Fact Sheet

Budget Facts 2009: PA State Budget Overview

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Pennsylvania faces a $3 billion tax revenue shortfall in the state’s General Fund Budget.  Competing proposals from Gov. Ed Rendell and the Republican-led Senate differ on raising taxes and reducing/reprioritizing spending.  This is the first in a series of fact sheets on the state budget.

HOW MUCH DOES THE STATE SPEND?

  • Pennsylvania state and local governments will spend approximately $10,000 for every man, woman, and child in the 2008-09 fiscal year.
    • State government spending per-capita = $4,925
    • Local government spending per-capita = $4,900
       
  • State government’s Total Operating Budget (estimate) = $61.2 billion (FY 2008-09)
    • General Fund Budget (enacted) = $28.3 billion
      NOTE: Most “budget” references are to this portion of the Commonwealth’s total Operating Budget and represents less than half of the state’s total spending.
    • Other/Special State Funds (estimate) = $14.9 billion
      NOTE: This spending includes the Lottery Fund, Motor License Fund, Gaming Fund, and other such dedicated funds.
    • Federal Funds (estimate) = $18.0 billion
      NOTE: These funds from the federal government are spent by the state.
  • Local government spending (projection) = $61.0 billion (FY 2008-09)

HOW LARGE IS THE CURRENT BUDGET DEFICIT?

  • On July 4, 2008, Gov. Ed Rendell signed a $28.3 billion General Fund Budget, despite predictions by both Senate Democratic and Republican Appropriations Committee members and staff that such a spending plan would likely result in a multi-billion dollar deficit.
  • Gov. Rendell began reducing FY 2008-09 spending to $27.4 billion in December 2008.
    • Reductions have not keep pace with additional revenue declines.
  • Tax revenue shortfalls for the first 11 months of FY 2008-09 suggest a $3 billion General Fund deficit.
    • Total General Fund revenues will approximate only $25 billion.

HOW MUCH WILL THE STATE SPEND IN 2009-10?

  • Gov. Ed Rendell proposed a $28.9 billion General Fund Budget on February 4, 2009.
    • The governor’s proposal is out of balance due to declining state revenues beyond expectations.
    • Additional spending reductions or tax increases will be needed by the administration to produce a balanced budget.
  • The Pennsylvania Senate passed a $27.3 billion General Fund Budget on May 6, 2009. 
    • Passed by a 30-20 vote, SB 850 uses expected state tax revenues for FY 2009-10 plus federal stimulus money, and does not require tax increases.
    • The House Democratic Leadership has no plans to allow all members to vote on SB 850.

GOVERNMENT SPENDING HAS GROWN FASTER THAN THE RATE OF INFLATION

  • During Gov. Ed Rendell’s tenure (2003-2008), General Fund spending has increased by more than double the rate of inflation (39% vs. 18%).
  • Although the Senate budget proposal (SB 850) represents a decrease from last year’s budget by $1 billion, it still represents a 36.2% increase in General Fund spending since 2003.

IS PENNSYLVANIA A HIGH TAX AND HIGH DEBT STATE?

  • Pennsylvanians pay, on average, $13,000 per person each year in federal, state, and local taxes.
    • Pennsylvania moved from ranking 24th of the 50 states in tax burden in 1990 to near the top today.  In 2008, Pennsylvania had the 11th highest state and local tax burden.
    • This increased tax burden means that it takes Pennsylvania workers 111 days-nearly one-third of the year-to pay off their federal, state, and local tax bills.
  • Pennsylvania taxpayers owe $115 billion in state and local government debt.
    That debt amounts to over $9,000 for every resident of Pennsylvania, or over $36,000 for the average family of four.

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Additional Resources

More Budget Facts

For additional information on the State Budget and other issues, go to www.CommonwealthFoundation.org, or call 717.671.1901.