Pennsylvania Budget

Pennsylvania Records First Quarter Revenue Growth

A blog post by Michael Wood, originally published at Third and State.

The September revenue collections are in, and as I told the Harrisburg Patriot-News this week, Pennsylvania is on track to meet revenue projections for the year, despite missing official estimates for the first quarter of 2011-12.

How's that? Well, first of all, revenue collections so far this fiscal year are running ahead of the same three-month time period last year, reflecting a stubbornly slow but continued economic recovery. Tax revenue grew by 3.7% during the quarter, which is slightly ahead of estimated growth of 3.3% for the fiscal year.

While actual tax collections are below official estimates, some of that underperformance may be attributed to a change in the way those revenue estimates were made. The 2011-12 estimates predict a larger share of annual revenue coming in during the first half of the fiscal year than revenue estimates of the past several years. If 2011-12 collection patterns follow a similar course as most recent years, this change may make budget “shortfalls” more common in the first half of the fiscal year, followed by surpluses in the second half.

PA Tax Collections Strong So Far, September Will Tell Us More

A blog post by Michael Wood, originally published at Third and State.

Here is another look at General Fund tax collections in the first two months of Pennsylvania's 2011-12 Fiscal Year. As you can see, collections so far this year have exceeded pre-recessionary levels — a positive sign.

General Fund Tax Collections July and August

Revenue collections for September will be released as early as late Friday. September collections are important to monitor because they include quarterly corporate and personal income tax payments. They should give us a much better idea of what to expect in future months.

So far, so good.

Pa. Revenue Growth Strong in 2011-12, Despite Missing Official Estimates

A blog post by Michael Wood, originally published at Third and State.

Some state policymakers are concerned that Pennsylvania tax collections are trailing official revenue targets for the first two months of the 2011-12 Fiscal Year. However, Pennsylvania’s revenue collections for July and August are running well ahead of the same two-month period in 2010-11.

While actual tax collections are below official estimates, some of that underperformance may be attributed to a change in the way those revenue estimates were made, as the Pennsylvania Budget and Policy Center explains in our recent Revenue Tracker.

From his Mouth to Lawmakers' Ears: Governor Corbett Calls for Gas Drilling Fee

A blog post by Chris Lilienthal, originally posted at Third and State.

Last week, Pennsylvania Governor Tom Corbett signaled his support for enacting an impact fee on Marcellus Shale gas drillers. His plan would use fee revenue to pay for statewide environmental cleanup and local impacts, such as road and bridge damage, the Governor said on his new radio show. He plans to release more details as early as this week.

This is a significant development for Governor Corbett, who was initially skeptical of a drilling tax or fee. As The Philadelphia Inquirer reported last week:

He had stuck to a pledge made in last year's gubernatorial campaign to oppose any new taxes — or fees — on anyone for anything. Since taking office in January, Corbett has softened that stance, saying at first that he would consider a local impact fee on the drillers, then saying he was in talks about one with GOP legislative leaders. His Marcellus Shale Advisory Commission studied the issue and recommended an impact fee.

The Pennsylvania Budget and Policy Center will have an update when the new fee proposal is introduced.

School’s Open but There’s Less Funding for Kids

A blog post from Chris Lilienthal, originally published at Third and State.

Kids are back in school across Pennsylvania and the nation, but many of them are likely seeing the fallout from education funding cuts.

Pennsylvania ranked among the top 10 states to cut school funding this year, according to a recent analysis by the Center on Budget and Policy Priorities. The Center found that 21 of 24 states for which data are available (including Pennsylvania) are providing less funding per student to elementary and high schools than last year (after adjusting for inflation). These states account for about two-thirds of the nation’s school-age population.

Pennsylvania ranked sixth among the 24 states, with an 8.8% cut in per-student, inflation adjusted spending. Only Illinois, Texas, Wisconsin, California and Ohio cut school funding more.

Overall, Pennsylvania is doing better than many of the other states, where funding cuts this year come on top of other cuts in state K-12 funding since the recession hit. As the Center’s Phil Oliff wrote:

As a result, 17 of the 24 states studied are providing less funding per student than they did in 2008. (See second graph.) In ten of these states, funding is down more than 10 percent since 2008, and in South Carolina, Arizona, and California, it is down more than 20 percent.

These cuts have serious consequences for students and the broader economy. They slow the economic recovery, hurt education reform efforts, damage the nation’s long-term competitiveness and leave school districts with few choices for restoring the lost state aid.

It all comes down to a question of priorities, as Oliff wrote:

While the state funding cuts partly reflect the economic downturn, which has depressed state revenues and raised the demand for public services, they also reflect choices by state and federal policymakers.  Most states took a cuts-only approach to closing their budget shortfalls for the current fiscal year, rather than using a more balanced mix of cuts and additional revenues.  And the federal government has failed to extend the emergency education aid it gave states earlier in the downturn, which played a crucial role in limiting the funding cuts to schools across the country.

News Flash: PA Public-Sector Jobs Not Path to Riches

A blog post from Stephen Herzenberg, originally published on Third and State.

The Economic Policy Institute has a new report out documenting — surprise, surprise — that jobs in Pennsylvania state and local government aren’t the way to get rich.

The report, authored by Rutgers University labor and employment relations Professor Jeffrey Keefe, shows that Pennsylvania public-sector workers make the same or slightly less in wages plus benefits than comparable Pennsylvania private-sector workers. The more-generous benefits of public-sector workers are balanced by lower wages and salaries.

We weren’t very surprised by this result. We had made similar observations earlier this year.

Public Employment Job Losses a Drag on Economy

A blog post from Christopher Lilienthal, originally published on Third and State.

Add this to the list of reasons that the economic recovery is limping along. Our friends at the Center on Budget and Policy Priorities explain:

July’s employment report included more bad news from states and localities:  job losses are continuing. Since August 2008, state and local governments have slashed 611,000 positions, and the cuts have been getting worse — 340,000 of those jobs were lost in the last 12 months. July was the ninth consecutive month, and the 29th out of the last 35, in which total state and local employment shrank.

Three Years of State and Local Job Losses

And we haven't seen the last of the public sector job cuts. As the Center notes, many states have enacted new state budgets that make deep spending cuts sure to reduce public employment that much more.

So where are we seeing the most cuts? Cities, counties and other local governments, along with local school districts, account for the lion's share:

  • Local school districts have cut 229,000 positions.
  • Cities, counties, and other local governments have cut 237,000 positions.
  • State governments have cut 145,000 positions.

Tax Flight Is a Myth, Report Finds

A blog post from Christopher Lilienthal, originally published on Third and State.

We’ve heard it before. If you increase state taxes, people will up and leave for lower tax states — especially the most affluent residents. You often hear the same argument used to support tax cuts.

A compelling new report from the Center on Budget and Policy Priorities busts this common myth advanced by those who oppose a balanced approach to budgeting and tax policy. Turns out Americans move from state to state for a variety of reasons, but tax levels rarely factor in.

Not surprisingly, cheaper housing and job opportunities are much more likely to drive people to move to another state than tax levels.

As the report finds, the effects of tax increases on migration are, at most, small — so small that states raising income taxes on the most affluent households can be assured of a substantial net gain in revenue.

The report cites numerous examples of research debunking the migration myth and, through case studies, shows how misinformation about the impact of taxes on migration can influence policymakers and the media. Those who support the migration myth often wrongly assume a cause-and-effect relationship, promote irrelevant findings, and inaccurately measure migration, the report found.

On the flip side, low taxes can prevent states from maintaining the kinds of public services that create jobs and build a strong economy — the very things that potential residents value.

State Cuts to Education, Health Care Will Slow Recovery

A blog post from Christopher Lilienthal, originally published on Third and State.

We have written about the negative impact that deep cuts to state funding will have for Pennsylvania children, seniors and our economy. Now a new report from the Center on Budget and Policy Priorities shows that we aren't alone.

At least 38 of the 47 states with new 2011-12 budgets are cutting K-12 education, higher education, health care, or other key public services, according to the report. As Policy Analyst Erica Williams writes at the Center's Off the Charts Blog:

While states continue to face rising numbers of children enrolled in public schools, students enrolled in universities, and seniors eligible for health and long-term care services, most states (37 of 44 states for which data are available) plan to spend less on services in 2012 than they spent in 2008, adjusted for inflation — in some cases, much less.

State lawmakers no doubt faced tough decisions this year, with revenues still far below pre-recession levels and emergency federal aid all but expired. Still, our review shows that the cuts are unnecessarily harmful, unbalanced, and counterproductive.

Pennsylvania is among that group spending less in 2012 than in 2008 (adjusted for inflation):

State Spending Cuts Kill Private Sector Jobs

A blog post from Mark Price, originally published on Third and State.

Recent debates about the impact of state taxes and spending have taken place in a “fact-free” zone, where anti-tax advocates urgently warn that “taxes kill jobs” without offering any evidence that this is true.

Thanks to recent analysis by economist Adam Hersh at the Center for American Progress, we now have some fresh data on the health of the economy in states that cut their budgets in recent years compared to those that increased spending.

The verdict: Those states that made steep public spending cuts in the wake of the Great Recession have seen weaker economic growth in the years since. Budget-cutting states have experienced rising unemployment, fewer new private sector jobs and weaker economic growth than the states that increased spending.

While this analysis does not tell us whether the spending cuts caused the negative economic outcomes, it is clear that steep spending cuts are correlated with markedly worse economic performance.

This could all be very bad news for Pennsylvania, where lawmakers and Governor Corbett recently enacted a 2011-12 state budget with deep cuts to education, health care and human services. Overall, the budget cuts spending by an inflation-adjusted rate of 4%, as the Keystone Research Center notes in a new policy brief interpreting the Center for American Progress data.

A Detailed Look at Pennsylvania's 2011-12 Budget

A blog post from Sharon Ward, originally published on Third and State.

Two weeks ago, the Pennsylvania General Assembly completed work on a 2011-12 state budget that achieved Governor Tom Corbett’s primary objective — to meet a target spending number of $27.3 billion or lower, regardless of the impact.

The budget spends $27.249 billion, the lowest amount since the 2008-09 enacted budget, with cuts totaling more than $960 million.

Still trying to piece it all together? Well, the Pennsylvania Budget and Policy Center has you covered. On Wednesday, we released a detailed analysis of the new budget. Check it out and get all the details.

Here are a few highlights:

Third and State Recap: Marcellus Jobs, Pa.'s Budget, Paid Sick Days & a Misleading Health Care Study

Over the past two weeks, we blogged at Third and State about Pennsylvania's state budget, Marcellus Shale job creation, paid sick days legislation in Philadelphia, and a thorough debunking of a misleading study on the Affordable Care Act.

IN CASE YOU MISSED IT

Pa.'s 2011-12 Budget: Doing Less with More

The Pennsylvania Legislature has approved a 2011-12 General Fund budget that makes deep cuts to education, health care and other cost-effective local services, while cutting taxes for business and leaving most of a $650 million revenue surplus untouched.

You can view our budget highlights post here. I also issued the following statement on the budget's passage:

The Legislature has adopted a budget that does less with more, cutting services to children while leaving most of a $650 million revenue surplus on the table.

The budget reflects a set of priorities that few Pennsylvanians share. It reduces the number of teachers in the classroom, raises college tuition, and increases local property taxes in order to meet an artificial spending number.

This budget provides tax breaks to businesses but cuts funding to homeless shelters and Meals on Wheels. It gives natural gas drillers a free pass, once again.

Pennsylvania’s economy grew more quickly than the nation in 2010, but that growth has begun to stall. Cutting jobs and services will have a ripple effect through our communities that will make a robust recovery even harder to achieve.

This budget fails to put people first. It continues a pattern in Harrisburg of balancing the budget on the backs of the most vulnerable and shifting more state costs onto local taxpayers. That’s bad news for middle-class families, taxpayers and the economy.

An Overview of Pennsylvania’s 2011-12 State Budget

State legislative leaders and Governor Tom Corbett agreed on a 2011-12 state budget deal this week, and on Tuesday, the state Senate approved it on a 30-20 party-line vote. The bill heads to the House of Representatives next.

It would spend just $27.2 billion, down $962 million, or 3.4%, from the 2010-11 budget.

The Pennsylvania Budget and Policy Center will have a detailed analysis of the budget later in the week, but for now we will highlight funding levels for major programs. You can view budget tables detailing funding levels by major department and highlights of education funding levels.

Education

The biggest cuts, in both dollars and percentages, are in education programs, including PreK-12 and higher education. While the budget makes some funding restorations from the Governor’s original budget proposal, the cuts are still significant:

  • Basic education funding, at $5.35 billion is cut $421.5 million, or 7.3%, from the current year.
  • Funding for Accountability Block Grants, at $100 million, is cut by $159 million, or 61%.
  • Special education is flat-funded for the third year at just over $1 billion.
  • Charter School reimbursements are fully eliminated (a loss of $224 million).
  • Funding was also eliminated for Educational Assistance (a tutoring program) and school improvement grants.
  • Both Head Start and PreK Counts were cut by about 3%.

The cuts in major education programs total $863 million.

Higher education fared much better under the final budget but still sustained cuts of about 18%, or $160 million. Penn State University received a cut of 19%, or $50 million, in basic support. Community colleges will see a 10% cut, or $23.6 million.

Health Care and Public Welfare

Third and State Week in Review: Unemployment Benefits, Drilling Fee Bill and the Latest Jobs Report

Last week, we blogged about a drilling fee bill moving in the Pennsylvania Senate, a resolution to the legislative standoff over extended unemployment benefits, an update on the May jobs report and more.

IN CASE YOU MISSED IT

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