Articles

(February 2008) Earlier this month, Governor Ed Rendell presented his 6th state budget proposal to the legislature in the annual state-of-the-state address. In addition to ongoing budget operation, his budget targets four specific initiatives: economic stimulus, health care, energy independence, and infrastructure.

The total budget weighs in at $61.3 billion. Nearly half of that ($28.3 billion or 46 percent) represents the General Fund Budget. Like any year, the focus of debate in the legislature will be the General Fund, which is mostly discretionary at the state level. Tax revenue directly from Pennsylvania’s citizens—most in the form of income taxes and sales taxes—supports nearly all of the General Fund. Other portions of the total state budget are driven by formula or federal requirements, with little to no opportunity to alter.

The General Fund: State Policy Priorities Start Here

At $28.3 billion, the General Fund Budget represents an increase of $1.1 billion, or 4.2 percent over the 2007-2008. Of this $1.1 billion increase, $476 million (about 40 percent) targets education. Other increases include funding for Public Welfare and Corrections. Other agencies have a budgeted decrease in spending, an average of 2.1 percent.

As in previous Pennsylvania budgets, the largest portion (35 percent) of the General Fund Budget supports PreK-12 education, with an additional 7 percent for higher education. Medical assistance would receive 20 percent, with other Department of Public Welfare programs receiving 17 percent of general funds. The remaining general funds are budgeted for Corrections (6 percent), debt service (3 percent), and all other state government departments and agencies.

Education: The Department of Education receives the single-largest proposed budget amount of $11.5 billion. This is $464 million over last year, or an increase of 4.2 percent. Major education programs in the budget include: 

• $9.8 billion for PreK-12 education (an increase of $469 million or 5 percent) 
• $1.6 billion for higher education ($8 million less than last year), plus $419 million for financial aid for students
• $131.4 million for public libraries and other programs (an increase of $3 million)

The 2008-09 school year also begins a multi-year process of phasing in the state funding adequacy goals for each school district. These goals are based upon each school district’s funding target, a per-student base funding, and adjustments based upon each district’s size and local cost of living indicators.

Public Welfare: Total public health and human services expenditures from all sources is $26.3 billion, of which $10.7 billion comes from the General Fund (an increase of $638 million, or 6.3 percent over last year). Major programs include: 

• $5.68 billion for Medical Assistance ($457 million increase or 8.7 percent) 
• $782 million for mental health programs ($8 million increase or 1.0 percent) 
• $1.2 billion for mental retardation ($71 million increase or 6.4 percent) 
• $1.1 billion for county child welfare ($54 million increase or 5.4 percent)

Economic Stimulus: The Governor’s budget includes economic development, job growth and community development programs that include: 

• Establishing the Jonas Salk Legacy Fund to support medical research ($500 million fully funded through the Tobacco Settlement Fund)
• Support of international trade programs ($3.3 million)
• The “Growing Greener II” program for environmental cleanup ($230 million), working farms protection ($80 million), housing development ($50 million), hatchery and dam repair ($27.5 million), open habitat facility upgrades ($20 million), and open space preservation ($217.5 million)
• Also proposed is borrowing $130 million from the Commonwealth’s Rainy Day Fund to provide tax rebates for lower-income working families
• Programs continued into the next fiscal year include the Keystone Innovation Zones, Infrastructure Facilities Improvement Program, and tax credits for film production

Energy Independence: Another priority in the Governor’s budget is his Energy Independence initiative that includes: 

• $350 million for the Pennsylvania Energy Development Authority to offer low-interest loans or grants to stimulate new products or new businesses
• $200 million for solar market incentives in the state
• $150 million for an energy site preparation program
• $56 million for the clean energy greenhouse (research and development of new products into the marketplace)
• $50 million for energy projects seeking venture capital
• $44 million for an air conditioner/refrigerator swap program that offers rebates to Pennsylvania retailers to help replace inefficient units with high-efficiency units

The Capital Budget: Building and Transportation

Infrastructure Upgrades: Included in the Governor’s “Rebuilding Pennsylvania” proposal is funding from the General Fund and capital budget. The following table summarizes expenditures (all numbers are in millions).