Gov. Wolf's spending plan is 13% more than last year's enacted budget: Highlights
Gov. Tom Wolf's eighth and final budget proposal would push state spending past $43 billion for the first time, as the Democrat asks lawmakers for the biggest-ever increase in aid for public schools, plus more money for direct care workers, higher-education institutions and college scholarships.
In all, the proposal's spending would be 13% higher than this year’s enacted budget of $38.6 billion.
Sen. Pat Browne, R-Lehigh, who heads the Appropriations Committee where the budget debate will play out in the coming months, cautioned that Wolf's plans masked a structural financial deficit that will present a growing challenge for state government in the coming years.
Wolf's budget proposal numbers, Browne said, “do not reflect reality.”
House Democratic Leader Joanna McClinton of Philadelphia said the state’s strong tax revenues and positive bank balance presented an opportunity.
“It’s all about investing in people, funding our schools so that property taxes go down and making Pennsylvania a more business-friendly commonwealth,” she said.
Here's a look at some highlights from Wolf’s spending plan for Pennsylvania's 2022-23 fiscal year that starts July 1:
THE BIG PICTURE
— Increases spending through the state’s main bank account to $43.7 billion, or about 13% of this year’s enacted budget of $38.6 billion. Counting $3.5 billion in federal pandemic aid, spending on state operations is projected to be $41 billion in this fiscal year.
— Projects a surplus of $6.4 billion at the end of this fiscal year but uses about $3 billion of it to prop up spending in 2022-23. Leaves intact $2.9 billion that is separately held in a restricted budget reserve account.
— Projects a 2% decrease in tax collections to $41.9 billion, as the economy slows. Does not increase the tax rate on income or sales, the state’s two biggest sources of revenue.
— Calls for lawmakers to raise the state minimum wage to $12 an hour on July 1, up from the federal minimum of $7.25 an hour, with annual increases of 50 cents until the minimum wage reaches $15 on July 1, 2028. Wolf's proposed increase includes tipped workers.
TAXES AND FEES
— Corporate income taxes: Reduces the current 9.99% tax rate on corporate profits to 7.99% in 2023, 6.99% in 2026 and 5.99% in 2027. The change is estimated to reduce revenue in 2022-23 by $79 million but would be accompanied by new rules “modernizing the tax base" to help ensure that large corporations do not shift profits out of state to lower-tax jurisdictions.
— Requests about $1.8 billion more for instruction, operations and special education in public schools, or about 21% more. Of that, $300 million is set aside for the 100 poorest public school districts and $200 million is for special education.
— Requests $200 million annually to fund scholarships for students at a State System of Higher Education university if they remain in Pennsylvania for as long as they receive the benefit. Scholarship money would be targeted to high-demand degree programs. Of the $200 million, $88 million would come from a tax on slot-machine gambling that subsidizes the state’s horse racing industry and $112 million for each of the first two years would come from federal American Rescue Plan Act money approved by Congress last March.
— Establishes a statewide cyber-charter school tuition rate of $9,800 per student that would save $199 million a year for school districts and changes special education reimbursements for charter schools to save another $174 million a year for school districts.
— Requests about $800 million to increase reimbursement rates for direct care workers under Medicaid who care for the disabled and elderly.
— Diverts $484 million from motor vehicle sales tax revenue to support public transit agencies that will lose $450 million annually when the Pennsylvania Turnpike Commission is no longer required to contribute the money on an annual basis.
SPENDING BY CATEGORY
— HUMAN SERVICES: Grows $2.2 billion, or 14%, to $18.3 billion.
— PRE-K and K-12 EDUCATION: Grows $1.9 billion, or 19%, to $11.6 billion.
— HIGHER EDUCATION: Grows $170 million, or 10%, to $1.94 billion, not including another $150 million in American Rescue Plan Act money proposed for state system universities.
— CORRECTIONS AND PAROLE: Grows $88 million, or 8%, to $2.8 billion.
— PENSIONS: Grows about $200 million, or 5%, to $3.9 billion.
— DEBT: Grows $79 million, or 7%, to $1.2 billion.