Once Upon a Time: An Analysis of the 2014-15 General Assembly Approved Budget

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Once Upon a Time: An Analysis of the 2014-15 General Assembly Approved Budget

The $29.0 billion 2014-15 state General Fund budget enacted earlier this month fails to confront Pennsylvania’s serious revenue problems. Lawmakers pretended that the half billion dollar revenue shortfall in 2013-14 did not exist and “balanced” the 2014-15 budget with one-time transfers, accounting tricks, and phantom revenues.

The budget relies on a myriad of dubious revenue sources including an increase in collections well above what the Independent Fiscal Office projected, revenue from a proposed casino that does not yet have a gaming license, and federal approval of the governor’s “Healthy Pennsylvania” alternative to Medicaid expansion. If these revenues fail to materialize, it is quite likely that Pennsylvania will face a mid-year budget crisis.

Already, there are signs that revenue collections will head off course. On July 18, in response to a lawsuit challenging the governor's plan to expand gas drilling in state forests and parks, the Corbett administration agreed not to lease any more state land for drilling until the court makes a ruling. The budget assumes that $95 million will be raised from these leases, however this revenue will be delayed if it arrives at all.

The final budget provides less than half of the education funding increase proposed in February, leaving many school districts to, once again, reduce programs for students. While there are some welcome increases in certain programs, they may be illusory, as the commonwealth may have to scale back spending before the end of the year.

The General Assembly and Governor Corbett could have put the Commonwealth on a responsible path by enacting a severance tax on natural gas drilling, imposing taxes on smokeless tobacco and e-cigarettes, and closing corporate tax loopholes. Instead they deepened the Commonwealth’s financial problems by making additional corporate tax cuts.

Status: The General Assembly passed Appropriations bill (HB 2328),[1] which contains line-item funding for most of the commonwealth’s programs, just hours before the start of the fiscal year on July 1st. Governor Corbett initially withheld his signature, calling on legislators to make changes to the state pension program. Over the next few days, the legislature approved an amended version of the Fiscal Code bill (HB 278),[2] which is necessary to implement the 2014-15 budget plan. Governor Corbett approved both the budget and the Fiscal Code on July 10, but vetoed several line items worth $72.4 million (0.25% of the General Assembly budget), including $53 million of the General Assembly’s budget.

This analysis is based on the current version of both the Appropriations and Fiscal Code bills, after the Governor’s vetoes, and is subject to change as the General Assembly could attempt to override the Governor’s veto.

Overview

State General Fund spending for 2014-15 increases by $469 million from the total available in 2013-14, an increase of 1.6%. This is $393 million less than the Governor’s budget proposal in February 2014. The lower spending number is due in part to General Fund revenue collections that fell well below estimates during the second half of 2013-14, and the General Assembly’s failure to adopt new revenue measures that were on the table as late as the last week in June. In a reversal from prior years, the budget does include small increases for a number of programs; however the promised funding increases may not materialize.

Table 1. 2014-15 General Fund Summary (in $ thousands)

 

2013-14 Available

2014-15 Enacted Budget

Change from 2013-14

Percent Change

Change from 2010-11

Percent Change

Total State

$28,557,964

$29,026,601

$468,637

1.6%

$986,810

3.5%

To balance the 2014-15 budget a number of questionable assumptions and legislative actions may make it difficult to generate the $30.2 billion in revenue that is required to fully fund this budget plan. If revenues fall short, program freezes or cuts are likely.

Magical Revenue Plan Clouds Budget Forecast

General Fund revenue collections are supposed to total $30.2 billion in 2014-15, a healthy increase of $1 billion, or 3.6% from 2013-14 collections. The tax estimates lawmakers used to balance the budget are $240 million higher than those most recently forecasted by the Independent Fiscal Office. [3] Meeting these estimates may prove difficult to reach for several reasons, enumerated later.

This relatively bullish forecast comes off a year when Pennsylvania’s General Fund collections decreased by $40 million from the prior year, falling over half a billion dollars short of yearly revenue targets despite the continued, but slow expansion of the U.S. economy and a decline in the jobless rate. Pennsylvania’s revenue decline is largely a result of business tax rate cuts enacted over the past 8 years.

More business tax cuts are scheduled for 2014-15, even though they were not specifically adopted in this year’s budget.

These cuts include:

  • Another cut in the capital stock and franchise tax (from 0.67 mills to 0.45 mills in 2015);
  • Increases in loss deductions for corporate net income tax;
  • New tax credits coming online.

Total corporate tax revenues are now declining from year to year, putting more pressure on the state’s other taxes, largely sales and income taxes, to grow robustly to hit overall revenue targets. This proved problematic in 2013-14. The 2014-15 budget plan requires personal income tax growth of 5.2%, rebounding for 0.6% growth in 2013-14, while sales tax revenue growth is projected to increase from 2.7% in 2013-14 to 3.8% in 2014-15.

Table 2. General Fund Revenue Growth in 2014-15 (in $ thousands)

 

2013-14 Actual

Dollar Growth in 2014-15

2014-15 Forecast

Total General Fund Revenue

-0.1%

$1,587,464

5.5%

General Fund Taxes

0.1%

1,024,637

3.6%

Personal Income Tax

0.6%

595,496

5.2%

Sales Tax

2.7%

348,079

3.8%

Corporate Net Income Tax

3.3%

-1,178

-0.0%

Capital Stock and Franchise Tax

-46.8%

-50,908

-15.9%

Gross Receipts Tax

-2.1%

25,472

2.0%

Cigarette Tax

-4.6%

-24,508

-2.5%

Liquor Tax

3.1%

15,388

4.8%

Inheritance Tax

3.8%

57,076

6.5%

Realty Transfer Tax

10.8%

72,092

19.2%

Non-Tax Revenue

-12.2%

562,827

110.6%

Heartier revenue growth than was seen in 2013-14 is forecasted for nearly every tax type, with the exception of corporate net income tax, in 2014-15.

2014-15 Marked by Uncertain and One-time Revenues

There are revenue sources counted on to balance the budget that could be problematic in 2014-15. $95 million is expected to be transferred from the Oil and Gas Lease Fund, but the additional drilling on state lands required to generate this revenue has been challenged in court, and a judge temporarily halted new leasing. License fees totaling $75 million from the yet-to-be built casino in Philadelphia are also counted on in the budget. Lastly, a $40 million “fix” for lost revenues from the 2013-14 budget’s bank tax reform (which caused bank taxes to fall short of estimate by $49 million, or 13% in 2013-14) is presumed, although a provision to help do so was stripped out of the Fiscal Code bill by the House.

The revenue plan also includes $247 million of transfers from other state funds, a $150 million one-time windfall from a change in the state’s unclaimed property law and $40 million from stepped up tax enforcement.

The budget is balanced using one-time revenue sources totaling $1.5 billion or 6% of total 2014-15 revenue.

While using the one-time revenue sources is convenient for balancing 2014-15, it makes the process of balancing the 2015-16 budget more difficult as revenue sources will need to be developed to cover not only the regular growth in the budget, but to also offset the loss of the one-time revenues used in 2014-15. If expenses are expected to increase by 3% in 2015-16 and the entire budget is to be paid for using recurring sources, regular General Fund revenues would have to grow by over 8% to make up the difference.

Personal Income Tax: $12.0 billion

The 2014-15 forecast for personal income tax (PIT), the largest single revenue source in the General Fund, is $595 million, or 5.2%, higher than 2013-14 PIT collections. This growth is based on the expectation that the economy will continue to expand, the number of unemployed continues to decrease, and that investment gains will bounce back in tax year 2014.[4]

Sales Tax: $9.5 billion

For several years in a row, the budget’s revenue projections have assumed robust increases in sales tax collections, and 2014-15 is no different – predicting growth of $348 million, or 3.8%. Unfortunately, the growth in sales tax revenue has failed to meet expectations in 2011-12, 2012-13, and 2013-14, falling short of estimate by $99 million last fiscal year. Unless there is strong improvement in the economy in 2014-15, meeting the sales tax collections target may prove difficult.

Corporate Taxes: $4.9 billion

Corporate taxes in total are predicted to decline by $21 million, or 0.4%, in 2014-15 due to reductions in the capital stock and franchise tax (CSFT) collections and other tax cuts. The 2013-14 budget cut the CSFT rate in tax years 2014 and 2015, which will lower CSFT payments by $51 million in 2014-15 as compared to the prior year. The CSFT collections totaled $830 million in 2011-12, by 2014-15 revenue will fall to $269 million. The repeated cut in the CSFT rate without a replacement of the revenue is one of the primary reasons for the commonwealth’s growing structural deficit.

Corporate net income tax (CNIT), the largest corporate tax source, is expected to decline by $1 million in 2014-15. This is due to an expected moderation in the growth of corporate profits and the net impact of corporate tax changes, including increases in the net operating loss deduction allowance in tax years 2014 and 2015.

The corporate loans tax was eliminated in the 2013-14 budget, effective for tax year 2014. This had a smaller effect on “other corporate” tax collections in 2013-14, but will become more evident in 2014-15 as the tax is no longer being paid.

The budget predicts bank taxes will increase by $6 million to $324 million in 2014-15 despite the lack of any type of lasting “fix” of the 2013-14 tax reform that caused bank taxes to fall by $34 million, or 9.6%. The tax reform expanded the tax base to largely out-of-state banks, but cut the tax rate by 29% for all banks. News reports indicate that PNC Bank, likely the largest bank taxpayer, saw a windfall from the change. [5] The Fiscal Code initially contained a $20 million bank tax surcharge to help make sure the shortfall of 2013-14 was not repeated, but it was removed by the House before enacted. This lack of action makes the estimated bank tax growth less likely.

Other Taxes: $2.7 billion

Cigarette taxes are predicted to fall by $25 million from 2013-14, a decrease of 2.5%. In 2012-13 and 2013-14, cigarette taxes fell more than 4% each year, so the decline in 2014-15 could be understated. The House and Senate have passed different versions of a proposal to increase the local Philadelphia cigarette tax to $2 per pack. If enacted when the House returns to session in August, the decline in state tax revenue would likely be larger than is currently predicted as consumption will decrease.

Non-Tax Revenue: $1.1 billion

To balance the budget, lawmakers transferred money from several other state-owned funds in 2014-15. This causes non-tax revenue to more than double, from $509 million in 2013-14 to $1.1 billion in 2014-15. Over $300 million in fund transfers are built into the 2014-15 budget plan including $100 million from the Machinery and Equipment Loan Fund, $100 million from the Small Business First Loan Fund, $95 million from the Oil and Gas Lease Fund (to be generated by new gas drilling on state land), $30 million from Volunteer Companies Loan Fund, $8 million from money set aside by the Gaming Control Board for local law enforcement grants, $6.2 million from a restricted account for alternative fuel use, and $2.355 million from a restricted account set up to pay Johns-Manville asbestos claims.

Non-tax revenue also includes $150 million from the change in unclaimed property holding period and $75 million in license revenue from a proposed Philadelphia casino project, both of which are one-time in nature.

Recurring non-tax revenue includes $80 million in liquor store profits and an assortment of fees, licenses, and interest earnings.

Education

Table 3. 2014-15 Education Summary (in $ thousands)

 

2013-14 Available

2014-15 Enacted Budget

Change from 2013-14

Percent Change

Change from 2010-11

Percent Change

Classroom Funding

$5,628,629

$5,730,079

$101,450

1.8%

-$579,597

-9.2%

State Pension Payment

$1,007,000

$1,157,853

$150,853

15.0%

$870,291

302.6%

Total PreK-12

$9,937,541

$10,244,455

$306,914

3.1%

$335,363

3.4%

Higher Education

$1,593,161

$1,606,861

$13,700

0.9%

-$325,942

-16.9%

Classroom funding includes: Basic Education, Basic Education Formula Enhancements, ARRA, School Improvement Grants, Accountability Block Grants, Ready to Learn Block Grants, Education Assistance Program, and Charter School Reimbursements.

Total PreK-12 includes state and ARRA funding.
Higher Education funding includes: Dept. of Education higher education funding (including non-preferred appropriations for state-related schools, State System of Higher Education, Thaddeus Stevens, and PHEAA.

PreK-12 Education

The 2014-15 enacted budget will increase PreK-12 spending of $307 million, or 3.1% from 2013-14 funding levels. Half of this growth ($152 million) is traceable to the increase in the state’s payments to the school employee pension system mandated under Act 120.

Funding going to classrooms increases by $101 million, or 1.8% in the final 2014-15 budget, but is still $580 million below 2010-11 classroom funding levels.

Governor Corbett did not propose an increase in the state’s Basic Education Funding line, instead offering a $241 million Ready to Learn block grant, which would target additional student-focused classroom funds to schools to be spent on a defined set of programs. The final budget reduced the new funding to $100 million, and gave districts more flexibility in using the funds. The Basic Education Funding line remains at $5.526 billion, the same as in 2013-14.

The governor also proposed a $10 million Hybrid Learning competitive grant program to blend digital and traditional learning opportunities. This program was not included in the final budget.

Early Childhood Programs

Governor Corbett proposed increasing the PreK-Counts and Early Intervention programs to increase the state’s investment in early learning programs. Funding for PreK Counts was increased by $10 million, or 11.5%, and Early Intervention received a $3.7 million increase, or 2%) in both the Governor’s budget plan and the final budget agreement. The Head Start Supplemental program was funded at the same level as 2013-14, $39 million. These programs received wide-ranging support from education and business groups during budget negotiations.

Special Education

After six years of flat funding, which pushed the increasing cost of special education services onto local school districts, the state’s special education subsidy increased by $20 million, or 2%, in 2014-15, as was proposed by Governor Corbett. Most of the additional funds are to be distributed to school districts based on a new funding formula developed by the governor’s Special Education Funding Commission.

School Construction

The commonwealth’s PlanCon program provides financial assistance to school districts for construction projects. The final budget included a $10 million, or 3%, increase in funding from the 2013-14 and the Governor’s proposed funding levels. This program had not been increased in four previous budgets, causing a backlog of projects to fund. The budget agreement also ends a moratorium on state reimbursement for new district projects.

Libraries and Literacy

The state subsidy for local libraries is funded at the same level as 2013-14. The governor proposed increasing the subsidy by $500,000, to $54 million, but that was not included in the final agreement. Prior to the Great Recession, the library subsidy was over $75 million per year.

Adult and Family Literacy is funded at the same level as 2013-14. The governor’s budget had proposed a $400,000 reduction, but this was rejected by the General Assembly.

Higher Education

Little changed in the 2014-15 budget for state support of higher education. In total, higher education programs received a $13 million, or 0.9%, increase from 2013-14, but this was limited to a handful of specific programs including:

  • $5 million for a new Ready to Succeed scholarship program for middle income families (Governor Corbett proposed $25 million for the program);
  • $3.5 million increase for community colleges;
  • $1.2 million in funding for a rural regional community college established in the Fiscal Code;
  • $2 million increase for Thaddeus Stevens College of Technology; and
  • $2 million of increased funding for Penn State’s Penn College of Technology.

All other higher education programs, including general support to the State System of Higher Education and the state-related universities (Penn State, Pitt, Temple, and Lincoln) were held at 2013-14 levels. Compared to 2010-11 funding (including ARRA), higher education programs have been cut by $326 million, or 16.9%.

A recent Center on Budget and Policy Priorities report found that Pennsylvania had the eleventh largest cut in higher education funding since the recession – and is one of only eight states in the U.S. to not begin increasing its investment in higher education in the last few years. [6] This lack of investment has led to tuition increases and heavier student debt burdens.

Pensions

Increasing state pension payments have been a contentious issue for the last several years and one of the central issues in the 2014-15 budget debate.

For school employees, the commonwealth pays roughly half of the “employer share” of contributions to the school employees’ pension system, with the “employee share” coming out of school employee paychecks. The commonwealth pays the entire “employer share” for state workers.

Employer share payments, at both the state and school district level, have been increasing in a significant, but predictable manner to help decrease an unfunded liability in the pension systems caused by a combination of massive investment losses in the recession and a decade-long employer contribution “holiday.”

In his February budget address, Governor Corbett called on the General Assembly to make pension reform a central issue in coming months. [7] The Governor did not offer a specific pension reform plan, but proposed again deferring a portion of the employer share in 2014-15, to provide temporary fiscal relief to both the state and school districts, which would have traded lower payments now for higher payments down the road. In addition, the governor proposed transferring $225 million from the Tobacco Settlement Fund to help make the required payment to the school employees’ pension in 2014-15. This mirrors a move made by the Rendell administration during the depths of the Great Recession in 2010-11 when $121 million was moved to the pension system. The final budget agreement included the $225 million payment from the Tobacco Settlement Fund, with $1.158 billion being paid from the General Fund to complete the state’s payment obligations to the school employees’ pension system under Act 120. For state employees, the commonwealth’s payment increases by $117 million to over $529 million in 2014-15.[8] This increase is contained within General Government Operations and other program line-items across the commonwealth’s departments.

While Governor Corbett called for pension reform in his budget proposal the final budget did not reduce the 2014-15 pension debt payment.

Unhappy with the General Assembly’s progress on pension issues, the Governor used his line-item veto power to reduce the 2014-15 funding of the legislature and legislative-directed programs by $72 million. As of this writing, the General Assembly has not attempted to override the governor’s funding cuts, although they will return to session in August.

Public Welfare and Human Services

Table 4. 2014-15 Public Welfare General Fund Budget (in $ thousands)

 

2013-14 Available

2014-15 Enacted Budget

Change from
2013-14

Percent Change

Change from 2010-11

Percent Change

Medical Assistance

$5,111,069

$5,223,922

$112,853

2.2%

$562,019

12.1%

Long-Term Living

$1,481,522

$1,306,905

-$174,617

-11.8%

-$45,220

-3.3%

Total General Fund DPW

$11,078,970

$11,208,406

$129,436

1.2%

$671,664

6.4%

Federal

$14,600,843

$17,465,892

$2,865,049

19.6%

$3,013,270

20.8%

The Department of Public Welfare (DPW) General Fund budget will increase by $129 million, or 1.2% in 2014-15. The growth rate in 2014-15 is kept artificially low using budgetary sleight of hand. One technique employed in 2014-15 is shifting a growing share of state costs for long-term and home and community based care out of the General Fund and into the state’s Lottery and Tobacco Settlement Funds. The budget includes $125 million in savings from the Healthy PA waiver, which has not been approved. Finally, the 2014-15 budget “saves” close to $400 million by delaying payment to managed care organizations for health care services by a month (pushing it to the next fiscal year).

The budget also preserves funding increases proposed by Governor Corbett for disability services, child care services, and programs to help victims of rape and domestic violence. As was the case with the governor’s original budget plan, the increases are predicated on funding sources that may fall short over the fiscal year.

Medical Assistance

Medical Assistance (MA), the commonwealth’s Medicaid program, provides health care services for 2.2 million Pennsylvanians, primarily seniors, children, and adults with disabilities. The MA budget in the General Fund increases by $113 million, or 2.2%, from 2013-14 for a total of $5.2 billion.

The MA budget uses a combination of state and federal matching dollars to provide inpatient, outpatient and managed care services, payments to hospitals to help reimburse uncompensated care they provide, and specialized care for workers with disabilities.

Periodically, the federal government recalculates how much it pays to provide Medicaid services in each state based on a formula. The federal government updated its calculations and Pennsylvania federal match percentage (called FMAP) will fall from 53.52% to 51.82% in 2014-15. This means that the state share of Medicaid funding will grow by approximately $200 million in 2014-15.

Medicaid Expansion, Affordable Care Act and Healthy PA

The finalized budget includes the appropriations, and potential cost savings, from the implementation of the Governor’s Healthy PA plan. The budget assumes an influx of an additional $2 billion in federal funds to help implement the program (which would provide funding for approximately 500,000 people using private insurance beginning in 2015). Pennsylvania submitted the Healthy PA plan in February and is still waiting for the U.S. Centers for Medicare & Medicaid Services (CMS) to approve or reject it. Pennsylvania’s proposal included a number of controversial provisions that differed from the proposal to expand Medicaid enrollment from the federal government, and the two continue to be in negotiations regarding the Pennsylvania proposal. Had the state expanded Medicaid, coverage could already be in effect.

In addition to the $2 billion additional federal dollars, the MA budget assumes $125 million in other state cost savings from the Affordable Care Act and Healthy PA. Some of this savings comes from a revision of Medicaid benefits proposed under Healthy PA.[9]

Medical Assistance for Workers with Disabilities is ended under the budget at the end of 2014. Workers currently in the program will qualify for traditional Medicaid if they are very poor or will have to get coverage on the Exchange, which may be unaffordable.

The enacted budget modestly scales back the proposed increase in funding for County Assistance Offices necessary to administer the coverage expansion. It appears that funding remains to hire most of the 700 additional county assistance office workers that were to be added under the governor’s plan as state funding increase by $39 million, or 14% from 2013-14.

Long-Term Care

To help balance the budget, state funding for long-term care services are shifted from the General Fund to Lottery and Tobacco Settlement funds. State General Fund dollars decrease by $85 million from 2013-14, offset by $25 million more in Lottery funding and a $144 million increase in Tobacco Settlement Fund resources ($80 million more than proposed by the governor).

Home and Community Based Services

The governor’s budget had proposed expanding home and community-based services for people with disabilities, providing services for 400 people on the waiting list, 700 recent graduates of special education programs, and moving 50 individuals out of state facilities to community-based care. The final budget reduces state costs for these services in 2014-15, delaying the implementation.

Other Human Services

Rape Crisis and Domestic Violence Services both received a 10% funding increase in the 2014-15 budget, as was proposed by the governor. Legal services and homelessness assistance have remained flat-funded for the past several budgets.

Environmental Protection and Conservation

Table 5. General Fund: 2014-15 Environmental Funding (in $ thousands)

 

2013-14 Available

2014-15 Enacted Budget

Change from 2013-14

Percent Change

Change from 2010-11

Percent Change

Conservation and Natural Resources

$30,006

$14,527

-$15,479

-51.6%

-$66,387

-82.0%

Environmental Protection

$127,693

$139,233

$11,540

9.0%

-$2,881

-2.0%

Total

$157,699

$153,760

-$3,939

-2.5%

-$69,268

-31.1%

Note: Both departments receive significant funding from other sources other than the General Fund.

The Departments of Environmental Protection (DEP) and Conservation and Natural Resources (DCNR) are the state agencies responsible for protecting our commonwealth’s air, water, land, and managing the state park and forest system. Over the last few years, less of the funding for these departments has been coming from the General Fund and more from other, special funds, including the Hazardous Sites Fund and Oil and Gas Lease Fund.

The final budget increased DEP’s General Fund appropriation to $139 million. This marks an increase of $12 million, or 9%, over 2013-14 levels. This was a $1.5 million, or 1% increase over what the governor’s budget had proposed. Before the recession, DEP’s General Fund allocation was over $220 million, now less than one-third of state dollars used to fund DEP activities come from the General Fund.

General operations, environmental protection, and environmental program management see increases of 8% or more from 2013-14. One notable cut is reduction of funding for the Delaware River Basin Commission by $500,000. This represents a 53% funding cut. Funding for other similar commissions remains at 2013-14 levels.

The department is also anticipating an additional $4.7 million from an increase in gas well permit fees that went into effect on June 14.

The fiscal code contains language which would fundamentally change the way DEP regulates oil and gas drilling at conventional (non-Marcellus shale) gas wells. Some environmental organizations oppose this attempt at changing environmental regulations in a budget-related bill, rather than through the usual regulatory process.

The shift from General Fund dollars is even more significant in DCNR. 94%, of the budget for the operation and protection of the state park and forests comes from gas drilling on public forestland in 2014-15. The 2013-14 budget shifted $28 million of these operations to the Oil and Gas Lease Fund and the governor proposed modest additional shift in 2014-15. In the final budget, the General Assembly cut the governor’s proposed General Fund appropriation in half, shifting costs to the Oil and Gas Lease Fund.

Governor Corbett lifted a moratorium on further leasing of state forestland for gas drilling that was imposed by a Governor Rendell executive order, and the fiscal code requires DCNR to bring in $95 million in additional revenue from expanded leasing of state forestland, and for the first time, state park land. The fiscal code language authorizing expanded leasing effectively alters DCNR’s mission, placing other commonwealth interests on an equal footing with the conservation of natural resources. Environmental groups have sued to stop the leasing and the administration announced it would wait for the court decision before moving ahead with leases.

Public Safety and Corrections

The Department of Corrections, which operates the state prison system, will receive $2.06 billion in 2014-15, an increase of $98 million, or 4.9% over 2013-14. This is roughly $20 million more than what Governor Corbett was seeking in his budget proposal. The bulk of the department’s funding is directed towards state correctional institutions, which were funding at $1.76 billion, or $99 million more than the 2013-14 spending level. The final budget allocates $21 million more for these institutions than Governor Corbett had initially proposed. Inmate medical care was funded at $229 million, a cut of $3 million, or 1.4%, from 2013-14. Governor Corbett had also sought a reduction in spending here, but at a more meager $1.1 million.

The Department of Corrections had 51,097 inmates under its control as of April 2014, about 150 fewer than a year before. [10] The estimated cost to house each inmate is $41,500, with $4,650 of that allotment covering medical costs.

The State Police funding from the General Fund increased by $11 million, or 5.2%, from 2013-14. This is $3.8 million over what Governor Corbett had allocated for the department, restoring funding for forensic lab support and adding to the increase in general government operations proposed by the governor. Most funding for the State Police now comes from the Motor License Fund. The general government operations funded by the Motor Fund increased by $46 million, or 8% from 2013-14.

Probation and Parole received a notable increase in funding, from $142 million in 2013-14 to $156 million in 2014-15, a 10.4% increase. The budget directs the majority of this funding to general government operations, which increase from $120 million in 2013-14 to $135 million in 2014-15, or 12.3 %.

The Pennsylvania Emergency Management Agency (PEMA) experiences a sizable cut in 2014-15, likely attributable to fewer natural disasters compared with previous years. The agency will receive $15 million from the General Fund, a 36.7% decrease over 2013-14. The General Assembly increased funding for the agency by $3.4 million from the governor’s proposal, with the additional funding going to municipal emergency relief.

Department of Agriculture

The Department of Agriculture will receive $127 million in FY 2014-15, a $3 million, or 2.5%, increase over 2013-14. Much of the increase went to general government operations, which increased by 11.3% over 2013-14. The final budget restores, and in some cases increases, funding for a number of agriculture programs the governor sought to eliminate, including Agricultural Excellence, Agricultural Research, and several promotion programs. The legislature returned funding for the State Food Purchase program to 2013-14 levels, rejecting a small reduction proposed by the governor.

Department of Health

The Department of Health receives $199 million in 2014-15, a $4 million increase from 2013-14. The General Assembly allocated $6 million to community-based health care practitioners, a 50% increase over the 2013-14 level, but 25% less than the $8 million Governor Corbett had proposed. Despite the governor’s desire to eliminate it, the legislature approved $5.9 million for bio-technology research, an 11.3% increase over 2013-14. Primary health care practitioners received $4.67 million for 2014-15, a 27% increase over last year, but $3 million less than Governor Corbett had proposed. As in previous years, the General Assembly restored funding for a number of disease-specific and institutional support programs.


[3] The IFO forecasted General Fund collections of $29.445 billion (not counting the unclaimed property change or the Oil and Gas Fund transfer, http://www.ifo.state.pa.us/download.cfm?file=/resources/PDF/Revenue_Esti....

[4] In April 2014, tax payments on investment and other non-withheld income fell significantly short of estimate. Many high income taxpayers recognized and paid tax on investments in tax year 2012 (largely collected in April 2013) rather than in 2013 to avoid a federal tax rate increase. It is expected that tax collected on investment earning will return to a more normal level in tax year 2014 (collected in April 2015).

[5] Joe DiStefano, “PhillyDeals: Failed tax overhaul aids a bank, opens Pa. budget hole,” Philadelphia Inquirer, July 10, 2014, http://articles.philly.com/2014-07-10/business/51254891_1_lower-tax-bill....

[6] Michael Mitchell, Vincent Palacios, and Michael Leachman, States Are Still Funding Higher Education Below Pre-Recession Levels, Center on Budget Policy Priorities, May 1, 2014, http://www.cbpp.org/cms/index.cfm?fa=view&id=4135.

[8] Payment to the state employee pension system from the House Democratic Appropriations Committee, http://www.pahouse.com/HACD/series/2805/Budget_At_A_Glance_HB2328_PN3895...

[9] A brief description of proposed changes can be found here: http://pennbpc.org/governor-corbett%E2%80%99s-%E2%80%98healthy-pa%E2%80%... .

[10] Number under DOC jurisdictional control taken from Pennsylvania Department of Corrections, Monthly Population Reports, http://www.cor.state.pa.us/portal/server.pt/community/research___statist....

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