Governor Signs $27.8 Billion Budget Bill

Pennsylvania's 101-day state budget impasse came to an end Friday, October 9 when Governor Ed Rendell signed a $27.799 billion budget into law.

The budget bill, House Bill 1416, was approved in the Senate on October 9 by a vote of 42-7. It was approved in the House October 7 by a vote of 107-93.

Read PBPC's full analysis of the 2009-10 state budget

Even after including $2.6 billion in federal stimulus dollars, the 2009-10 budget will reduce overall state General Fund spending by 1.8%, or $524 million, from the 2008-09 budget. Many departments are funded below 2007-08 funding levels.

1 - Figures from Governor's Office of Budget "2009-10 Enacted Budget General Fund" spreadsheet.

2 - Aging administrative costs moved to Lottery Fund.

3 - Basic Education figure for Enacted Budget includes funding for Education Assistance Program and PA Accountability Grants Program.

Additional Resources:

Education: Table comparing Education line items in enacted budget to prior two years' budgets and other 2009-10 budget proposals.

Healthcare: Table comparing Healthcare line items in enacted budget to prior two years' budgets and other 2009-10 budget proposals.

Other Selected Line Items: Table comparing other selected line items in enacted budget to prior two years' budgets and other 2009-10 budget proposals.

All Line Items: View a 45-page state House Appropriations Committee document detailing all appropriations in HB 1416.

Budget Comparison: View a 24-page state Office of the Budget document comparing the revised 2008-09 budget to the enacted 2009-10 budget.

Federal Stimulus Funds: View a four-page summary of how these funds are appropriated in HB 1416.

Revenue Plan: Read an overview of the revenue plan (HB 1531)

The budget plan relies heavily on one-time revenue sources, such as the Rainy Day Fund. It is also funded with a limited number of new recurring revenue measures, including taxes on table games at casinos, mini-cigar taxes and a gross receipts tax on Medicaid Managed Care Organizations. Cigarette taxes are increased 25 cents a pack and the phase-out of a business assets tax is frozen at its 2008 tax rate.

Basic education funding will receive a $300 million increase as part of a multi-year effort to better fund public education costs at the state level. However, absent federal fiscal stimulus funds, overall education funding is actually about $704 million less than 2008-09 and about $283 million less than 2007-08.

Funding for most state services was frozen or cut, with the cost of running prisons and health care for the poor and disabled being two exceptions. Federal fiscal stimulus money was used to fund both of those areas, supplementing reduced state funding.

The compromise state budget plan will restore a number of services and programs that would have been cut more heavily in Senate Bill 850, such as funding for child care, early childhood programs, hospital funding, agricultural programs and workforce development. Still, this budget means that most state departments and agencies will have to operate with less than they did in each of the last two fiscal years. Environmental and economic development programs were hit particularly hard.

On October 7, the House approved House Bill 1531, which enacts the revenue and tax changes needed to fund the budget. Read an overview of the revenue plan here.

On October 9, the House and Senate finalized the details of a Fiscal Code bill, which will authorize fund transfers and other steps necessary to implement the budget. Media reports indicate the Fiscal Code bill has a provision to create a new nonpartisan legislative fiscal office on a temporary trial basis that would be responsible for analyzing fiscal and budget matters.

PBPC will have a more detailed analysis of the 2009-10 state budget next week.