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PA Budget, Revenues and Expenditures  

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State budget process 

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State Budget 

How it Works

State Budget: The Pennsylvania State Budget is the annual taxing and spending plan for the operation of state government in PA for one fiscal year. The budget is more than a spending plan though. Governors and the General Assembly use it as a tool for proposing new priorities or major policy shifts.

Total Operating Budget: The total operating budget for FY2010-11, including all commonwealth funds, is $66.4 billion (proposed). The total operating budget includes the General Fund. The FY2010-11 $29 billion General Fund is funded primarily through state tax revenue, and includes $2.8 billion in federal American Recovery and Reinvestment Act (ARRA) funds.

General Fund Budget: The General Fund budget contains many of the general spending programs of the state; special funds, such as the Motor License Fund, which funds most of the state’s road and bridge programs, are targeted toward specific program areas and are often non-discretionary. Bigger ticket items in the General Fund budget include education, welfare and corrections. Welfare in PA however is a bit of a misnomer as it includes Medical Assistance, and the vast majority of welfare recipients in PA are children and the elderly. Spending increases in these line items are predominantly non-discretionary. The spending is formula-based and determined more by demand for services than by new programs or new funding priorities of lawmakers. The ever increasing cost of health care or special education are two examples where lawmakers have little choice but to fund increases.

The PA General Fund budget is approximately $26 billion. But nearly 80 percent of that budget is for mandated expenses – things the state is required by law to pay, such as state employee pension costs, fixed school funding costs, costs of operating the State corrections system, or costs of the state Medical Assistance program. But the amount of discretionary spending in the General Fund budget – spending that the state can actually control – totals $5 billion, or less than 20 percent of the entire General Fund budget.

Welfare Funding: (DPW) The Department of Public Welfare (DPW) budget includes funding for Medical Assistance and programs such as community mental retardation services, mental health services, child care services, nurse family partnerships and (sometimes) cost of living adjustments for child welfare services. General Fund spending on Medical Assistance is supplemented by appropriations from the Lottery Fund and the Tobacco Settlement Fund.

Budget Deadline: The PA Constitution tasks the PA General Assembly with the job of enacting a state budget bill each year. This actually takes the form of multiple bills: a spending plan; a taxing plan (the fiscal bill); and the non-preferred appropriations bills (which provide funding for specific colleges, hospitals and museums.) This Constitutional charge has been interpreted as a deadline. deadline has been interpreted to So on July 1, 2010 Fiscal Year 2010-11 begins.

Where Does the Money Go? Pennsylvania’s budget funds critical public services that keep our communities safe, our children educated, our economy growing, and our poor and disabled citizens receiving health care. Over the past twenty years, PA State government has outsourced human services to the State’s 67 counties and to thousands of nonprofit organizations and for-profit companies through grants and contracts.

Budget Impasse: When negotiations fail to produce a budget by the June 30 Constitutional deadline, the state stops disbursement on its contracts and grants, withholding payment for services rendered. A budget impasse has a particularly negative impact on smaller nonprofit organizations who can not afford to continue to provide services in the absence of state funds. A budget impasse imposes hardship on smaller nonprofits and for-profit companies that service state or county contracts or subcontracts. In the case of nonprofits, this hardship expands the hole in the social safety net. By depleting charitable resources and infrastructure. Once these organizations and programs cut services or close their doors, their business interruption costs, interest on borrowed money, and loss of skilled labor can not be recovered-- not to mention the impact on the communities they serve. Community services is like dental work, you can fill the cavity now, or pull the tooth later.

Measuring the Budget: There are many ways to measure the trending of the state budget. Traditionally it is measured by total funding over the prior year with respect to the Governor‘s proposed budget and actual revenues collected. Many chose to measure the budget in terms of increases or decreases in their own line items. The devil is in the details. Often times, what is authorized is never even appropriated.

…And that is where lobbyists come in.


PA Budget, Revenues and Expenditures                                                         top of page

PA FY 2010-11 Total operating budget 
All Other Funds $8.2 B              General Fund $26.3 B
Federal Funds $23.0 B              Motor License Fund $2.7 B
Lottery Fund $1.6 B                  Augmentations & Fees $1.8 B
ARRA Budgetary Relief $2.8 B

PA FY 2010-11 Total operating budget general fund revenues

Sales & Use Tax 31.3%             Non-Tax Revenues 3.5%
Gross Receipts Tax 5.6%          Cigarette Tax 4.0%
Other Taxes 8.3%

General Fund Expenditures Personal Income Tax 37.7%
Corporate Net Income/ Capital Stock & Franchise Tax 9.6%

PA FY 2010-11 Total general fund budget expenditures
All Other 9.3%                           Debt Service 3.8%
Higher Education 6.8%               PreK-12 Education 35.2%
Other DPW Human Services Programs 16.1%
PreK-12 Education 35.2%
Medical Assistance/Long-Term Living 21.7%
Corrections/Probation and Parole 7.1%

 

State budget process                                                                             top of page

The State’s Fiscal Year runs from July 1, through June 30.

The State budget process is as complex as it is critical. It starts with the Governor’s budget proposal in January of each year, and runs until the budget is passed -- ideally prior to June 30. The budget address is a proposal based on the legislative priorities of the Governor’s administration.

The annual budget cycle can be divided into four major stages: preparation (budget development and submission to the General Assembly); approval (budget review and enactment by the General Assembly and budget signing by the Governor); execution (rebudget approval and agency budget implementation); and audit (financial audit and program performance monitoring and evaluation).
Download a PDF on the PA budget process

Budget process reform                                                                          top of page

Budget Reform Proposals

The following items were proposed in late 2009 as a soluition to prevent a budget impass.

  1. Common Cause of PA Proposal: Provides standing committees with authority to determine spending levels for Departments, and provides for input from rank and file legislators. It also includes a series of interim budget deadlines and fines legislators $100 per day that these interim deadlines are not met. Furthermore, if the budget is not approved by June 30, all members of the General Assembly, the Governor and Cabinet forfeit their salaries and as of July 1, their per diems are suspended until the new budget is enacted.

  2. Interim Deadlines and Penalties: (SB1068)(Sen. Mike Brubaker) Imposes a protocol of interim deadlines on the budget process, as well as placing penalties on legislators for failure to pass a budget. Legislators would be required to forfeit their pay check and per diem for not meeting deadlines. In addition, a physical presence would be required in the Capitol until the deadlines are met.

  3. Last Budget Governs Until New Budget Passes: Based on Joint Resolution (HB1952)(Rep. Bryan Barbin). Seeks to Amending the State Constitution to ensure that if a budget is not approved by June 30, then government agencies and contractors will operate on the prior fiscal year’s appropriation until the new budget is enacted.

  4. Emergency Essential Services Fund: (Sen. Kim Ward) Provides that if the State budget is not enacted by July 15, the State Treasurer must periodically transfer unappropriated, unrestricted available General Fund moneys, to a newly created “Emergency Essential Social Services Fund” administered by the Treasury Department. The Treasury would then transfer the funds bi-weekly to designated nonprofit institutions and agencies at a level not to exceed eighty five percent (85%) of the level at which those operations were authorized in the prior year’s budget. The Secretary of Revenue would determine if sufficient revenues have been received to cover the disbursements. Once the budget passes, payments would be adjusted pursuant to the program’s appropriation in the enacted budget.

  5. Prompt Payment Resolution: (SR 200)(Sen. Mike Brubaker/David Ross) In the event of a budget impasse, this Resolution requests that once a budget does pass the State Treasure release funding for nonprofit organizations as quickly as possible to ensure the continued operation of and the least possible injury to nonprofit and charitable organizations.

Legislative Fiscal Office

October 9, 2009, the PA House, Senate and Governor also approved the Fiscal bill (the taxing portion of the State budget) with a provision intended to fundamentally reform Pennsylvania's budgeting process while increasing transparency and accountability in state government. Act 50 of 2009, [PA HB1614 (PN2799)] established the Legislative Fiscal Office (LFO), a non-partisan bi-cameral agency designed to provide to the legislature with accurate and unbiased agency revenue projections by specific dates each year. The LFO will have access to the same agency and department financial information as the Governor's Budget Office, but will be an office under the Legislature instead. While the Governor and Legislature must agree on spending during budget negotiations, the Administration currently has sole discretion over setting the revenue projection for the upcoming fiscal year. Under the news law, the LFO will submit a preliminary revenue estimate during the second week of February, a week after the Governor traditionally presents his budget request for the upcoming fiscal year. The LFO would then submit a binding revenue estimate for the upcoming fiscal year by June 15. The law also requires state agencies and departments to submit their budget requests to the LFO at the same time they submit them to the Office of the Budget. Pennsylvania was one of only eight states where the Legislature does not receive the agency budget requests. More Information

Act 50 of 2009 would establish the non-partisan, bi-cameral, PA Legislative Fiscal Office (LFO). The LFO would be created by a commission representing majority and minority leadership of the PA House and Senate, the Appropriations Committee chairs, and the Governor‘s Office.The LFO would prepare revenue estimates, establish a baseline budget that reflects current spending levels and statutory requirements, provide analysis of the executive budget, develop models to forecast state revenue, provide an annual assessment of the state’s fiscal condition and five-year forecast, monitor tax receipts, develop performance measures and evaluate outcomes-based performance measures.

The legislation would transfer responsibility for setting official revenue estimate from the executive branch (where it currently is) to the legislative branch (under the LFO). The LFO would establish an initial revenue estimate and set a binding revenue number on June 15th of each year that would serve as the maximum for purposes of the General Appropriations Act. The estimate could only be changed under certain circumstances. The Governor‘s role in the process would be to certify that the General Assembly’s budget does not exceed the General Assembly’s revenue estimate.

Act 50 of 2009 would make available to the LFO certain information, including monthly and daily revenue reports, monthly expenditure data, and performance data, and offer access to the Commonwealth’s accounting system. The director of the LFO could take civil action to compel agencies and political subdivisions to provide information.

Act 50 of 2009 would give the fiscal office access to data that is currently available to legislative appropriations staff under the Administrative Code, including daily revenue reports and information in the Commonwealth’s accounting system. (Some of the information is already available to the general public.)

See testimony by Sharon Ward (PBPC) on the LFO

(2/3/10) Joint Public Hearing with the House Finance Committee on the Independent Fiscal Office (video)

(2/17/10) Joint Public Hearing with the House Finance Committee regarding the Independent Fiscal Office (contained in Act 50 of 2009)

(3/10/10) Joint Public Hearing with the House Finance Committee on the Independent Fiscal Office

(10/22/09) Pennsylvania budget reform: new Fiscal Office could be a real winner By Patriot-News Editorial Board

Resources                                                                                               top of page

PA Governor’s Budget Office
The Office of the Budget is responsible for preparing the Governor’s annual budget and implementing it after it is passed by the General Assembly and the Governor signs it into law.

Office of the Budget Organization Chart

Current and Proposed PA Budgets

FY 2010-11 Governor's Executive Budget

FY 2010-11 PA Budget in Brief (Governor’s Budget Office)

Status of General Fund Appropriations

PA Revenue Data (monthly)

PA Governor’s FY 2010-11 Budget Resources

Issues PA - initiative of the Pennsylvania Economy League

Pennsylvania Budget and Policy Center (PBPC) is a nonprofit, non-partisan research organization based in Harrisburg that provides information and analysis of state tax and budget policies. PBPC reviews tax policy proposals for their impact on revenue adequacy and equity, and budget proposals for their impact on Pennsylvania’s families.

PBPC releases analysis of PA tax revenue’s for May 2010
[6/1/10] With only one month left in the 2009-10 fiscal year, Pennsylvania revenue collections are $1.2 billion, or about 4.8%, below estimate for the year. Tax collections alone are $1.1 billion short of projections for 2009-10 and trail 2008-09 collections by $905 million, or nearly 4%. In May, total revenue collections were off by $125 million, or 6.5%, for the month. Read PBPC full analysis of the May revenue numbers.

PBPC Analysis of PA FY 2010-11 Budget

PBPC's Budget & Tax Primer explaining the state budget.

FY 2009-10 State Budget

Enacts Budget That Cuts Spending
On October 9, 2009, the PA House, Senate and Governor finally approved the state budget for Fiscal Year 2009-10 [PA HB1416 (PN2772)] which reduced state spending while maintaining most state services and programs without instituting a broad-based tax increase. Act 10A of 2009 set general fund spending at $27.8 billion – more than $1 billion less than the Governor's initial budget request and nearly $500 million less than the approved 2008-09 budget total of $28.267 billion. To balance revenues and expenditures, the budget eliminated or reduced spending across the board, including a $9.7 million reduction for the state Senate and a $7.3 million funding cut for the State House. The 2009-10 spending plan augmented it’s $25.17 billion in state funds with $2.6 billion in federal stimulus funds. More than $650 million of federal stimulus funds was allocated for basic education to bolster state support for Pennsylvania's 501 school districts. Overall, basic education funding was increased by $300 million to $5.53 billion. Read more from the Senate Republicans.

 

 

 

 

 
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