Pennsylvania Budget Update

On 7/10/16, Governor Wolf held a press conference regarding his plans for Senate Bill 1073 (General Appropriations). He opened with stating that over the course of the last several days, he has been asked what he will do with the General Appropriations Bill.  He stated his intent to avoid unnecessary distractions and he called this press conference to tell the public and the Members that he will let Senate Bill 1073 become law without his signature, unless he receives a sustainable, recurring and sufficient revenue package by midnight in which case he will sign.  He commented that the General Appropriations bill is something that Pennsylvania should be proud of and now we must pass legislation to pay for what is in it. He still expects and hopes the General Assembly will send him such a revenue package by tomorrow evening.

Some highlights of Senate Bill 1073 are as follows:

  • Increases spending in the Department of Human Services by $537.3 million;
  • Increases spending on pension obligations by about $450 million;
  • Increases aid for public school operations and instruction by $200 million;
  • Increases spending in the Department of Corrections by $153 million;
  • Increases aid to higher education, including state system universities, state-related universities, student grants and community colleges, by $39 million;
  • And, increases to help address the Heroin Epidemic – Department of Drug and alcohol – $5M increase and $15M increase under the Department of Human Services for a total of $20M.

Disagreements over what revenue enhancements have support and how much revenue is needed, have jammed the process from moving forward just before the July 4 weekend.  Reports are that the recent posturing has a lot to do with the upcoming elections, with all 203 House seats are up and half the 50 Senate seats.  Also, both the Republicans and Democrats have their national conventions on their minds as well.

Revenue enhancements up for discussion include, but not limited to, the following:

  • Gross Receipts Tax (GRT) on natural gas utility service;
  • Increase in the Cigarette Tax (question still remains whether it will be $.50 or $1.00 per pack);
  • Taxing e-cigarettes and smokeless tobacco, among others;
  • Increase in the Bank Shares Tax to .99,
  • Removing the 1% vendor discount for retailers who collect the 6% sales tax for the Commonwealth;
  • Sales tax on digital downloads;
  • Internet Gaming;
  • And, borrowing funds from the State Workers Insurance Fund;

While the House and Senate Leadership and the Governor continue to meet to try resolve their differences on what revenue is needed to fund the budget, the rank and file House and Senate members have been put on notice that they will not likely return to session until Sunday, July 10th.

DMGS continue to monitor this process closely to ensure that clients and colleagues are updated frequently with real time information.

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