A Breakdown of Governor Wolf's Budget Address

February 10, 2022

Governor Wolf's Budget Address

From Bellevue's Holly Kinser, Julie Platt, and Andrew Wisniewski

Yesterday, Governor Wolf made his final budget address as Pennsylvania's Governor. His budget looks to cement his legacy and prioritize significant initiatives that he has advocated for since he took office, such as workforce development, educational funding, healthcare, behavioral health, criminal justice reform, and long-term care.

His $43.7 billion 2022-2023 budget is about 13% higher than this year's enacted budget of $38.6 billion. Given the state's large cash reserves, Wolf is proposing no change to state income or sales taxes, the state's two primary sources of income. Below are some highlights from his proposed budget.

K-12 Education:

The Governor proposed a $1.75 investment in Pennsylvania schools. This includes a $1.25 Billion increase directly towards the fair funding formula, ensuring that school districts receive state funding based on student and community needs. Additionally, his budget addressed much-needed charter school accountability by applying the Special Education Formula to all public schools and establishing a Statewide Cyber Charter Tuition Rate. Lastly, his budget would increase the minimum teacher salary to $45,000.

Higher Education:

A critical scholarship program, Nellie Bly Tuition Program, would see a $200 million increase in the Governor's budget. This program provides financial assistance to PASSHE and community college students who major in the high-need sector of the Commonwealth. Overall, the Commonwealth higher education institutions would receive a $125 million increase.

Business and Workforce Development:

Gov Wolf proposed to cut the corporate net income tax from 9.99 percent to 7.99 percent. PA has one of the highest corporate tax rates in the county. Additionally, his budget would increase the state's minimum wage to $12 per hour starting July 1st, 2022, with an annual increase of $0.50 per hour until the minimum wage reaches $15 per hour.

Criminal Justice Reform:

As gun violence continues to accelerate, the Governor's budget would provide $35 million for grants to support community-led gun violence prevention efforts. Pennsylvania has one of the highest rates of individuals on probation or parole, and the Governor's budget would provide a $425,000 increase in staffing resources for county juvenile probation offices.

Long Term Care:

Our state has one of the highest aging populations in the country. To increase support for long-term care, the Governor's proposed budget includes a $91.25 million state increase to Medical Assistance rates for skilled nursing facilities.

Behavioral Health:

County mental health funds would get a $36.6 million increase. The budget would also invest $75 million in federal funds for recruitment and retention payments to qualifying home and community-based service providers.

Individuals with intellectual disabilities/autism:

The Governor's budget proposes moving 732 individuals off the emergency waitlist into the Community Living Waiver and 100 individuals into the Consolidated Waiver.

Over the next few months, the legislator and the Governor will work together to enact a budget by June that will include many of the priorities outlined here.

For more information, please visit. www.budget.pa.gov.

Republican Response

Speaker of the House Bryan Cutler stated that it has been the responsibility of the Republican Caucus during the tenure of Governor Wolf to develop a budget that works for Pennsylvanians both now and in the future. According to Speaker Cutler, the Governor’s proposed budget reflects the reckless spending from Washington D.C. This level of unbridled spending has increased inflation and has harmed the Pennsylvanians who can not afford another financial burden. Speaker Cutler stated that “... it falls on the Legislature to rein in calls to dramatically increase state spending.” In closing, Speaker Cutler offered the state of the Commonwealth’s Rainy Day Fund and the improving financial wealth of Pennsylvania as proof that previous years of Republican budgeting had been successful.

House Majority Leader Kerry Benninghoff called Governor Wolf’s budget a “spending plan” but stated that the General Assembly’s job was to look at the process holistically, ensuring that the revenue streams are identified and used in a responsible manner. “An exiting governor doesn’t have to worry much beyond November - the rest of us may,” stated Leader Benninghoff in advocating for a balanced budget. Leader Benninghoff did agree with the Governor’s proposal to lower corporate income tax, so long as it is done in a responsible and planned manner. Leader Benninghoff extolled the Wolf administration to overhaul the unemployment compensation process and to lessen environmental restrictions on businesses that are trying to restart the Commonwealth’s economy. Leader Benninghoff closed with, “As we move forward it is vitally important to be prudent in our spending, any less could be a doom for Pennsylvania and the Commonwealth’s overall fiscal health and put the taxpayers in jeopardy.”

Appropriations Chairman Stan Saylor stated that Governor Wolf’s budget proposal would leave the next Governor with a deficit of $800 million or more. Chairman Saylor views the revenue numbers that the Governor used in his budget proposal as arbitrary, stating that they came in $5 billion higher than the Independent Fiscal Office’s report. The budget proposal also only projects a budgetary increase of .3% for the following budgetary cycle, an impossibly low increase to forecast, according to Chairman Saylor. Chairman Saylor emphasized the need to utilize the $5 billion in unspent federal relief funding for the Commonwealth’s public schools.

Senate President Pro Tempore Jake Corman believes that the Governor’s budget proposal “grossly overstates revenue and grossly understates expenditures.” President Pro Tempore Corman cautioned against the expectations that the Governor’s budget proposal could create. Specifically calling out school districts, President Pro Tempore Corman warned that the budget “will not be anywhere remotely close to [Gov. Wolf’s proposal].”

Senate Majority Leader Kim Ward stated that a spending increase of $4.5 billion will not be helpful for Pennsylvania. According to Leader Ward, such spending will only intensify the personal financial pressures on Pennsylvanians in the form of higher taxes, energy prices, and the overall economic conditions confronting our nation including inflation and supply chain disruptions. Leader Ward touted the economic recovery that has occurred due to the efforts of Republican Senators throughout the Commonwealth. Leader Ward advocated for measures that will bring businesses back to Pennsylvania, such as the reduction of the corporate income tax and the death tax.

Senate Appropriations Committee Chairman Pat Browne stated that the most important fiscal data published by the Independent Fiscal Office is Pennsylvania’s structural deficit numbers. According to Chairman Browne, the Commonwealth’s $2 billion structural deficit is masked by the federal stimulus money. The Commonwealth must plan for when the federal stimulus funding is no longer available and Pennsylvania must address the structural deficit on its own. Chairman Browne observed that “[Governor Wolf] is passing on to the next governor a position that he wouldn’t support.”