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2015-16 PA Budget

Urgent: Tax Vote - Take Action contact our Legislators

How to pay for the budget that requires at least $1.2 billion in new revenue. 

 

At least one budget framework bill is on its way to the governor the Public Welfare—now Human Services—Code bill.   We’ll all soon find out if the Senate has worked out its differences with the House Republicans regarding the Administrative Code, that was sent back to the Senate for them to review changes made by the House.   And whether pension reform or some other issue blows up current efforts to get a budget finished.  There is a possibility that more bills that are part of the budget framework agreement (or similar ones) could be returning to the chamber containing components different from those worked out in the five-party agreement. 

However, as bills continue to chug along, questions are still lingering for members about questions concerning how the budget is going to be paid for, how budget dollars are going to be distributed to public schools, and even some of the procedure behind how the process will move forward.

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The House approved its version of a budget bill and sent it to the Senate.

The Senate approved a 2015-16 budget (Senate Bill 1073) this week that includes cost-cutting reform and historic funding for education without the need for the massive tax increases originally proposed by Governor Wolf. The $30.8 billion plan is approximately $1.15 billion less than the Governor’s original budget request in March.  The bulk of funding increases in the budget are dedicated to education. The plan increases Basic Education funding by $350 million, early childhood education by $60 million, Special Education by $50 million and higher education by $82 million

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The budget package includes reform of public pensions– the number-one cause of local property tax increases. The reform (Senate Bill 1082) requires new state workers and new school employees to enroll in a combination of a traditional pension and a 401(k)-type benefit as used in the private sector.

 

As part of the budget package, the Senate also took the first step in getting the Commonwealth out of the liquor business (House Bill 1690), providing for the private sale of wine at restaurants and grocery stores, as well as many other changes that will result in increased customer convenience.

 

The bills are now before the House of Representatives for consideration. 

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Governor Tom Wolf, as expected, provided his official veto of the stop-gap budget measures for FY 2015-2016 (SBs 1000, 1001, and HB 224). The same morning, Auditor General Eugene DePasquale issued his own press release, budget related of course, as to the current financial conditions of the state’s school districts. While bunkering for the budget impasse, the AG referred to school districts that already obtained loans, resulting in over $11 million in fees/interest to the state, just to keep afloat until the end of September (wait, that’s today). DePasquale further issued a “point of no return” date of November 1, citing the date by conservative estimates and assuming a federal government shutdown. 

Click Here for video of PA Auditor's Press Conference

The stopgap budget would drive out about a third of the funding that was included in the GOP-passed $30.2 billion budget that Wolf vetoed in its entirety on June 30.

That would provide temporary relief to financially strapped social service agencies and school districts that have laid off staff, curtailed some services and put off paying bills while awaiting a budget agreement, which has encountered a number of roadblocks.

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The budget impasse between the Wolf administration and the General Assembly continues over the same issues that divided them back in June:

-      appropriate spending levels,

-      proposed tax increases, and

-      what to do about a $53 billion and growing public pension crisis. 

No one knows when a deal will be reached since the GOP-led House and Senate are sticking to their priorities of substantive pension reform, liquor privatization and no broad based tax increases; while the governor is insisting on raising the sales tax and expanding its base, increasing the personal income tax and imposing another tax on the natural gas industry to fund nearly $5 billion in new state spending. 

But what we do know is that some entities have already been told to brace themselves for financial hardship, and these situations are likely to reach a boiling point as schools prepare to open for the year. The massive tax increases are not in the best interest of our residents and will not move the state forward.  We need to work together to make our business climate one in which job creators can afford to do business. 

We are advocating for a budget deal that’s fair to the business community—one that does not spend beyond its means, does not include new tax increases and responsibly addresses Pennsylvania’s biggest cost-drivers.  And we’re continuing to speak out about the negative impact of Gov. Wolf’s total veto in lieu of a line item veto on the legislature’s budget plan, a liquor privatization bill and a pension reform measure will have on Pennsylvania’s economy.

Proposed Steps

*The House Appropriations Committee put a budget vehicle into place for the eventuality of an agreed-to budget plan.  House Bill 1460 cleared the committee along a party-line vote and contains the exact same language as the budget bill passed by the General Assembly and vetoed by Gov. Wolf.  While an agreement still seems to be a ways off, this move was necessary as part of House rules in order to make sure an agreed-to product can be considered in a timely manner. House rules require the posting of a General Appropriations bill for second consideration, it takes about two weeks in advance of when this bill will actually be voted on the floor. By voting House Bill 1460 it would provide a first reading and get it in position for second consideration whenever a negotiated agreement is reached. The bill creates a document that can later be amended to reflect a budget deal.

* Rep. Dan Truitt (R-Chester) has introduced House Bill 1410, which would authorize the Budget Secretary to make payments to school districts, human services agencies, and other entities providing government services to ensure they receive funding during a budget stalemate.

“Though people haven’t yet begun to feel the pain of a state government shutdown, that will change if the budget stalemate continues much longer,” said Rep. Truitt in a statement on his proposal. “The state continues to collect tax revenue, but without an enacted budget, the government lacks the authority to distribute those funds.  Funding streams for many critical services will soon dry up.  An emergency budget fund, like I have proposed, would give the administration the necessary authority to keep state government operational until the governor and General Assembly arrive at a compromise.”

___________________________Budget Bill_____________________________

The General Appropriations Bill (HB 1192) a $30.179 billion spending plan, representing a near four percent increase over the prior fiscal year plan assumes no new taxes or tax shifts, but includes another $100 million for basic education, $46 million in one-time spending, as well as $220 from privatizing the state liquor stores.

  • Represents a $30.1 billion spending plan
  • Does not include any broad-based tax increases
  • Increases basic education funding by $100 million – provides $11 billion total in state funding for education. According to data from the U.S. Census Bureau, PA ranks among the top 10 states in the nation for per-pupil spending
  • Passed the House and Senate

   X  Vetoed by the Governor

Governor Wolf’s Proposed 2015-16 Budget

  • Contained broad-based tax increases, including:

            Personal Income Tax increase by 20 percent – from 3.07 to 3.7 percent
            Sales Tax Increase by 10 percent – from 6 to 6.6 percent
            Expansion of the Sales Tax

  • Contained a Severance Tax on the natural gas industry
  • Contained Corporate Tax changes, including:

          Gradual reduction of the Corporate Net Income Tax rate to 4.99 percent by 2018
          Reversal of progress made on Net Operating Loss carry forward by lowering the                   deduction to $3 million or 12.5 percent of taxable income
          Implementation of mandatory unitary combined reporting

 

Rep. Dan Truitt (R-Chester) has introduced House Bill 1410, which would authorize the Budget Secretary to make payments to school districts, human services agencies, and other entities providing government services to ensure they receive funding during a budget stalemate.

“Though people haven’t yet begun to feel the pain of a state government shutdown, that will change if the budget stalemate continues much longer,” said Rep. Truitt in a statement on his proposal. “The state continues to collect tax revenue, but without an enacted budget, the government lacks the authority to distribute those funds.  Funding streams for many critical services will soon dry up.  An emergency budget fund, like I have proposed, would give the administration the necessary authority to keep state government operational until the governor and General Assembly arrive at a compromise.”

Other Insights:

          Pa Manufactures Assoc. Perspective - Corporate Taxes 

          ACEC/PA Budget Update: as a result of the veto of the entire budget bill, funding for certain government services and selective payments to government vendors are beginning to slow.  Click here for more details. 

2015-16 PA Proposed Budget (Introduced by Governor Tom Wolf, March 3, 2015)

          Jobs that Pay

          Schools that Teach

          Government that Works

To learn more about Governor Wolf’s proposed budget and review/approval process click on the links below.  The Chamber’s Business & Community Advocacy Council will be monitoring the PA Budget process and our Budgets & Taxes Special Taskforce will be reviewing the details.

2015-16 Executive Budget Presentation by Pa Budget Secretary Randy Albright and PA Revenue Secretary Eileen McNulty

2015-16 Governor's Executive Budget 

2015-16 Budget in Brief

2015-16 Proposed Budget Line-Item Appropriations

2015-16 Proposed Budget Slide Presentation

2015-16 Proposed Budget Dashboard


Additional Resources:

The PA House Appropriations Committee Budget Hearings on Gov. Tom Wolf’s budget proposal have been completed after hearing from the various heads of departments and agencies about the governor’s proposal. To watch footage of completed hearings, click here

PA Taxpayers that Pay shows how much in new taxes the taxpayers of each school district will pay under proposed Governor Wolf’s tax plan along with how much property tax and rent relief funds go back to the school district’s taxpayers under the Governor’s property tax shift plan.  [website:House Appropriations Committee Majority Chairman Bill Adolph (R-Delaware)]