Governor Corbett Signs Budget by June 30 Deadline, But Liquor Sales Reform, Transportation and Other Bills Delayed to the Fall

Leech Tishman is carefully monitoring consideration of the state budget for the firm’s clients. Although Governor Corbett signed a general fund budget a few hours before the July 1 start of the new fiscal year, key details are not yet available. It is noteworthy that legislative and executive action on major spending bills was postponed until the fall.

The Government Relations Practice Group will report as the General Assembly acts on initiatives such as transportation funding and liquor sales reform. In the meantime, please do not hesitate to contact Leech Tishman with any questions you may have on the impact of state budget issues on your business.

On Sunday, June 30, Governor Corbett signed into law a $28.4B General Fund Budget for fiscal year 2013-14 which represents an increase of 2% over last year. The non-controversial budget increases aid to elementary education, corrections, and state police but essentially remains flat. It contains no state sales or income tax increases.

Up until the June 30 deadline, lawmakers and the Governor had been wrangling over four major issues separate from but related to the budget:

1) Transportation;
2) Liquor sales privatization;
3) Medicaid expansion; and
4) Pension reform.

While prospects for late June passage of bills on the first two issues seemed promising, the transportation and liquor bills were informally linked at the last minute. Complications arose when the House could not assure the Senate it would pass the Senate’s transportation bill (whose mass transit provisions were seen as underfunded by some Democrats). House Republicans also balked at the Senate’s “go slow” modifications to the House liquor privatization bill. As a result, the Senate refused to consider the House liquor reform measure. The Republican-dominated General Assembly will consider both bills in the fall.

The Senate’s budget vote was 33-17, and the majority included six Democrats. The House passed the budget on a straight party-line vote of 111-92.

In parallel with budget negotiations, over the weekend Senate committees held votes to push the Governor to accept Medicaid expansion under certain conditions. Although Republican governors in other states (e.g., OH and AZ) have agreed to do so, Corbett has indicated he does not want to expand Medicaid unless he can make certain changes to the program. The state’s Independent Fiscal Office appears to support legislators (many but not all Democrats) who favor expansion by reporting that expansion “would add $435M to state coffers by 2022 and cover 440,000 uninsured adults and children.”

To date, these budget details have emerged from Harrisburg:

  • Basic education: This is funded at $5.5B, approximately $122M more than last year and $33M more than in the Governor’s proposal. Special education and library funding remain flat.
  • Higher education: Pitt and Penn State get essentially flat funding, as well as State System of Higher Education, community colleges, and grant programs.
  • Public welfare: The $10.95B total represents an increase of $320M.
  • Health: The Department of Health gets $195.4M, an increase of $5.6M. In addition, $111M was budgeted for the Children’s Health Insurance Program (CHIP), an increase of $10M.
  • State police: Funding is at $210M, up from $195M.
  • Corrections: $1.94B is allotted for the state prison system, an increase of $77M.
  • Department of Community and Economic Development: This agency total is $236.4 million, an increase of about $7 million.

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