the budget proposal, or would like to submit any feedback about our position to the public policy committee, please reach out to me.

Thank you for your partnership in driving Impact for our friends and neighbors across the region.

Sincerely,

Jim Cawley
President & CEO