June is a time to celebrate Father’s Day, countless graduations and the first day of summer. However, anyone involved in government or politics knows that June is also the month of the state budget here in Pennsylvania. Though the 2015-2016 budget process went a little bit sideways, we’re hopeful that with any luck (and a lot of hard work and compromise), we will have a 2016-2017 state spending plan in place by the stroke of midnight on the 30th.

In order to see where we might be going, we should take a look at where we are. Without rehashing the 2015-2016 budget epic, let’s just say that the budget has been put to bed as of the end of March, nine months past the June 30th deadline. Though the delay in its enactment may have made it difficult to plan for the upcoming budget year, Gov. Wolf delivered his annual budget address as scheduled on February 9th.

Since the 2015-2016 budget was still up in the air at that time, the Governor reiterated that his goals for the 2016-2017 fiscal year would be “schools that teach, jobs that pay and government that works.”

According to the administration, the total spend for the 2016-2017 state budget is $32.7 billion (though it moves over $560 million in pension spending from the General Fund to a restricted account to fund the state’s payment to PSERS). Gov. Wolf is asking for an additional $200 million for basic education funding, and an additional $60 million for early childhood education to enroll about 14,000 additional children in Pre-K Counts and the Head Start Supplemental Assistance Program. He is also proposing an increase in human services spending in the amount of about $800 million and an increase of $178 million for the Department of Corrections.

To foot the bill for the increases, the Governor is proposing several new tax-based sources of recurring revenue, as follows:

  • An increase in the Personal Income Tax from 3.07 to 3.4 percent;
  • A expansion of the Sales Tax base;
  • An increase in the Bank Shares Tax from .89 to .99 percent;
  • An increase in the Insurance Premiums Tax;
  • An $1.00 per pack increase in the cigarette tax;
  • A tax on “other tobacco products” at 40 percent;
  • A 6.5 percent severance tax; and
  • Taxing gaming promotional pay at 8 percent.

Wolf is also banking savings as part of the budget, from initiatives such as GOTIME and merging the Department of Corrections and Probation and Parole into one new “Department of Corrections and Rehabilitation.”

Materials on the Governor’s budget proposal can be found here: http://www.budget.pa.gov/Pages/default.aspx

Republicans in the House and Senate have, not surprisingly, spoken out against the Governor’s proposal.   A preferable plan for the Pennsylvania GOP would be to reduce spending and institute government reforms instead of increasing revenue through new and increased taxes.

More from the House Republicans here: http://www.pabudget.com/ProposedBudget.aspx

And from the Senate Republicans here: http://www.pasenategop.com/state-budget/state-budget-2016-2017/

Despite fundamental differences in fiscal policy, House Republicans did recognize the will to have a 2016-2017 spending in place by the end of June. Appropriations Chairman Bill Adolph (R-Delaware) introduced and reported out H.B. 1999, a General Appropriations bill that will serve as a place holder so that when a budget agreement is reached, a bill will be available for amendment. The bill was re-referred to the Appropriations Committee after receiving second consideration on May 2nd.

Now the stage has been set for the 2016-2017 budget discussion; priorities have been set and a bill is ready as a vehicle. With less than thirty days until the deadline, lawmakers still need to figure out ways to raise revenue and then agree on a final spending plan. This is difficult enough in a good economic climate, but the state is also facing a $2 billion structural deficit. How to plug that hole—through pension reform, liquor privatization and/or gaming expansion—is also part of the ongoing discussion.

So what’s to be expected over the next few weeks? It’s hard to say. Hopefully, lawmakers will come to an agreement on how to raise much-needed revenue for the 2016-2017 state budget and to begin to manage the deficit. If the stars align properly, as the end of June nears, we’ll see those bills being passed by the General Assembly, as well as a General Appropriations Bill, the non-preferred appropriations bills for the state-related institutions and bills amending the Fiscal Code, Public School Code and Public Welfare Code, may be necessary to dictate how funds in the General Appropriations Bill are spent. Budget savvy staff inside and outside of state government will be watching closely to see what bills move when in this fiscal chess match, though predictions are somewhat futile until the very end of the process, when all the I’s are dotted and T’s are crossed, and the bills start moving so quickly if you blink you may miss them. However we’ll do our best to keep readers posted on the budget play-by-play. Stay tuned to this blog or follow us on twitter @BuchananLobbyists for updates.