Changing Course in Pennsylvania: Analysis of Gov. Wolf s Proposed Budget

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1 Changing Course in Pennsylvania: Analysis of Gov. Wolf s Proposed Budget Pennsylvania Budget and Policy Center 412 N. 3 rd St, Harrisburg, PA March 25, 2015 Pennsylvania needs a new direction. For far too long, our commonwealth has been relying on tax cuts as its cure for all ills. It has not worked. Our schools are struggling to do more with less. Our economy is recovering more slowly than the nation s (we rank 50 th among states in job growth). Austerity has held back state revenue growth (Pennsylvania ranks 46 th in that). And resorting to a series of one-time budget fixes has led to repeated downgrades of the state s bond rating. While the wealthiest Pennsylvanians are doing just fine, too many in the state are struggling to make ends meet. In his first state budget, 1 Gov. Tom Wolf proposes an ambitious $29.9 billion General Fund spending plan for that includes $1 billion for restoring cuts to education funding, $1.75 billion for a job growth plan, and $3.8 billion in property tax relief, beginning in The budget also fills an expected $2 billion shortfall between revenues and expenditures that Wolf inherited. Gov. Wolf offers a multi-faceted approach to accomplish all this. His proposal would: raise the sales tax 0.6 percentage points and broaden it to include more goods and services raise the personal income tax 0.7 percentage points cut some business taxes while eliminating corporate tax loopholes (for a net corporate income tax cut of about one-third) fix a 2013 bank tax change that resulted in lower revenue enact a severance tax on natural gas production. 1 The Governor s Executive Budget proposal for is online at

2 P a g e 2 While there are elements of the proposal we would not support individually, overall it does many important things that we think will move Pennsylvania forward. The plan makes the state a better place to work, increases investment in our schools and colleges, expands access to health care, invests in communities, and helps our most vulnerable citizens (children, seniors, and people coping with disabilities). The plan also helps raise revenue to pay for these investments not just in , but in future years. One of the governor s priorities is to raise revenue in a way that makes our tax system fairer for struggling communities and middle-income families. We will be evaluating his proposal against that standard as we dig more deeply into the details of the budget in the coming weeks and months. The following is a brief analysis of the basics of the plan. Revenue Gov. Wolf has proposed an ambitious revenue reform package to fund property tax relief, restore cuts to classrooms, and meet other critical needs. This package would provide sustainable revenues for balancing not only the budget, but also budgets in future years. The mix of tax changes incorporates substantial elements of tax proposals aimed at property tax reduction considered by the General Assembly in the prior session. 2 Proposed tax reform package includes: Enacting a severance tax on natural gas production, effective Jan. 1, Pennsylvania is now the second-largest producer of natural gas in the United States and the only major producer without such a tax. The governor proposes a tax equal to 5% of the selling price of natural gas plus a 4.7 cents per thousand cubic feet (MCF) charge to replace the current impact fee. This rate is the same as is in place in neighboring West Virginia. Beginning in 2016, $225 million in severance tax revenue would be 2

3 P a g e 3 distributed in the same manner as the current impact fee. (The impact fee transfers to local governments in will be from fees collected in April 2015 under current law). In , the General Fund is projected to receive a net $156 million in severance tax collections. By , total severance tax collections are projected to total $1.2 billion, with the portion going to the General Fund equaling $948 million. The General Fund share of collections will be reserved to fund basic education, debt service on proposed economic growth bonds, and environmental enforcement of oil and gas operations. 3 Fixing the 2013 bank shares tax reform. A 2013 effort to modernize the bank shares tax triggered an unintended revenue loss for the General Fund. The administration proposes raising the bank shares tax rate from 0.89% to 1.25% retroactively to the 2014 tax year (to be paid in ). This is expected to increase bank tax collections in by $339 million but lower amounts (approximately $200 million less) in future years. Closing corporate loopholes, and cutting the corporate net income tax (CNIT) rate in half. Beginning in 2016, corporations would use combined reporting, which would close many tax loopholes. 4 At the same time, the corporate tax rate would drop from 9.99% to 5.99%, and would decrease to 4.99% over the next two tax years. The net impact of the changes would reduce corporate income tax collections by $249 million in By , the 4.99% CNIT is projected to raise $945 million less than in (an underestimate of the impact of the tax changes because it does not consider the normal growth in CNIT revenues that would have occurred). This would amount to a tax reduction of 35%. The administration claims such a move will improve the state s business climate, although there is little evidence to support this assertion. 5 Increasing the cigarette tax by $1 a pack and enacting a 40% tax on the wholesale price of other tobacco products, effective Oct. 1, Pennsylvania is the only state in the U.S. without an excise tax on smokeless tobacco and one of only two states that does not tax cigars. This proposal would tax cigars, smokeless tobacco, and e-cigarettes and increase the existing tax on cigarettes. This change is projected to generate $443 million in Increasing the personal income tax to fund property tax relief. The plan calls for increasing the personal income tax (PIT) rate from 3.07% to 3.7%, effective July 1, This increase would largely be used to fund property tax/rent relief with payments going to eligible homeowners and renters in October The increase is expected to raise $2.376 billion in , with $2.14 billion being transferred to an account to be used for making payments to homeowners. In , the administration expects to transfer $4.596 billion in revenue from this rate increase to fund property tax relief. It is not clear how much the PIT changes would generate that year. 3 These details come from the Executive Budget slideshow, March 3, 2015, (slide 19), 4 For more information on combined reporting, please see Michael Mazerov, State Corporate Tax Shelters and the Need for Combined Reporting, Center on Budget and Policy Priorities, October 26, 2007, 5 Robert Tannenwald, Testimony of Robert Tannenwald, Senior Fellow, before the New Hampshire Business Tax Commission, Center on Budget and Policy Priorities, November 4, 2010,

4 P a g e 4 In addition, the long-existing tax forgiveness program would receive a modest expansion of $2,200 per taxpayer (with no change for dependents). This change would allow a married couple with two children to pay no PIT up to $36,400 in annual income; currently, such a couple pays no PIT up to $32,000 in annual income. The tax forgiveness expansion would reduce PIT collections by $90 million. In total, these changes (including the transfer to the property tax/rent relief account) would increase General Fund collections by $162 million in Increasing the sales tax rate and expanding its base to fund, in part, state school employees retirement payments. The sales tax base would be expanded to include more than 40 additional products and services (but maintaining the current exemption for groceries and clothing) 6, and the overall sales tax rate would be increased from 6% to 6.6%, effective Jan. 1, This change is projected to generate $1.554 billion in The budget would redirect $1.75 billion of sales tax receipts into a restricted account to pay the state s share of the employer costs of the school employees pension system in , and would continue to make the pension payments in a similar manner in future fiscal years. These payments currently are made out of General Fund allocations to the Department of Education. The net result would be a reduction of $195 million in sales tax collections available for the General Fund in In future years, where there are 12 months of collections at the higher tax rate and expanded base, this change would likely generate additional revenue for the General Fund, even with the dedication of some sales tax receipts to pension payments. Including the governor s tax plan, the General Fund revenues are projected to total $31.4 billion, an increase of $1.2 billion, or 4.0%, from Tax revenues are projected to increase by $1.6 billion, or 5.4%, from expected collections, while non-tax revenues decrease by $383 million, or 43.4%, as transfers from other funds used to balance the budget are discontinued in Personal income tax will make up 41% of General Fund collections in PIT, including the rate increase, is projected to grow by $878 million, or 7.4%, from A list of goods and services proposed to be added to the sales tax base (from the Wolf Administration) can be found here:

5 P a g e 5 The sales tax will compose 31% of all General Fund revenue in Between the rate change, base expansion and transfer of funds to pay the state s share of school employees pensions, sales tax collections are projected to increase by a net $137 million, or 1.4%, from under the governor s plan. Corporate taxes, the next largest General Fund revenue source, are projected to grow by $209 million, or 4.2%, in under the governor s proposals. However, the CNIT, the largest current source of corporate tax revenue, is projected to decrease by $223 million, or 8.2%, due to the rate cut in Capital stock and franchise tax (CSFT) revenue drops by $126 million, or 56.6%, from , as the tax is currently scheduled to be eliminated in This tax generated more than $1 billion as recently as The CSFT rate has been reduced in steps since 1999 without a specified way to replace the lost revenue. Proposed changes in bank taxes will trigger an increase of $357 million in financial institution taxes, for a one-time increase of 113.5%. The budget s proposed severance tax on natural gas would generate $156 million for the General Fund in The General Fund s share of severance tax revenue is projected to increase to $765 million in as the tax is in place for a full fiscal year. The increasing severance tax would largely offset the loss of CSFT collections and the decline of CNIT revenue due to the hefty proposed rate cut. Despite the myriad of revenue changes, General Fund dollars devoted to tax collection and administration at the Department of Revenue would decrease from to In total, the budget proposal includes General Fund revenue sources that are projected to grow more quickly than in years past. This should help close the commonwealth s ongoing structural deficit and make balancing future budgets easier. Pennsylvania s current sales tax is regressive people with lower incomes pay a larger share of their income in sales tax than those with higher incomes. The sales tax is also outdated taxing many goods while exempting many services. The governor proposes expanding the sales tax base to include some goods and services that are currently untaxed. How this is done matters for tax fairness. If the goods and services that are added are more heavily consumed by people with higher incomes, the expansion can make the tax fairer across all income levels. While the details of the Wolf sales tax expansion have been released, it is not yet clear how the Economic and Community Development plan would alter who pays the sales tax.

6 P a g e 6 State funding from the General Fund for the Department of Community and Economic Development (DCED) would increase from $164 million to $242 million, a restoration to roughly the level (but half the level). While funding for community development programs would more than double (increasing from $12.9 million to $27.8 million), much of the department s funding increase is devoted to economic development programs. Highlights of the proposed funding increases include: An increase from $20 million to $45 million for PA First subsidies for job creation. $21 million, up from $6 million in , for Keystone Communities, including Main Street and Elm Street programs. The three programs that were merged into Keystone Communities had total funding of $27 million in A significant bump in Infrastructure and Facilities Improvement Grants, from $19 million to $30 million the highest funding for that program in at least a decade. $5 million (reallocated from the authorized but unused Promoting Employment Across Pennsylvania tax credit) for Made in Pennsylvania Job Creation subsidies of up to 5% of payroll for companies that increase payroll by at least $1 million and pay at least the average county wage plus health benefits. An increase from $78 million to $97 million in the transfer to the Commonwealth Finance Authority to pay debt service on newly proposed economic development bonds. $12 million for Industrial Resource Centers, including $5 million for the IRC Manufacturing Initiative to partner with research universities to advance manufacturing technology and commercialization $4 million for marketing to tourists ($2 million), businesses ($1 million), and foreign investors and markets ($1 million). The governor proposes $15 million in funding for a Mixed Use Development Program through the Pennsylvania Housing Finance Agency. As is often the case, the governor s proposed budget also eliminates funding for specific DCED programs. This year s elimination list includes Infrastructure Technology Assistance; Discovered in PA, Developed in PA; Super Computer; Powdered Metals; Tourism Accredited Zoos; and Rural Leadership Training. A similar process often occurs in the Department of Agriculture. During budget negotiations, the General Assembly often restores some of the funding for these programs. The governor also proposed a $675 million economic development bond that would be repaid using a portion of the natural gas severance tax revenue. The bond would finance: $100 million for a technology initiative to support entrepreneurs, established companies and manufacturing innovation. $100 million to recapitalize the PIDA low-interest business loan program $250 million to Business in Our Sites brownfield redevelopment $225 million for energy investment, including: $50 million for solar $50 million for energy efficiency $20 million for wind $25 million for last mile gas distribution lines

7 P a g e 7 $20 million to make farms more energy self-reliant $30 million for the PA Energy Development Authority $30 million for new, on-site heat and power technologies The budget also would provide $1 billion for transportation, and water and sewer infrastructure including: o $500 million in bond-financed transportation investment to supplement revenues from Act 89 of 2013 o $500 million leverage through revenue bonds issued through PENNVEST Education: Early Childhood and PreK-12 Governor Wolf s General Fund prek-12 budget proposal totals $9.8 billion, a decrease of $496 million, or 4.8%, from , due largely to the movement of the commonwealth s $1.75 billion school employees pension payment off budget, as it is proposed to be paid using earmarked revenue from the sales tax change. Including the pension payment in , the prek-12 budget would increase by just over $1 billion from , a 10% increase in funding. This budget would be the first phase of a four-year plan to increase prek-12 funding by $2 billion and return the state s share of education funding to 50%, which it has not been in 40 years. Raising the state s share to 50% depends on property tax relief, which would not start until the school year. The state s current funding share of 35% is one of the lowest in the country. 7 A low state share of education funding shifts the tax burden onto local taxpayers (often homeowners) and results in funding inequalities between poorer and wealthier districts. The lion s share of annual revenue from a 5% severance tax, projected to raise in excess of $1 billion in and beyond, would be invested in education. In , $155 million of severance tax revenue would be used to increase basic education funding (as the tax would be effective Jan. 1, 2016, the fiscal year would only include a couple months of collections). The state would return to using a basic education funding formula, under development by the General Assembly s Basic Education Funding Commission, starting in , to ensure funding for all school districts is adequate, equitable, predictable, and accountable. Currently, Pennsylvania is one of only three states without a formula. Basic education funding would be increased by $400 million, or 7%, in and would consolidate the Basic Education Funding subsidy, Accountability Block Grant, Ready to Learn Block Grant, Educational Assistance Program, and Charter Reimbursements line-items. The budget proposal funds the combined Basic Education Funding subsidy for schools at $6.1 billion, a $400 million increase that includes: 7 Bruce Baker and Jesse Levin, Educational Equity, Adequacy, and Equal Opportunity in the Commonwealth: An Evaluation of Pennsylvania s School Finance System, American Institutes for Research, October 2014, %20Full%20Report% pdf.

8 P a g e 8 The full restoration of cuts made in to the Accountability Block Grant -- which helps provide funding for proven, effective academic programs -- and the Educational Assistance Program. A partial restoration of charter reimbursements to school districts after these payments were eliminated in Prior to , school districts received a 30% reimbursement of their mandatory charter tuition payments. The governor s budget proposes that school districts would receive about a 10% reimbursement. Restoration of most of the remaining classroom cuts from the budget. If enacted as proposed, classroom funding 8 would be $180 million below levels (which included federal stimulus funding). That reduces the per-student cut of $475 to $101 per-student in Special education funding would be increased by $100 million (10%), and the formula enacted in 2014 would continue being used to allocate the new funding. While local districts would still pick up much of the cost of special education this increase, building on the smaller increase in state funding in , would be a step in the right direction. Cyber charter school reform would create standard tuition charges based on costs incurred by Intermediate Units providing cyber education. This change recognizes the lower infrastructure costs of cybers compared to other types of schools. The budget proposes a cyber-charter funding formula for regular and special education that is projected to save school districts $162 million per year in tuition costs. Early childhood education funding would be increased by $120 million (88%), with $100 million going to Pre-K Counts and $20 million going to the Head Start Supplemental Assistance Program, both aimed at helping low-income children develop academically and socially prior to entering the regular classroom. This funding increase would result in the enrollment of more than 14,000 additional children in the programs. Recent years have seen funding for these programs remain largely flat, earning Pennsylvania a D+ grade and a 41 st ranking among states for early childhood education. Even with this historic increase in early childhood funding, the demand for services would still outstrip supply. PDE s Early Intervention program would be flat-funded at the level of $238 million. Among other education-related programs, Adult and Family Literacy and Career and Technical Education would receive increases in the governor s proposal, while the state Public Library Subsidy would remain at the same funding level it has had since , $53.5 million. State library support was over $75 million in Higher Education State funding of higher education funding would increase by $159 million (10%), the first major increase in four years. Even with the increase, total state support of higher education would remain below pre- 8 PBPC includes Basic Education Funding, BEF Formula Enhancements, School Improvement Grants, Accountability Block Grants, Ready to Learn Block Grants, and Charter School Reimbursement payments to schools as classroom funding.

9 P a g e 9 recession levels. As of , Pennsylvanians support of higher education ranked 49 th out of the 50 states in the country as a share of state personal income less than half of the national average. 9 Funding for the 14 state-owned Pennsylvania State System of Higher Education (PASSHE) schools would increase by $45 million (11%), restoring about half their cuts. All state-related universities would see funding increases. Penn State would receive about $51 million (22%) more, and the University of Pittsburgh and Temple University would both receive about $15 million (11%) more. This total of $81 million in funding restorations represents half of their cuts. Community colleges would receive $15 million (7%) more, restoring three-quarters of their cuts. General Fund support for the Pennsylvania Higher Education Assistance Agency (PHEAA) would increase by $16 million (4%), and Other Funds support of PHEAA programs would increase by $25.5 million, or 318%. The major PHEAA increases are: $7.5 million for the STEM Scholarship Initiative, to help students pursue careers in Science, Technology, Engineering and Math fields. A tripling from $5 million to $15 million in funding for Ready to Succeed Scholarships for middleclass students with good grades. $9 million for dual enrollment through which high school students earn college credit. The Environment A new severance tax on natural gas extraction, using the same rate as West Virginia, is projected to generate approximately $1 billion a full year of collections, a portion of which would go to environmental programs: 9 Illinois State University College of Education, Grapevine Survey , Table 4,

10 P a g e 10 $40 million a year to finance debt service on a $225 million clean energy bond that would be distributed in the following way: o $100 million for alternative energy. o $50 million for solar power installation rebates. o $50 million for energy efficiency. o $25 million for natural gas distribution line development. $10 million to the Department of Environmental Protection (DEP) to beef up oversight of the gas drilling industry. The Wolf budget includes an overall $18.8 million increase in DEP s budget, with $7.8 million of it from the General Fund. Funding for General Government Operations, Environmental Program Management, and Environmental Protection Operations would all be modestly increased. The proposed budget includes an $8.3 million, or 2.5%, overall increase in the Department of Conservation and Natural Resources (DCNR) budget. Over the last several years, DCNR s operational budget has been funded almost entirely from royalties from natural gas drilling on public land. The proposed budget would begin to reverse that dependence by increasing the amount provided from the General Fund by $20 million. $41.7 million, an increase of $1.16 million, would be available through the Growing Greener Program which provides funding for watershed protection and restoration, parks and forest rehabilitation and community conservation. $51 million, an increase of $2.6 million, to the Keystone Parks, Recreation and Conservation Fund for local recreation projects, open space conservation, and parks and forest rehabilitation. Health and Human Services The budget would provide $11.9 billion from the General Fund to the Department of Human Services (DHS), an increase of $691 million, or 6%. Up to 2014, DHS was called the Department of Public Welfare. The name was changed to more accurately reflect the agency s mission and duties. Nearly half of DHS's funding would go to Medical Assistance (MA), which provides health care services for 2.2 million Pennsylvanians -- primarily seniors, children, and adults with disabilities. The General Fund s share of the MA budget is expected to grow by $87 million, or 1.7%, to $5.2 billion. The budget would merge MA inpatient and outpatient services into a single system. It also would expand Pennsylvania's Medicaid program under the Affordable Care Act to more than 600,000 adults with incomes up to 138% of the federal poverty line (roughly $33,000 a year for a family of four). These changes are estimated to save the General Fund more than $500 million next year. The proposed budget shifts $41 million in Medical Assistance Workers with Disabilities (MAWD) costs to the Tobacco Settlement Fund.

11 P a g e 11 The budget would put $46 million toward reducing waiting lists and expanding services for Pennsylvanians with physical and intellectual disabilities. The budget would expand home- and community-based services to more than 5,500 seniors by allocating an additional $31 million to DHS and $7.3 million to the Department of Aging. For the first time, more than half of all Pennsylvanians receiving long-term care would be in home or community settings. General Fund long-term care costs would increase by $303 million, or 21%, which would include a shift back to the General Fund of $82 million in costs from the Lottery Fund. This would partially reduce the large increase in Lottery Funds used to fund long-term care programs in the budget. The budget would also shift $132 million in Long-Term Care costs back to the General Fund from the Tobacco Settlement Fund. County Administration and County Assistance Offices, the front line in providing human services in the commonwealth, would receive an additional $31 million in funding, a 9% increase.. The budget would allocate $28 million in the first of a three-year restoration of cuts to seven county human service programs that were cut in when the Corbett administration implemented the human services block grant pilot program. The biggest piece of that increase, $18 million, would go for mental health services. Overall, mental health services would see a $55 million increase to $787 million. $4.8 million would go to the Intellectual Disabilities-Community Base Program for a total of $154 million, and $4 million would go for behavioral health services for a total of $47 million. The other four programs benefiting would be county child welfare, Medical Assistance Fee-for- Service, homeless assistance, and the Human Services Development Fund. Despite the proposed funding increases for early childhood programs at the Department of Education, several important programs focused on young children at DHS would see no increases in funding in the proposal. This includes Child Care Services for low-income working families, at $156 million; Child Care Assistance for Temporary Assistance to Needy Families (TANF) recipients, at $153 million; Early Intervention, at $128 million; and Nurse Family Partnerships, funded again at slightly less than $12 million in the governor s proposal. Services for victims of domestic violence would receive a $1.5 million, or 10%, increase to $16.8 million. Funding for rape crisis services would receive a nearly $900,000 increase to $9.6 million. Early Intervention, Family Centers, Nurse Family Partnerships, and Legal Services would all be funded at levels. Within the Department of Health, $4 million of new funding is proposed to re-open state health care centers and $100,000 to establish a Statewide Natural Gas Fracking Health Registry to help track the health of people living near gas operations.

12 P a g e 12 The governor s budget proposes to eliminate or reduce funding for several specific health treatment programs including cystic fibrosis, lupus, sickle cell, regional poison control centers, trauma prevention, and ALS support services. The General Assembly has typically restored funding to these programs. The Department of Drug and Alcohol Programs would receive a $5 million increase to help combat the commonwealth s heroin epidemic. Within the Insurance Department, state funding for the Children s Health Insurance Program (CHIP) would be decreased, as the federal share of the program increases from 66% to 89% as part of Medicaid expansion. The proposed budget would use $14 million in state funds to provide health insurance coverage for an additional 15,800 children. Pensions The governor s budget would fully fund Pennsylvania s required payments under Act 120 of 2010 to the two statewide pension systems. The increase in the General Fund s share of state employees pension costs is approximately $100 million. The increase in the commonwealth share of employer costs of the school employees pension is $592 million in The proposed budget would dedicate a portion of sales tax revenues ($1.75 billion in ) to paying the state s portion (roughly half of the overall cost) of the employer s share of the PA School Employees Retirement System (PSERS). This recurring revenue source should reassure bond-rating agencies that the pension debt will be paid. The governor s budget includes new initiatives that could lower long-term liability by more than $10 billion, including: Reducing excessive management fees now estimated at $700 million annually. Using $80 million in liquor modernization profits to reduce school district pension payments, beginning in Using $185 million in annual revenues from liquor modernization, starting in , to pay off a $3 billion bond that would pay down the school employees pension system debt. The $3 billion pension bond is expected to reduce the future unfunded liability by $8 billion. Public Safety The commonwealth s three primary public safety agencies would receive sizable increases in funding under the proposed budget. Funding for the Pennsylvania State Police from the Motor License Fund and General Fund would rise by $83 million, or 8%, to $980 million. The budget includes funding to train 350 new cadets. The cost of running state prisons would increase by $147 million, or 7%, to nearly $2.3 billion in Most of the increased costs would be for prison operations and medical care, with a smaller increase for inmate education and training. The prison population is expected to drop by nearly 800 inmates, but the state s cost to incarcerate an individual would rise by more than

13 P a g e 13 $3,200 to $45,762 per year. The cost of health care per inmate (included in the overall total) is expected to increase by $329, or 6.7%, to $5,280. Funding for the Board of Probation and Parole would rise by $16 million, or 10%, to $172 million. Included in this increase is an additional $2.4 million for grants to improve county probation services. Gov. Wolf is proposing a consolidation of the Board of Probation and Parole with the Department of Corrections. The board would retain its independent parole-granting authority. Transportation Pennsylvania's bipartisan transportation funding law, Act 89 of 2013, overhauled the state's gas tax, and increased fines and permit, vehicle registration and licensing fees to drive more funding to road and bridge projects. Highlights of the proposed budget for the Department of Transportation include: $5.5 billion in state, federal and restricted revenues from the Motor License Fund an increase of $329 million, or 6% -- for state and local highway and bridge projects. A $159 million, or 20%, increase in state mass transit operating assistance. Workforce Development Workforce training funding would be restored to levels comparable to , including: A $10 million increase for Industry Partnerships, to about 60% of funding levels. $8 million for the Workforce and Economic Development Network (WEDnetPA). A $5 million increase for Vocational Rehabilitation, drawing down $18.5 million in additional federal funds. $37 million to build a bridge from high school to college and careers including: o $15 million to establish Career and Technical Education partnerships to train students for high-demand occupations with a living wage and career ladders. o $5 million for Career and Technical Education Equipment grants. o $8 million for career counselors to develop pathways to high-skill careers. o $9 million for dual enrollment. Other Highlights of proposed funding for other departments and offices include: An increase of $3 million (3%) in funding for the Attorney General s Office. An increase of $4 million (9%) for the Auditor General s Office. Most of this increase, $3.2 million, would be for the final installment of a three-year technology improvement project. An increase of $73 million (6%) for the Treasury Department. Much of this increase would be for General Fund-financed debt service payments that will increase by $60.5 million, or 6%, to $1.157 billion. $317 million, the same amount as in , for the Pennsylvania Judiciary. An increase of $51 million (22%) for the General Assembly. This would represent a dollar-for-dollar restoration of Gov. Corbett s line-item veto from Restoration of most of the line-item veto funding reductions ($13.5 million) for government support agencies.

14 P a g e 14 A $2 million increase (23%) to $10.6 million for Grants for the Arts within the Executive Offices. While this is still below funding levels, it is still a sizable increase. A $2.9 million increase (17%) to $20.3 million for the Department of Agriculture s State Food Purchase Program. This increase will permit more food to be distributed to needy households. Elimination of several Department of Agriculture programs, including Hardwoods Research and Promotion, Agricultural Excellence, and support for livestock shows. The General Assembly often restores this type of funding during budget negotiations. The governor s budget now heads to the General Assembly for its consideration. Both the House and Senate Appropriations Committees hold hearings on the proposal during March and early April. As we find out more information regarding some of the budget s proposals, we will post this information on our website at The Pennsylvania Budget and Policy Center is a non-partisan policy research project that provides independent, credible analysis on state tax, budget and related policy matters, with attention to the impact of current or proposed policies on working families. Learn more at