Pennsylvania’s budget year began on July 1st, but not all budget issues are yet resolved. Here’s an update on some of the issues that have been up for debate:

• education funding – the approved FY2013-14 budget was slightly higher than Governor Corbett’s proposed budget, but declining state funding for basic education is resulting in more teacher layoffs around the state:
  – Allentown School District is cutting 102 teachers and 23 other staff.
  – Philadelphia School District is laying off over 3,500 employees
• medicaid expansion – The state Senate voted overwhelmingly in June to expand Medicaid health coverage in Pennsylvania, but saw its action negated by the House during a series of parliamentary maneuvers in the final hours of the state budget debate. While the House stripped the language out of the bill, Senate leaders have vowed to continue to push expansion when they return to the Capitol in September.
    To help meet Gov. Corbett’s concerns, the Senate added a number of conditions to its endorsement of Pennsylvania’s participation. One major condition would allow children in Pennsylvania’s heralded Children’s Health Insurance Program (CHIP) to remain in the state-operated program. Another would allow the state to set employment and job search requirements for able-bodied persons, and language was inserted allowing the state to exit the program at any time.   (For more details, see pahealthaccess.org.)
• state budget / corporate tax policy – while funding for schools and human services have been cut back for the past several years, Pennsylvania has also been cutting corporate taxes? Does it make sense to phase out the Capital Stock and Franchise Tax next year while there is a projected budget shortfall?
    The 2013-14 budget package approved by Governor Corbett includes a Tax Code bill (HB 465) that sets tax rates and makes permanent changes in tax law. The bill includes two very important provisions: 1) It maintains the capital stock and franchise tax, which was set to expire at the end of 2013, for two more years, and 2) For the first time, it takes steps to close the Delaware loophole — although not until 2015. These changes will provide some additional revenue to support schools, health care, and other critical state needs.
    The bill, however, is filled with new special interest tax breaks for private aircraft owners, banks, gas drillers, satellite TV companies and wireless companies like Verizon and Sprint. These items were added at the last minute, in some cases with no public debate.   (For more details, see pennbpc.org.)
• state pension proposals – pensions for teachers and state employees have been under-funded for a number of years. How should the deficit be addressed? The debate will continue in September.
• liquor privatization – should private businesses be licensed to replace state liquor stores? What are the benefits and costs to Pennsylvania’s residents? The Senate passed a bill on June 30, but debate continues.
• transportation funding – should Pennsylvania raise additional funds to repair highways and bridges, and public transit improvements … by raising gas taxes and license fees? New weight restrictions will soon be announced for many state highway bridges, as the legislature continues to debate transportation funding.
• payday loan legislation – A last-minute maneuver by House Republican leaders played into the hands of opponents of predatory payday loans in the waning hours of the state budget deliberations. Payday lenders convinced state House Republican leaders to slip a line into a Fiscal Code bill needed to implement aspects of the new state budget stating that it was the “intent” of House and Senate Republican leaders to pass legislation by October to legalize high-interest payday loans in Pennsylvania.
    Unfortunately for the Payday industry, the maneuver has cost them in the Senate, whose leaders had not approved the provision. Responding to the House’s underhanded move, the Senate voted unanimously to strip out the payday lending language. The payday loan debate is not over, because payday loans are a lucerative business for predatory lenders. (Source: United Methodist Advocacy in Pennsylvania).

The Pennsylvania Budget and Policy Center tracks many of the issues mentioned above and has presented several webinars on key budget issues this spring, for which resources and recordings are posted here.

Better Choices for Pennsylvania coalition monitors a number of state budget issues.