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Senator Pat Browne


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Senate Appropriations Committee Report
June 2016

Committee Website


2016-17 Budget Enacted

The General Assembly enacted an on-time spending plan and presented it to the Governor on July 1, 2016.  The Governor declined to sign the spending plan and permitted it to become law without his signature on July 12, 2016. During the interim, the General Assembly and the Administration worked to develop and enact a revenue package to support the enacted fiscal year 2016-17 appropriations.  The Governor signed the revenue bill on July 13, 2016.

Enacted fiscal year 2016-17 General Fund appropriations total $31.5 billion, an increase of $1.2 billion, or 3.9%, over the prior year after accounting for one-time spending reductions in 2015-16.  The total 2016-17 General Fund appropriations is remarkable, not in its growth over the prior year, but in the reduction from the Governor’s February 2016 request.  The enacted budget is approximately $1.8 billion less than the $33.3 billion that Governor Wolf proposed in his request.  

The enacted budget provides funding for the ongoing costs of operating government’s core programs and provides increases for education and other programs.  This was possible through fiscal restraint, thorough analysis and recognition that as fiscal stewards we cannot automatically go to taxpayers and ask them to contribute more to the operation of government.  Budget highlights include:

  • $200 Million increase for Basic Education
  • $30 Million increase for Early Childhood Education
  • $20 Million increase for Special Education
  • 2.5% increase for Higher Education Institutions
  • $15 Million for Opioid Treatment
  • $2 Million to combat Avian Influenza
  • $750,000 more for the State Food Purchase Program
  • $3 Million increase for the National Guard Education Program
  • $1.5 Million to begin implementing the ABLE Act
  • $3 Million to begin implementing  the Medical Marijuana Act
  • $1.4 Million to combat the Zika virus

Meeting Our Obligations Without Broad-Based Tax Increases

The 2016-17 Fiscal Year budget recognizes the economic reality facing the Commonwealth of Pennsylvania.  We are looking at modest economic growth over the coming year offset by significant obligations, such as escalating public pension premiums, federally mandated increases for human service  programs and increasing Corrections’ spending.

The budget maintains Pennsylvania’s core programs and provides significant additional money for all levels of education, without increasing income taxes, the state sales tax or imposing a job-killing Marcellus Shale extraction tax.

The 2016-17 revenue package was developed to balance this year’s budget without raising broad-based taxes and totals nearly $1.3 Billion.  This revenue package includes $727.4 million of tax changes, $285.5 Million from unneeded balances in other Commonwealth funds and settlements, $149 Million from reforming the state’s liquor system, $100 Million from an anticipated expansion of gaming, and $24.8 Million from expedited receipt of table games license fees.

Tax changes is primarily comprised of increased revenues from a one-dollar-per-pack increase in the cigarette tax ($431.1 Million); a tax amnesty program ($100 Million); imposition of taxes on other tobacco products like e-cigarettes, loose tobacco and smokeless tobacco ($64.6 Million); a change to the Commonwealth’s revenue-sharing policy with sales tax vendors ($55.5 Million); and requiring sales tax to be applied to digital downloads and streaming videos ($46.9 Million).  Various other tax changes will add $29.3 Million of revenue.

July 2016 Revenue Update

Total General Fund revenue for July 2016 was $1.973 billion, $162 million, or 7.6%,  less than July 2015. 

However, July 2015 General Fund revenues included Personal Income Tax (PIT) withholding deposits from five Wednesdays, while there were only four such Wednesdays in July 2016.  Each Wednesday PIT collection day is worth approximately $110 million.  After accounting for the difference in the number of PIT collection days, it appears that July 2016 revenues are approximately $52 million lower than July 2015 revenues when compared on an equivalent basis.

In addition to the discrepancy in PIT collection days, July 2016 revenues also included a negative $25 million adjustment for unclaimed property (escheats) revenue, while a similar negative adjustment for July 2015 was only $5 million.

After adjusting for the difference in the number of PIT collection days and the negative adjustment for unclaimed property, July 2016 General Fund revenues are $32 million, or 1.5%, lower than July 2015 revenues.

July 2016 corporation tax collections were $7.6 million, or 10.3%, lower than last year.

Sales and use tax (SUT) collections for July 2016 were $9.6 million, or 1.1%, below last July.  General SUT grew by $4.2 million, or 0.5%, over last year, while SUT on motor vehicle sales was down by $13.8 million, or 11.3%.

Personal income tax collections, which make up the largest source of General Fund revenues, were $116.5 million, or 13.3%, below last year.  After adjusting for the number of collection days, PIT withholding would have been approximately $6 million lower than last year.  PIT non-withholding was $10.7 million, or 20.1, below last year.

Realty transfer tax (RTT) collections for July 2016 were $20.4 million, or 38.5%, lower than July 2015 RTT collections.  Inheritance tax collections for July 2016 were $7.5 million, or 8.9%, below last year’s collections.

Cigarette tax, liquor tax and table games tax collections for July 2016 were 2.1%, 2.3% and 1.7% higher than last year, respectively.

In keeping with historic practice, this month’s revenue analysis does not contain a comparison against estimated July revenues because the Department of Revenue is still finalizing its monthly revenue distribution. 

Oil and Gas Lease Fund Update

The Oil and Gas Lease Fund is used to finance conservation, recreation, dams or flood control projects or to match federal grants made for these purposes.  Revenues are derived from rents and royalties from oil and gas leases of Commonwealth-owned land with the exception of land owned by either the Pennsylvania Game or Fish & Boat Commissions.  As Oil and Gas Lease Fund revenues have declined in concert with the sharp drop in the price of natural gas, the General Fund has been forced to make up the difference.  Since FY 2014-15, the Department of Conservation and Natural Resource’s operating appropriations have increased from $9.1 million to $100.9 million in FY 2016-17, an eleven-fold increase. 
 


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Coplay, PA 18037
610-769-5566
FAX: 610-769-5568
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