News from Second and State

Budget Address Edition

Governor Wolf delivered his third budget address to a joint session of the General Assembly today. Though not expressed in the speech as emphatically as in previous years, a quick pass through the budget book shows that Wolf is keeping with his theme from his last two budget addresses: “schools that teach, jobs that pay and government that works.”

The 2017-2018 spending plan totals a slim 1.8% increase over last year’s budget; however we’ll start new fiscal year with a $3 billion deficit. In an effort to fill that ever-growing budget hole, the Governor suggests $2 billion in cost saving measures and budget cuts, a slight increase in revenues, as well as a $1 billion tax package.

Cost savings measures proposed include:

  • Consolidation of the Department of Corrections and the Board of Probation and Parole into one “Department of Criminal Justice”;
  • Consolidation of the Departments of Aging, Health, Human Services and Drug and Alcohol Programs into one “Department of Health and Human Services”;
  • Reforms to workers compensation programs and an early retirement incentive program;
  • Continuing GO-TIME efforts throughout all Commonwealth agencies;
  • A lease-leaseback arrangement for the Farm Show Complex and Expo Center;
  • A new bond program, through the Commonwealth Financing Authority, to fund CURE grants, Environmental Stewardship Fund grants, Cultural and Historical Support grants, and Grants to the Arts; and
  • A $25 fee on every person residing in a municipality that does not have a local police department.

The expectation of increased revenue through:

  • An additional $137 million from liquor privatization efforts; and
  • An additional $150 million from expanded gaming.

A tax package that includes:

  • A severance tax on natural gas;
  • Closing loopholes in the insurance premiums tax;
  • Capping the Net Operating Loss (NOL) provisions of the tax code;
  • Eliminating special interest tax loopholes; and
  • Adopting combined reporting along with Corporate Net Income (CNI) tax rate reductions.

The Governor’s efforts to ensure the Commonwealth has “schools that teach” include an increase in education funding of $200M, as well as an $8.9M increase in funding for the Pennsylvania State System of Higher Education. The Governor also encouraged school districts to competitively bid their transportation contracts, and provided increased funding for educational efforts under the “Every Child Succeeds Act,” as well as increased funding for school breakfast programs.

“Jobs that pay” efforts include an increase in the minimum wage, new grant funding for an Apprenticeship Grant Program and a manufacturing training to career grant program, the establishment of a middle class task force, as well as funding for business outreach efforts, tourism and smart cities.

This year, the Governor’s “government that works” efforts include plans to protect our Commonwealth’s most vulnerable citizens. This includes increased funding to move individuals with intellectual disability and autism from the waiting list and into services, increased funding for access to naloxone, the establishment of specialty drug courts and an “all payer claims database” to streamline medical payments and ensure transparency in our medical claims systems. The budget also includes reforms to sentencing and parole policies, increased funding and awareness for college campus sexual assault, new police cadet classes and funding for watershed protection activities.

Adopting the state budget is always a daunting task for the Governor and the General Assembly, but between our deficit and structural deficit, this year could be especially so. Budget hearings will keep legislators and department heads busy over the next few weeks, as they work toward a timely enactment of a 2017-2018 state spending plan. Stay tuned to this blog and follow us on Twitter for updates to all things budget related in the Commonwealth of Pennsylvania.

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