By Peter N. Calcara, vice president – government relations

A $33.9 billion state budget for the new fiscal year that begins July 1 has made its way to Pennsylvania Gov. Tom Wolf’s desk with time to spare. The General Appropriations Act for 2019-2020, found in House Bill 790, represents an increase of $596 million, or 1.8%, over the 2018-2019 fiscal year spending plan, and is in line with the rate of inflation. Public education, the agriculture industry, and workforce development programs and services will all see boosts in state funding. The plan includes no new or broad-based tax increases.

In comparison to the previous four budgets, this year’s process was mostly uneventful and free of the turmoil that often accompanies negotiations of a political nature. Wolf’s budget proposed in February was noncontroversial and well received by most legislators on both sides of the political aisle. The process had been on cruise control until the week of June 24. On Wednesday, June 26, a dustup in the Senate over a bill that would eliminate General Assistance payments nearly derailed the entire plan. A shouting match between Senate leaders brought the process to a temporary standstill. Fortunately, calmer heads prevailed and the shuffling back and forth of budget-related bills continued.

What was different this year that would affect the process in such a beneficial way? Revenues! The Independent Fiscal Office’s final revenue estimate for the year projects that the 2018-2019 fiscal year General Fund will come in at about $34.81 billion, or $910 million more than projected last year. There is, however, about $750 million in supplemental appropriations in the current fiscal year that will have to come out of that surplus.

Notable proposals from Wolf’s February budget that did not make it into the final plan includes a change in the state’s minimum wage, a per capita tax on municipalities without their own police force, combined reporting, and increases in teachers’ salaries.

Here are some highlights of the 2019-2020 state budget:

• Pre-K through 12th grade education expenditures will increase by $432 million.
• $160 million more is being spent on basic education funding.
• School Social Security payments will be rolled into the basic education funding line item. Each school district will still get the same payment they would have if Social Security was a separate line item.
• $50 million more allocated for special education.
• $25 million more provided to PreK Counts.
• $25 million in additional funds was added to the Earned Income Tax Credit program.
• School safety grants are being funded at $60 million, with $45 million coming from General Fund revenues and $15 million from the courts.
• The public library subsidy is getting a $5 million bump.
• The career and technical education line item got an additional $7 million, and the equipment grants line item got $3 million.
• The budget would fully pay the estimated annual required contributions for the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS).
• This budget adds $4 million each for Thaddeus Stevens and Penn College of Technology. These schools have demonstrated success in placing students into family-sustaining careers.
• Pennsylvania State University, University of Pittsburgh, Temple University, and Lincoln University all receive a 2% increase. Also receiving 2% increases are the Penn State Ag Extension, the University of Pennsylvania’s Veterinary School, the Pennsylvania State System of Higher Education, and Pennsylvania community colleges.
• There is an additional $26.3 million for mental health services, which includes funds to provide home and community-based services for 45 individuals currently residing in state hospitals.
• The Intellectual Disabilities-Community Waiver Program is receiving an additional $84.8 million, which includes funds to provide home and community-based care for 865 individuals currently on the emergency waiting list.
• The budget includes $16 million for the Medical Assistance Day One Incentive payment to nursing homes.
• An investment of $12 million will be made for a 2% increase, effective January 2020, for homecare workers who care for seniors and those with physical disabilities.
• Early Intervention includes $5 million, for a 3% increase, for Infant Toddler service rates.
• General obligation debt service is proposed to increase by $26 million in fiscal year 2019-2020.
• Livestock and Consumer Protection gets $1 million.
• Animal Health and Diagnostics Commission gets $2 million.
• There is a new line item, Agriculture Business and Workforce Investment, of $4.5 million.
• Agriculture, in total, will see a $19.5 million, or 12.8%, increase.

Having now passed a budget, legislators are in summer recess. The PICPA Government Relations Team will host a Legislative Update: FY 2019-2020 Budget webinar on July 18.

The 2019 Conference on Pennsylvania Taxes will examine the budget's tax implications. Attend in Harrisburg on July 29, Malvern or via webcast on July 30, or Cranberry on Aug. 1.

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