PathWays PA Special Budget E-Alert - April 21, 2010

State Budget

Governor Calls for a Special Session

To address the added funding needed for road and bridge repairs, Governor Rendell will convene a special session of the Legislature starting May 4. The special session is necessary as federal officials rejected proposals to place tolls on I-80, which would have generated an estimated $472 million for road, bridges, and mass transit. Without that funding, there is a large hole in the state’s transportation budget.

The Governor is hopeful that the special session will only focus on the issue of transportation funding. Some potential proposals to raise the revenue include:
  • leasing the Pennsylvania Turnpike to private companies,
  • an increase in the state's 31-cent-per-gallon gasoline tax,
  • an increase in the car registration fee,
  • enacting a tax on the natural gas in the Marcellus Share,
  • enacting private-public partnerships on road or bridge projects, where a private firm would build and operate a road and likely charge a toll, and
  • enacting a toll on I-79 in the west, I-81 in central Pennsylvania and I-95 in the southeast.
While some of the above proposals are unlikely to pass, the General Assembly will be asked to consider all options to close the gap.

Another Hole in the State Budget

A court ruling just made the hole in the state budget significantly larger. Pennsylvania’s Commonwealth Court has ordered the state to return $808 million to the MCARE Fund. The Fund is a state-run program that provides medical malpractice coverage to physicians.

The case concerned the transfer of money from the MCARE Fund that were used to balance the 2009-10 state budget. The court ruled that the funds needed to be returned to MCARE due to their finding that the state mishandled subsidies provided to help doctors pay malpractice premiums. The court also found that the transfer of funds left the state MCARE Fund unable to pay future judgments against physicians.

With Pennsylvania already facing a revenue shortfall of nearly $720 million ,this court ruling could push the year-end deficit to close to $2 billion. The state will appeal the court decision, but if the decision is not overturned on appeal Pennsylvania would have to make hundreds of millions of dollars in cuts, raise additional revenue, or both to keep the 2009-10 budget in balance.

Philadelphia Budget

City Council continues to hold hearings on the budget proposed by Mayor Nutter. Council members have started to propose other ways to raise revenue besides those proposed by the Mayor..

Councilman Clark has proposed a 3.6 cent tax on cigars and a 36 cent-per-ounce tax on loose forms of tobacco. His office has estimated that the tax would raise between $5 and $6 million. The Governor has
proposed a similar tax for the state, which, if passed, would prevent Philadelphia from instituting their own tax.

Councilman Green has proposed a plan to close the budget hole though $40 million in spending cuts and $80 million in revenue measures. The spending cuts would come by creating more efficiency in city departments, primarily through the use of technology. His revenue proposals include short-term real estate and business-privilege taxes as well as fines and fees. In anticipation of a budget hole next year, the Councilman proposes a “pay-as-you-throw” trash collection system that would tie citizen trash disposal cost to use. Councilman Green has also proposed a reform of the business-privilege tax. Under the Councilman’s plan, the reform is meant to distribute the tax burden between large and small businesses more equitably, and there will be decreased taxes for sectors of the economy with growth potential.

Board of Revisions of Taxes Plans to Revisit Property Assessments

The Board of Revision of Taxes (BRT) is the Philadelphia agency responsible for establishing property values that were to serve as the basis for real estate taxes levied by the City of Philadelphia.

Yesterday, BRT’s Chairwoman said before City Council that the agency would revisit a freeze on property reassessments. Using the Actual Value Initiative, a sweeping plan to overhaul the city’s real estate assessment system, new property values for every parcel in Philadelphia would be generated.

Whether BRT will be able to revalue properties depends on voters. On May 18, voters are scheduled to approve or reject a charter change that would permanently abolish the BRT and replace it with two new entities. The BRT has challenged the scheduled charter change in Pennsylvania Supreme Court.

Financial Forecast

To know what is needed in the city’s budget it is important to look at how it is doing financially. Below are some highlights from the City Controller Office’s Financial Forecast and Snapshot report:

  • Sales tax collections are up 85 percent compared to the same month one year ago.
  • Wage tax collections declined 6.5 percent compared to the same month one year ago.
  • General Fund tax collection increased 6 percent compared to the same month one year ago.
  • The City’s unemployment rate increased almost a full percentage point to 11.4 percent from December to January.

While it is believed that the economy is moving from recovery to expansion, consumer demand remains a big question. Without increased demand, job growth will likely be minimal over the next few months.

Did You Know...
That in Pennsylvania, nearly 20 percent of adults relying on Medial Assistance are employed, usually in the hospitality and food services, retail, or health care and social services sectors.

If you or one of your clients rely on this program or think it is important please contact your legislators today and let them know.

Action Alerts

Medical Assistance in the State Budget

The Medical Assistance (MA) Program provides essential health care to families struggling through out Pennsylvania. More than 2 million Pennsylvanians use the program, including one million children. With the current recession, applications for MA are on the rise.

The Governor’s proposed FY10-11 Budget and the budget which passed the House funds essential increases in Medical Assistance that will meet the growing demand. Individuals eligible for MA include those who are elderly, pregnant women, people with disabilities, and victims of domestic violence. MA provides services that include physician and clinic visits, inpatient hospital care, home health care, medical supplies and equipment, nursing facility care, inpatient and outpatient psychiatric/drug/alcohol services, prescription drugs, dental, and other medically necessary services.

If you or one of your clients rely on this program or think it is important please contact your legislators today and let them know.

Other Important Programs and Action Steps:

While the state budget is very tight this year, it is crucial for legislators to hear from their constituents about programs that cannot and should not see more cuts this year. Even programs that are not undergoing large cuts need to be advocated for to ensure that changes are not made to their funding during the budget debates. Below we have highlighted just a few of those programs:

Industry Partnerships: Workers who participate in the Industry Partnership program have seen an average 6.62 percemt increase in their wages within the first year after training.  HB 2230, currently in the House Committee on Labor Relations, will institutionalize Industry Partnerships to ensure that this important program remains in Pennsylvania for years to come. If you or your clients have benefited from Industry Partnerships, please let your legislators know by emailing or calling their offices.

State Supplemental Program: Help restore cuts to the State Supplemental Payments for Pennsylvania’s elderly, disabled, and blind. As a result of the 2009-2010 budget, the state supplement has now been cut each month by $5 for a single person and $10 for a couple. If you believe the payments are important. please contact your state legislators and urge them to find ways to restore this cut. 

adultBasic: Over 350,000 people are on the waiting list for adultBasic. While those on the waiting list can pay full price for the program until they can access the program, but the cost to buy in has increased 80 percent. Meanwhile, coverage under the Governor’s 2010-2011 budget will not expand beyond 50,000 people. If you or your clients believe that when 12 percent of adults in Pennsylvania are without health care, programs that assist them are essential and need to be expanded, please contact your state legislators today and let them know.

Child Care Subsidy: At least 6,000 families are on the waiting list to receive the child care subsidy. The subsidy allows parents to afford to work by assisting them with the expense of child care. If you or your clients have been impacted by the need for child care, please contact your state legislators today and let them know.


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