Pennsylvania state budget (2010-2011)

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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 had met its fiscal deadline.[1][2] Gov. Ed Rendell Gov. Rendell signed the budget into law on July 6, 2010, after a dispute over the establishment an Independent Financial Office which left the state to start FY2011 without a budget.[3]

The state faced a deficit of us to $4 billion for the FY2012 state budget at the end of 2010.[4]

Pennsylvania had a total state debt of $41,844,487,003 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[5]

Three months into FY2011, Pennsylvania's overall general fund revenue was running $76 million above projections.[6]

2011 State spending & deficit in billions[7]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$68.9 $6.9 $20.2 $11 $9.4 $3.5 $8.3 $47.4
2011 Local spending & deficit in billions[7]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$74.1 $1.3 $4.0 $25.2 $5.8 $5.9 $5.5 $102.8

Fiscal Year 2011 State Budget

See also: Archived Pennsylvania state budgets

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.[8]

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $276.2 million, which represented 0.2% of the FY2011 state budget.[9]

As of Oct. 2010, four months into the fiscal year, the state collected $7.6 billion, just $19 million more than had been projected, although the Oct. figures were less than expected.[10]

The Senate voted in favor of the $24 billion 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 was 0.6 percent higher than that for FY2010. The spending plan included no tax increases. Basic education and economic development were two areas that saw increased funds; most of all other areas were 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 was $1 billion less than what Gov. Ed Rendell requested in February.[1]

Federal Funds

Congress approved nearly $1 billion in funds for Pennsylvania for Medicaid and education.[11] 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.[12]

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 made no sense for the state to let retailers had that money when it could be used to preserve jobs.[13][12]

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.[12] The cuts had to be approved by the legislature because the governor controls only state agency funding.[12][14]

Three independent agencies refused to make those cuts -- State Auditor General Jack Wagner, the General Assembly and the courts.[15] The governor said that their refusal meant the state was missing out on $11 million in savings.[15] Other agencies also not under the governor's control complied with his request for a spending cut, including Attorney General Tom Corbett, an agency that oversees hospitals and the state Ethics Commission.[15]

Job Cuts

Gov. Rendell announced that 50 state employees would be laid off due to the state's budget problems.[16] The governor had initially estimated that 1,000 jobs would be cut if federal funds were received, and more if not.[17] The number was lower than first estimated in part because more state employees retired than anticipated.[16] The state also eliminated 500 vacant jobs.[16]


The budget included up to $100 million in discretionary spending, otherwise known as WAMs ("walking around money") or legislative initiative grants.[18][19] Included in the funds was $10.6 million for "urban development," $2.4 million for "cultural activities" and $500,000 for zoos.[18]

"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."[20]

Capital Budget

Of the $600 million capital budget, the governor got to designate half the amount borrowed for his favored construction projects. The governor's portion of the capital budget for FY2011 was $298 million, which was financed by state-issued construction bonds. It included $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.[21]

$141 million in the governor's pot was designated for projects in Philadelphia and the four suburban counties.[21]

Traditionally, the governor gets to designate half the amount borrowed for his favored construction projects. 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.[21]

Shale Tax

State officials were unable to agree on a tax on natural gas extracted from deep underground areas of Marcellus Shale.[22] The FY2011 budget included the deadline of Oct. 1 for enacting such a tax.[22] The governor planned on $70 million being generated by the Marcellus Shale tax in FY2011 to help ease a $282 million budget shortfall.[22] The governor wanted a tax that imposed a 5% levy on the value of the natural gas that was sold, plus an additional $0.047 cents for each 1,000 cubic feet of gas produced, but some Marcellus gas producers thought that was too high, and said the tax shouldn't be prohibitive when the industry was just getting started.[22] Rendell disagreed, saying, "Pennsylvania was the 15th largest production state for natural gas, but was the only major fossil fuel producer that did not levy a tax on natural gas extraction. That's just not fair."[22]

Budget background

The $27.8 billion General Fund budget for FY 2010 was $1.9 billion lower than FY 2009 and $524 million smaller than FY 2009 when federal stimulus dollars were included. Education receives a $300 million increase for a total of $5.5 billion. While the plan did not had a broad-based tax increase, it did include 25 cents per pack increase on cigarettes and projects a $350 million year-end balance as a hedge against economic uncertainties.[23]

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.[24]

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[25] $389.6[25] 19.3789%
2001 $80.7[25] $406.7[25] 19.8426%
2002 $85.9[25] $423.1[25] 20.3025%
2003 $90.2[25] $440.7[25] 20.4674%
2004 $94.4[25] $459.9[25] 20.5262%
2005 $101.3[25] $482.4[25] 20.9992%
2006 $104.0[25] $508.8[25] 20.4403%
2007 $107.8[25] $531.1[25] 20.2975%
2008 $111.8[25] $548.7[25] 20.3754%
2009 $116.0*[25] $547.8*[25] 21.1756%*

Budget transparency

See also: Pennsylvania Spending Transparency

Despite the absence of a statewide site, there were 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. For 2011, the Pennsylvania State Senate was focused on creating an online budget database for citizens to use.[26] 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 had a number of other research pieces detailing Pennsylvania's 2010-2011 Budget on its budget resources page.[27][28][29]

Commonwealth Foundation budget research:

Economic stimulus transparency

  • The state was facing a $250 million budget shortfall[13] when Congress HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[11] Pennsylvania would receive approximately $1 billion total[11], with $668 million to help pay for Medicaid and $387.8 million to save K-12 education jobs.[30] The funding was less than the state had budgeted, leaving Pennsylvania with a $280 million hole and Gov. Rendell called for additional budget cuts.[12][31]
  • Pennsylvania established an economic recovery website to show how legislators and government officials in Pennsylvania were spending Federal funds.[33]

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.[34]

State budget websites and analysis

The Commonwealth Foundation had 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 had written "A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania."[35] 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.[36][37][38][39]

For comprehensive look at Pennsylvania state spending (which includes "special funds" and federal funds spent by the state), see the Governor's Executive Budget.[40]

Each of the four legislative caucuses had a budget page with spreadsheets and analysis:

The Pennsylvania Budget and Policy Center also offers analysis of Pennsylvania government spending.[41]

See also: Evaluation of Pennsylvania state website

Accounting principles

Pennsylvania Auditor General had 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 audit reports were published online. Jack Wagner was elected Auditor General in 2004 and re-elected in 2008.[42][43]

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 did 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 did not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[44] Pennsylvania's CAFRs were annual publications of the Pennsylvania Office of the Budget. The Office of the Budget was authorized by the Administrative Code of 1929; it was under the direct supervision of the Secretary of the Budget, who reports to the Governor. Anna Maria Kiehl had been Chief Accounting Officer for Office of the Budget since December of 2007 and Mary A. Soderberg had been Secretary Office of the Budget since her appointment in July of 2008.[45] [46]

Credit Rating Fitch Moody's S&P
Pennsylvania[47] AA Aa2 AA
Main article: Pennsylvania Spending Transparency and Pennsylvania government accounting principles

See also

External links

Additional reading


  1. 1.0 1.1 1.2 1.3 The Pittsburgh Post-Gazette "State budget passed -- and on time" July 1, 2010
  2. The Standard-Journal "Budget process won’t be smooth" April 17, 2010
  3. The Philadelphia Inquirer "Pa. budget awaits votes on two bills" July 2, 2010
  4. The Scranton Times-Tribune "Revenue stop was big challenge for Pennsylvania budget" Dec. 20, 2010
  5. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  6. Businessweek "Pa. budget collections beat expectations in Sept." Oct. 1, 2010
  7. 7.0 7.1 USA Spending, State Guesstimated* Government Spending
  8. FY2011 CAFR
  9. The Wall Street Journal “States Face Budget Shortfalls of $26.7 Billion“ Dec. 8, 2010
  10. Businessweek "Oct. revenue figures come in below Pa. projections" Nov. 1, 2010
  11. 11.0 11.1 11.2 Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  12. 12.0 12.1 12.2 12.3 12.4 The Philadelphia Inquirer "Rendell proposes wide-ranging cuts to fill $280 million budget gap" Aug. 12, 2010
  13. 13.0 13.1 "Rendell works to fix state budget shortage" August 10, 2010
  14. Businessweek "Pa. Gov. Rendell says only 100 layoffs necessary" Aug. 18, 2010
  15. 15.0 15.1 15.2 [The Pittsburgh Post-Gazette "Three agencies refuse to comply with Rendell's request for budget cuts" Oct. 5, 2010]
  16. 16.0 16.1 16.2 The Pittsburgh Post Gazette "Rendell announces 50 state layoffs" Sept. 21, 2010
  17. The Patriot-News "Gov. Ed Rendell lowers the number of budget cut-related job cuts" July 19, 2010
  18. 18.0 18.1 "Pa. taxpayers in for yet another WAM" July 12, 2010
  19. "A tale of two States: The differences between PA and NJ's budgets" June 30, 2010
  20. The Pittsburgh Tribune-Review "Up to $100 million in grants part of budget" July 8, 2010
  21. 21.0 21.1 21.2 The Philadelphia Inquirer "Uproar follows new Pa. budget" July 7, 2010
  22. 22.0 22.1 22.2 22.3 22.4 The Pittsburgh Post-Gazette "Gov. Rendell pushes for shale gas tax" Aug. 28, 2010
  23. "Governor Rendell Press Release, "Governor Rendell Signs Budget that Cuts Overall Spending, Boosts Education Funding, With No Broad-Based Tax Increase," October 9, 2009
  24. State of Pennsylvania, "The budget process in Pennsylvania," accessed June 1, 2009 (dead link)
  25. 25.00 25.01 25.02 25.03 25.04 25.05 25.06 25.07 25.08 25.09 25.10 25.11 25.12 25.13 25.14 25.15 25.16 25.17 25.18 25.19 US Government Spending, "Pennyslvania State and Local spending," accessed May 31,2009
  26. "Pennsylvania Senate committed to taxpayer database," Pittsburgh Tribune-Review, January 20, 2011
  27. database of state contracts
  28. budget resources page
  29. A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania
  30. Pittsburgh Post-Gazette "Pa. to get $1 billion for teacher jobs, Medicaid" August 11, 2010
  31. H.R. 1586
  32. Wall Street Journal, "Stimulus Spending by State," March 12,2009
  33. Pennsylvania Recovery
  34. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  35. A Taxpayer's Budget 2010: Responsible Spending for Pennsylvania
  36. Commonwealth Foundation Spending Report
  37. 2010 budget overview
  38. Pennsylvania state budget resources
  39. 2010 Spending Increases by Department
  40. Governor's Executive Budget
  41. Pennsylvania Budget and Policy Center
  42. Department of the Auditor General Web site, accessed November 9, 2009
  43. audits reports
  44. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  45. Pennsylvania Office of the Budget Web site, accessed November 9, 2009
  46. CAFRs
  47. State of Indiana, “State Credit Ratings-as of June 24, 2009"