Difference between revisions of "Pennsylvania state budget"

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Gov. [[Tom Corbett|Tom Corbett]] presented his budget proposal for FY2014 to the legislature on Feb. 5, 2013. He said that one of his priorities is pension reform. On Jan. 23, 2013, the governor said that he did not plan to make big cuts funding in his forthcoming budget for basic and higher education, but he also cautioned that the budget is based on the assumption that lawmakers will reform the struggling state pension system. Should lawmakers refuse to reform the pension system, all bets are off. The governor also said he would honor the no-tax pledge he made in his 2010 campaign.<Ref>[http://www.philly.com/philly/news/homepage/20130124_Corbett_says_funding_for_education_will_depend_on_fate_of_public-employee_pension_costs.html The Philadelphia Inquirer "Corbett says funding for education will depend on fate of public-employee pension costs" Jan. 24, 2013]</ref>
 
Gov. [[Tom Corbett|Tom Corbett]] presented his budget proposal for FY2014 to the legislature on Feb. 5, 2013. He said that one of his priorities is pension reform. On Jan. 23, 2013, the governor said that he did not plan to make big cuts funding in his forthcoming budget for basic and higher education, but he also cautioned that the budget is based on the assumption that lawmakers will reform the struggling state pension system. Should lawmakers refuse to reform the pension system, all bets are off. The governor also said he would honor the no-tax pledge he made in his 2010 campaign.<Ref>[http://www.philly.com/philly/news/homepage/20130124_Corbett_says_funding_for_education_will_depend_on_fate_of_public-employee_pension_costs.html The Philadelphia Inquirer "Corbett says funding for education will depend on fate of public-employee pension costs" Jan. 24, 2013]</ref>
  
==Fiscal Year 2012 State Budget==
 
 
A mortgage foreclosure settlement between banks and states was announced in Feb. 2012, with Pennsylvania receiving approximately $69 million.  The administration said some of its $69 million may be used to offset $2 billion in cuts to programs made earlier in the fiscal year.<ref>[http://www.cbsnews.com/8301-500395_162-57396609/states-diverting-foreclosure-settlement-funds/ CBS MoneyWatch "States diverting foreclosure settlement funds" March 14, 2012]</ref>
 
 
===Passed Budget===
 
 
Gov. [[Tom Corbett|Tom Corbett]] signed the budget with 15 minutes to spare on June 30, 2011, giving the state will have its first on-time budget in nine years.<ref name=post>[http://www.washingtonpost.com/national/pa-governor-signs-budget-ahead-of-midnight-deadline-following-flurry-of-legislative-action/2011/07/01/AGIIlBtH_story.html The Washington Post "Pa. governor signs budget ahead of midnight deadline following flurry of legislative action" July 1, 2011]</ref>
 
 
The FY2012 budget reduces spending by three percent from FY2011.  The budget did not include any tax increases.<ref name=post/>  It reduced education funding by approximately $860 million and also made cuts to human services.<ref>[http://www.reuters.com/article/2011/06/30/pennsylvania-budget-idUSN1E75S11A20110630 Reuters "Pennsylvania legislature passes budget with cuts" June 30, 2011]</ref>
 
 
In Jan. 2012, the governor cut spending from the budget by $160 million in reaction to a tax revenue-shortfall that reached $487 million at the end of December.  Gov. Corbett directed most agencies, including the Department of Environmental Protection and the state parks and forest bureaus, to reduce spending by 3 percent. But some individual programs are seeing reductions up to 10 percent.<ref>[http://thetimes-tribune.com/news/corbett-reduces-160-million-in-state-spending-1.1253657#axzz1icdFvH3Z The Times Tribune "Corbett reduces $160 million in state spending" Jan. 5, 2012]</ref>
 
 
The [[Pennsylvania House of Representatives|House]] approved the budget with a 109-92 vote on June 29, 2011, and the day before the [[Pennsylvania State Senate|Senate]] passed it on a party-line vote.  Republicans called the spending plan a $27.2 billion plan with no increased taxes, while Democrats put the total at $27.7 billion and called a higher hospital "assessment" a tax increase.  Approximately $200 million of the FY2012 budget comes from FY2011's surplus, revenues that have outpaced projections by some $700 million,<ref>[http://www.forbes.com/feeds/ap/2011/06/30/business-us-state-budget-pennsylvania_8543220.html Forbes "Pa. House Republicans send governor state budget" June 30, 2011]</ref>
 
 
On June 23, 2011, Republican legislative leaders and the governor agreed on the framework of a state spending plan of less than $27.3 billion that reinstated most of the higher education money Corbett proposed cutting, although the details were not yet finalized.  Those involved in budget talks said the plan to eliminate a $4.2 billion deficit does not raise taxes.<ref>[http://www.pittsburghlive.com/x/pittsburghtrib/news/breaking/s_743558.html The Pittsburgh Tribune-Review "Corbett, GOP make progress on budget" June 24, 2011]</ref>
 
 
'''Pensions'''
 
::''See also: [[Pennsylvania public pensions]]''
 
The FY2012 budget accounts for $1.1 billion in pension payments.<ref>[http://www.post-gazette.com/stories/local/state/gov-corbett-adds-pension-reform-to-budget-agenda-636794/ The Pittsburgh Post-Gazette "Gov. Corbett adds pension reform to budget agenda" May 21, 2012]</ref>
 
 
 
===Legislative Proposed Budget===
 
 
On June 28, 2011, the [[Pennsylvania State Senate|Senate]] passed a $27.1 billion state budget with a party-line vote of 30-20 and sent it to the [[Pennsylvania House of Representatives|House]].  If he does so, this budget will be the first on completed on time in nine years.  The budget spends 3 percent less than the state spent in FY2011, marking the first budget decrease since 2001.  Under the budget, higher education funds will be cut by 18 to 19 percent.<ref>[http://www.philly.com/philly/news/124684693.html The Philadelphia Inquirer "Pa. Senate passes $27.15B budget" June 28, 2011]</ref>
 
 
House Republicans released a counterproposal to the governor's budget, but said that they agreed with the governor's $27.3 billion bottom line.  They would go about that almost 3% reduction in spending very differently, however, focusing more on cuts to welfare and less to education.  The House Republican plan would restore $380 million to universities, with cuts being 15% for most state -sponsored universities, although four would lose a quarter of their state aid.  It would give public schools an additional $210 million compared to the governor's budget.  Although the House Republican plan restores some funding when compared to the governor's plan, public schools would still have to see cuts of 10 percent, amounting to about $1 billion.
 
It would cut $470 million out of the Department of Public Welfare, and would expand by $50 million the co-payments for some optional services under the Medicaid program or services that are used by higher-earning families.<ref name=house>[http://www.businessweek.com/ap/financialnews/D9N4QK8G0.htm Businessweek "Pa. House GOP plan to budget more money for ed" May 10, 2011]</ref>
 
 
The proposal also eliminated currently vacant jobs in state government and would reduce the Legislature's funding five percent, saving approximately $15 million.<ref name=house/>
 
 
===Governor's Proposed Budget===
 
Gov. [[Tom Corbett|Tom Corbett]] said shortly after being elected that he intended to reduce state administrative operations by 10% and that he also planned to reduce the state automotive fleet by 20%, saving the state $140 million over 10 years.<ref name=new>[http://money.cnn.com/2010/11/15/news/economy/governors_budgets/ CNNMoney.com "New governors: Budget cuts not tax hikes" Nov. 15, 2010]</ref> Corbett has also said that he wants to require all elected officials to contribute to their health care coverage.<ref name=new/>  Corbett acknowledged the "pending storm" of a budget deficit projected at $4 billion to $5 billion in his inaugural address and will deliver his budget address on March 8, 2011.<ref>[http://www.philly.com/inquirer/local/20110119_Corbett_sworn_in__citing_the__pending_storm__of_a_budget_deficit.html#ixzz1BUPM2hu7 The Philadelphia Inquirer "Corbett sworn in, citing the 'pending storm' of a budget deficit" Jan. 19, 2011]</ref>
 
 
Gov. Corbett introduced his $27.3 billion proposed budget for FY2011-2012 on March 8, 2011. At the time, Pennsylvania faced a projected $4 billion budget shortfall.  To address that, Corbett's planned to cut spending by $866 million, returning spending to 2008-09 levels, prior to the recent budget plans that included several billion in federal stimulus funding.  The proposed budget did not raise taxes.<ref name=plan>[http://www.post-gazette.com/pg/11068/1130622-454.stm The Pittsburgh Post-Gazette "Corbett's state budget plan cuts $866 million" March 8, 2011]</ref> 
 
 
The $27.3 billion spending plan proposes to eliminate nearly 1,000 vacant state jobs as well as laying off about 500 state workers. The budget includes no pay increase for state workers for the 2011-12 year and will look for salary roll backs.  Corbett is also calling for school districts to freeze pay for all employees even if it means re-opening contracts.<ref> [http://www.pennlive.com/midstate/index.ssf/2011/03/pennsylvania_gov_tom_corbetts_1.html/ Pennlive, Budget Would Cut 1,550 State Jobs, March 8, 2011] </ref>
 
 
'''Cuts''' 
 
 
The governor's proposed would reduce basic education funding by more than $1 billion and would cut by more than half funding for state-supported universities.<ref>[The Philadelphia Inquirer June 22, 2011]</ref>Funding to four state universities and 14 schools in the State System of Higher Education would be cut in half.  Funding for the Department of Environmental Protection would decrease from $147 million to $140 million.<ref name=plan/>  To save  $400 million next year, or preserve about 9,000 teaching jobs statewide, the governor asked for all school personnel to agree to a wage freeze for the 2011-12 school year. As of mid-April, around 70 of the state's 500 school districts had teachers, staff or administrators agree to the pay freeze.<ref name=acting>[http://citizensvoice.com/news/acting-education-secretary-defends-state-budget-calls-for-merit-pay-1.1134896#ixzz1K7xkszQA Citizensvoice.com "Acting education secretary defends state budget, calls for merit pay" April 20, 2011]</ref>  State education spending K-12 increased from $13 billion in 1995, to more than $26 billion currently.<ref name=acting/>
 
 
The governor's plan also cut funding to the State Department of Community and Economic Development from $337.9 million to $223.6 million.<ref name=plan/>
 
 
Despite the cuts, some agencies would see an increase in funding.  The proposed budget included an additional $607.7 million for welfare funding and health funding would increase by $61.5 million, Military and Veterans Affairs would increase by $19.6 million, the state police would get a $10 million increase and the Department of Revenue funding would increase by $8 million.<ref name=plan/>
 
 
Budget Secretary Charles Zogby told the Pennsylvania Press Club the governor would not use any one-time budget gimmicks to fill the gap.<ref> [http://articles.mcall.com/2011-02-28/news/mc-pa-budget-cuts-20110228_1_big-spending-cuts-spending-plan-federal-stimulus/ The Morning Call, Day of Reckoning coming on budget, Feb. 27, 2011] </ref>
 
 
Some lawmakers and activist organizations are calling on Corbett to tax shale gas. Pennsylvania is the only state with this kind of gas that does not tax its extraction.<ref> [http://www.post-gazette.com/pg/11058/1128043-85.stm/ Pittsburgh Post Gazette, Taxing Natural Gas, Feb. 27, 2011] </ref>
 
 
Budget highlights include:
 
*Cut $550 million from basic education spending
 
*Cut preschool funding by $2.4 million
 
*Special Education funding remained at $1 billion
 
*Increased spending on prisons by $186 million
 
*Increased funding for state police by 3.4 percent
 
*Leased oil and gas rights on state forestland to provide $65 million to help keep state parks open
 
*$15 million increase in the Research and Development Tax Credit
 
 
'''adultBasic cuts'''
 
 
In order to address a $4 billion budget shortfall, Pennsylvania Gov. Tom Corbett shut down adultBasic, a government-subsidized health care program for the state's working poor who earned too much to qualify for Medicaid. There were approximately 41,000 members in the program. Corbett said the 10-year old program is not sustainable. In 2010 the program cost $163 million. Much of the funding for the program came form Blue Cross/ Blue Shield, however the insurance giant ended its financial partnership at the end of 2010.<ref> [http://www.digitaljournal.com/article/304173/ Digital Journal, Adult Basic Healthcare Ends, Feb. 28, 2011] </ref>
 
 
Participants in the program paid monthly premiums of $36.
 
 
==Budget transparency==
 
==Budget transparency==
  

Revision as of 08:15, 1 May 2014

Pennsylvania state budget

Flag of Pennsylvania.png
Budget calendar:  Annual
Fiscal year:  2014
Financial figures
GF expenses:  $27.65 billion
Other state budgets
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Pennsylvania's Gov. Tom Corbett signed the $27.65 billion FY2013 state budget into law on June 30, 2012, with minutes to spare before the start of the fiscal year.[1] The budget increases state spending by $471 million, or 1.7 percent, over FY2012.[2]

The state operates on an annual budget cycle.[3] The state's fiscal year begins July 1 and it is currently in FY2013.

In FY2012, Pennsylvania had a total state debt of approximately $142,513,672,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.[4] The FY2013 state debt total is down from the FY2012 state debt of $147,788,481,000.[5]

Pennsylvania's total FY 2012 state debt per capita is $11,183.78.[6]


Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

State 2008 2009 2010 2011
Pennsylvania 26.59% (#34) 30.15% (#35) 33.4% (#36) 34.31% (#33)
  • Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.[7][8]

Fiscal Year 2014 State Budget

Gov. Tom Corbett presented his budget proposal for FY2014 to the legislature on Feb. 5, 2013. He said that one of his priorities is pension reform. On Jan. 23, 2013, the governor said that he did not plan to make big cuts funding in his forthcoming budget for basic and higher education, but he also cautioned that the budget is based on the assumption that lawmakers will reform the struggling state pension system. Should lawmakers refuse to reform the pension system, all bets are off. The governor also said he would honor the no-tax pledge he made in his 2010 campaign.[9]

Budget transparency

Government tools

A new site, called PennWATCH, was required by law to go online by December 31, 2012. The site will include spending and contract information, tax collections and federal revenues, as well as the name, position, and salary of all state employees.[10]

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
none n/a n/a n/a n/a n/a n/a
See also: Evaluation of Pennsylvania state website

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Pennsylvania, which measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[11][12]

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[13][14]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[15] According to the report, Pennsylvania received a grade of B- and a numerical score of 82.5, indicating that Pennsylvania was an "advancing" state in terms of transparency regarding state spending.[15]

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 are included. Education receives a $300 million increase for a total of $5.5 billion. While the plan does not have a broad-based tax increase, it does include 25 cents per pack increase on cigarettes and projects a $350 million year-end balance as a hedge against economic uncertainties.[16]

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.[17]

Accounting principles

The Pennsylvania Auditor General has 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 audits reports are published online.[18]

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 does 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 does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[19] Pennsylvania's CAFRs are annual publications of the Pennsylvania Office of the Budget. The Office of the Budget is authorized by the Administrative Code of 1929; it is under the direct supervision of the Secretary of the Budget, who reports to the Governor. Anna Maria Kiehl has been Chief Accounting Officer for Office of the Budget since December of 2007 and Mary A. Soderberg has been Secretary Office of the Budget since her appointment in July of 2008.[20][21]

Credit Ratings

Credit Rating Fitch Moody's S&P
Pennsylvania[22] AA Aa2 AA[23]

Stimulus

Pennsylvania received $8.47 billion in federal stimulus funding between February 2009 and June 2013.[24]

Public Employees

See also:Pennsylvania public employee salaries and Pennsylvania public pensions

According to 2011 Census data, the state of Pennsylvania employed a total of 208,870 people.[25] Of those employees, 142,206 were full-time employees receiving a net pay of $666.5 million per month and 66,664 were part-time employees paid $110.3 million per month.[25] More than 57% of those employees, or 399,454 employees, were in education or higher education.[25]

External links

Additional reading

References

  1. The Philadelphia Inquirer "Corbett signs $27.65 billion budget with minutes to spare" July 2, 2012
  2. Cite error: Invalid <ref> tag; no text was provided for refs named philly
  3. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting" April 2011
  4. State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
  5. State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  6. State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
  7. US Census Federal Aid to State and Local Governments
  8. Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
  9. The Philadelphia Inquirer "Corbett says funding for education will depend on fate of public-employee pension costs" Jan. 24, 2013
  10. "Government transparency in Pennsylvania becomes a reality," The Commonwealth Foundation, July 13, 2011
  11. Institute of Government and Public Affairs
  12. University of Illinois Transparency Profile for Pennsylvania
  13. [ University of Illinois 50 State Transparency Comparison
  14. University of Illinois State Transparency Profiles
  15. 15.0 15.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  16. "Governor Rendell Press Release, "Governor Rendell Signs Budget that Cuts Overall Spending, Boosts Education Funding, With No Broad-Based Tax Increase," October 9, 2009
  17. State of Pennsylvania,"The budget process in Pennsylvania," accessed June 1, 2009
  18. State and Local Audit Reports
  19. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  20. Pennsylvania Office of the Budget Web site, retrieved November 9, 2009
  21. CAFRs
  22. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  23. Pew Stateline Infographic on State Credit Ratings, Accessed September 19, 2013
  24. Recovery, "Stimulus Spending by State"
  25. 25.0 25.1 25.2 2008 Pennsylvania Public Employment U.S. Census Data