When Gov. Tom Wolf delivers his fifth budget address to a joint session of the state House and Senate mid-morning today, he’ll officially kick off what’s expected to be a contentious debate over Pennsylvania’s finances.
Getting a budget passed is complicated, but the end result should boil down to this: spending = revenue.
Getting there — and by the June 30 deadline! — is rarely easy.
The budget: What it is + how it gets passed
Federal funds, as well as earmarked and non-earmarked state revenue, make up Pennsylvania’s operating budget. Every year, the governor and state lawmakers decide how to spend non-earmarked money in the General Fund, which accounts for about 40 percent of the operating budget.
Feb. 5: Wolf will formally unveil his budget plan today, but in reality, it’s been in the works since last summer. That’s when executive branch agencies started preparing their budget requests, which they submitted to the Office of the Budget in October.
The requests are analyzed and eventually turned over to the governor, who completes his Executive Budget in January and presents it to the General Assembly the following month.
The Executive Budget features revenue projections and proposed spending. Pennsylvania’s governor is constitutionally required to submit a balanced budget. In past years, Wolf has proposed different tax increases to raise additional revenue for areas of priority like education.
Feb. 11-March 7: Next, the House and Senate Appropriations committees hold hearings with dozens of agencies and executive offices to discuss the requests. See the House schedule here, and the Senate schedule here.
March to June: This is when things can (and most likely will) get interesting.
After holding hearings in both chambers, the House, Senate, or both will introduce a general appropriations bill, which dictates line-by-line spending for the “executive, legislative and judicial departments, public schools, and for public debt,” per this handy Office of the Budget explainer: “All other appropriations are made individually by separate special bills.”
If the House and Senate can agree on a spending bill, it’s sent to the governor.
If they can’t, then a conference committee with six members can be convened to reach an agreement.
Once the governor gets the bill, he can sign it, veto it, veto parts of it, or let it go into effect without his signature. Wolf has signed one budget and let three become law without his signature.
Remember spending = revenue?
If the spending bill doesn’t match revenue projections produced by the Department of Revenue and the Office of the Budget, the General Assembly and governor have to agree on a way to make up the difference.
July 1: This is the start of the new fiscal year, when a new budget is supposed to be in place. That doesn’t mean it will be.
What to expect from 2019
Last year, Wolf and lawmakers passed a “balanced” budget with time to spare, thanks to $1 billion in one-time revenues. That’s part of the reason the nonpartisan Independent Fiscal Office (IFO) is projecting a $1.7 billion deficit this year.
Wolf’s administration doesn’t think the situation is nearly that dire.
In December, then-Budget Secretary Randy Albright touted higher-than-expected tax revenue collections. While human services costs are expected to grow in the coming fiscal year, Albright said he was “more optimistic” than the IFO about a potential deficit. Republicans are also not predicting a doomsday situation.
“We fully intend to enact a budget in the upcoming fiscal year that lives within current revenue projections,” House Appropriations Committee Chairman Stan Saylor, R-York, said in a December statement.
If there is a significant deficit, expect special funds to come up again. There are dozens of them, each set up with a specific revenue source for a specific purpose. The Medical Marijuana Program Fund, for example, earmarks fees and taxes from the state’s program to assist low-income patients and pay for drug abuse prevention.
The General Assembly hasn’t been above cracking these piggy banks. They’ve taken hundreds of millions of dollars from these special funds to balance the budget. The state also borrowed $1.5 billion to plug a big budget hole by selling future payments it expects to get from a 1998 tobacco settlement.
In each previous budget request, Wolf asked for a severance tax on natural gas drillers, most often to pay for new spending on education. This year, he wants to use the tax to pay for a $4.5 billion infrastructure plan that would expand high-speed internet, fund flood prevention projects, and help urban areas with blight.
The plan would be accomplished through separate legislation, not the budget. House Republican leaders say they aren’t interested.
Wolf last week also repeated his call for a $12 minimum wage, effective July 1. The administration estimates a wage increase would bring $36 million in Medicaid savings in 2020 and $119 million the following year.
So what should we expect today? According to Wolf’s spokesperson, the Executive Budget will feature “additional funding for early childhood programs, K-through-12, and higher education.” It will also include a “new package of initiatives and overhaul of policies aimed at building the strongest workforce in the nation.”
As for the rest? We’ll see later today.