5 Facts About the State Budget Proposal

The 2014-15 Pennsylvania State Budget proposal is more than 1000 pages, but we’ve boiled it down to five facts taxpayers you need to know

1. State Spending is at an All-Time High: The budget proposal increases total spending to $71.8 billion and General Fund $29.4 billion, both are all time highs. That’s a 6 percent increase in total spending (which includes increases in transportation spending and federal funds) from 2013-14.  The General Fund increase of 3.3 percent exceeds the rate of inflation plus population growth.

Despite union leaders’ big lie of “$1 billion cut,” education spending is at an all-time high. Governor Corbett’s proposal would increase education funding by more than $360 million, with more than $10 billion going to public schools.

2. State Spending Exceeds Revenues. The state will begin next fiscal year with $217 million in the bank (so to speak) and end with $27 million—spending $190 million more than revenues. The budget is also predicated on one-time sources of funding, and “savings” from pension reform (which may not happen) and is contingent on federal approval of Healthy PA to spend federal taxpayer dollars rather than state taxpayer dollars for some Medicaid recipients.

This structural deficit is the result of years of spending beyond our means, and was made possible by the federal stimulus and draining reserve funds. Gov. Corbett has done well to balance the budget without raising the sales or income tax, but we haven’t dug out of that hole yet.

3. Pension Reform Cannot Wait: We agree with Gov. Corbett’s call to “pass pension reform this session.” Pennsylvania’s exploding pension liability now stands at $47 billion and will drive up taxes both at the state level and in school property taxes (or require teacher layoffs) if not addressed.

Gov. Corbett proposed short-term relief by contributing less in 2014, but such a proposal will cost more overall if not must be accompanied by long-term pension reform. This should start with a defined benefit (401k) plan for future hires to take politics out of pensions. Refusing to act is, as Gov. Corbett said, “deeply unfair to children, communities, and our schools.”

4. Liquor Choice is Still on Tap: The governor repeated his call from last years’ budget to end the state liquor store monopoly. A majority of Pennsylvanians from all political persuasions agree that the government in the booze business is a lose business. Legislation has already passed the state House, and the Senate should act this year.

5. Obamacare Isn’t Free: The budget includes $219 million for Affordable Care Act benefits and more than $39 million to implement the ACA in Pennsylvania. Taxpayers will also shell out more than $109 million in 2013 and 2014 in Obamacare taxes on health coverage for state workers.

Gov. Corbett’s budget assumes $125 million in state savings next year if the federal government approves Healthy PA—his application for a waiver to use federal Medicaid expansion money to put newly-eligible recipients into the federal exchange. But he also projects more than $2 billion in new federal funds spent on Healthy PA.