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Senate Appropriations Committee Report
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
- $1.5 Million to begin implementing the ABLE Act
- $3 Million to begin implementing the Medical
- $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
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.
Contact Senator Browne:
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702 W. Hamilton Street
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Western Lehigh County
Upper Macungie Township Building
8330 Schantz Road
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Northern Lehigh County
North Whitehall Township Building
3256 Levans Road
Coplay, PA 18037
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