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Revenue Collections End Year Up Almost 3% Over Estimates

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Pennsylvania ended the fiscal year in the plus column.   Revenues for June were 8.3 percent, or $246.1 million above estimates.

The Pennsylvania Department of Revenue says the numbers were boosted by higher collections for sales, personal income, corporation and inheritance taxes.  They offset declines in realty transfer and other general fund taxes, such as cigarettes, malt beverage, liquor and table games.

Sales tax receipts were $72.2 million above estimate in June and 3% or $252.9 million more than anticipated for the fiscal year.

The Personal Income Tax revenue was $115.5 million above estimate for June and 3.1 percent or $311.2 million above estimate for the fiscal year.

Corporation Tax Revenue was $32.3 above estimate for June and $245.4 million or 5.3 percent above estimate for the fiscal year.

Inheritance Taxes brought in $9.2 million more than expected for June, bringing the fiscal year 4.5 percent or $34.3 million ahead of estimates.

However, the Realty Transfer Tax was $1.7 million below estimate for June, lagging by 12.4 percent or 39.4 million below estimates for the fiscal year.

Other General Fund tax revenue brought in $6.9 million less than estimated for June and were off 2 percent for the fiscal year, $30.1 million less than expected.

 For the fiscal year 2010-11, General Fund collections exceeded estimates by 2.9 percent or $785.5 million.

 Non-tax revenue ended the year 1.1 percent, or $11.2 million, above estimate.

Motor License Fund collections for the year were 8.5 percent, or $197.6 million, above estimate. Those revenues include gas and diesel taxes along with license, fine and revenue fees.  

 

Is Rick Santorum Really Running for VICE-President?

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    A few weeks ago, former Pennsylvania U.S. Senator Rick Santorum announced his candidacy for President of the United States on the courthouse steps in Somerset County. He’s been campaigning in the early primary and caucus states for months and seems serious about making a run for the #1 spot on the ticket, but that’s an approach many candidates take when they’re really looking at the #2 slot, according to F&M College political analyst Dr. Terry Madonna.

Santorum: The Ideal Candidate for Veep?

    On paper, Santorum could be the ideal running mate. He’s a bulldog with strong Conservative appeal, which would help balance out any necessary moves to the center by the eventual nominee.

    That being said, with more than 6 months to go before the start of the primary season, Santorum still has plenty of time to increase his name recognition and define himself to voters. He faces an uphill battle, though, as his state and national poll numbers are mostly hovering in the low-to-mid single digits.

    Here in Pennsylvania, a recent poll by Quinnipiac University showed Santorum in a strong 2nd place in the GOP field, trailing only Mitt Romney, who also leads in most other national and state polls.

Corbett Signs Budget Ahead of Deadline

PA Budget Signing Beats Midnight Deadline

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The $27.15-billion dollar, no-tax increase budget trims state spending by more than a billion dollars.  It passed the legislature with zero Democratic support Wednesday night, but Governor Tom Corbett waited until all of the supporting bills were in place before finally putting pen to paper late Thursday night. 

The administration reports that 66-line items were eliminated, 226-line items were reduced, and 52-line items were consolidated.  Basic education funding will receive $5.35-billion dollars in the new fiscal year.  That’s down from a total of $5.77-billion dollars last year (a number which included federal stimulus dollars).  The State System of Higher Education is already responding to 18% funding cuts.  Its board of governors approved a 7.5% tuition hike on Thursday.  Similarly, the state related universities (PSU, Pitt, Temple and Lincoln) face 19% reductions in state support.    

Governor Corbett calls the lean spending plan an important first step in putting PA’s fiscal house back in order.  “It spends no more than we have and it doesn’t pretend that we have more that we haven’t budgeted,” Corbett said referring to Democrats’ calls to use last year’s unexpected revenues to mitigate cuts to education and welfare programs. 

At Thursday night’s bill signing, Governor Corbett said the budget was crafted to grow PA’s economy: “Make no mistake here. This is a budget for Pennsylvania families, for Pennsylvania working families.  It is a budget that imposes no new taxes on them.”

Governor Corbett also hailed legislative passage of a new bill to limit Act 1 exceptions – thus requiring a voter referendum if a PA school district seeks to raise property taxes above the rate of inflation.  While it was technically an unrelated bill, it represents a Corbett priority and the final piece of the budget package.  “I believe we need to give the citizens of Pennsylvania, in the school districts, the ability to voice their opinion in more than just the election of school board directors,” Corbett tells reporters.     

However, the Pennsylvania School Boards Association is concerned that this will result in additional reductions in educational programming.  They know that voter referenda on property taxes are extremely difficult to approve.  “The problem is, less than 25% of the population has children in schools, so there’s 75% of the population that the districts need to reach that they don’t necessarily reach on a routine basis,” says PSBA director of research Dave Davare.  “Districts are not willy-nilly raising taxes,” Davare tells us. 

With this year’s budget work behind them, the State House and Senate have each recessed until September.  This marked the first time in nine years that PA’s state budget was signed by the constitutional deadline.

Tuition Will Increase at Pennsylvania’s 14 State Owned Universities

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Tuition will be going up for students attending Pennsylvania’s 14 state owned universities.  The Board of Governors of the State System of Higher Education has approved the increase to help make up part of the gap left by the state budget.

In-state students will pay an additional 7.5%  for tuition, or $218 per semester and 50% more for their technology fee, an increase of $58 per semester for the 2011-2012 academic year.  The tuition for out-of-state students was still being calculated.  Chancellor John Cavanaugh told the board the schools will still face a gap of about $33 million after the increases.

Dr. Cavanaugh says a 1% increase in tuition translates into $8.5 million.  The total gap was $112 million, including a reduction of more than $90 million in state funding under the budget approved by the General Assembly this week. The Governor’s original budget plan had called for an even steeper cut in state funding.  Dr. Cavanaugh says the system had been saying all along they would not totally make up the difference through tuition increases.

Prior to the vote, Steve Hicks, President of the Association of Pennsylvania State College and University Faculties (APSCUF), told the board they’ve done a great job in the last six years keeping tuition down, maybe too good a job. He says Pennsylvania had  the lowest tuition increases in the country for a public system for the last six years, going from above the national average, to $600 below it.  He asked the board to vote for an increase that fills most of the gap left by the legislature.

APSCUF Vice President Ken Mash says the Office of the Chancellor has worked very hard to look for areas to reduce costs.  He says the presidents and everyone at the universities have risen to the challenge, seeking to preserve high quality education while repeatedly reducing expenditures.  He says efficiency has reached its pinnacle, the budget ax has simply hit bone.

Board of Governors student representative Leonard Altieri III, who attends West Chester University, said students knew a tuition increase was coming.  He said he’s extremely comfortable with this increase, because students see what happens when the schools don’t have the funds, with programs that get cut from the campuses.

The increase is the highest since the 2002-2003 school year, when tuition was raised by 9%.

The state system schools are Bloomsburg, California, Cheney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock and West Chester Universities.

 

AAA Projects Fewer Travelers this 4th of July

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According to AAA forecasts for the holiday weekend, not quite as many people will travel this year as last.  AAA is projecting a 2.5% to 2.7%  decline in the number of travelers overall. Automobile travel is expected to be down about 3%, while air travel will be up about 9%. However, 84% of those making trips over the Independence Day weekend are expected to drive.

Jim Lardear, Director of Public and Government Affairs for AAA Mid-Atlantic, says it’s important to remember that 2010 saw big gains in travel coming off of the recession. He says this year’s projection shows people are feeling the pinch from higher fuel costs.

Lardear says the fuel prices are hitting lower income families more. He says one of the most striking things they found was in travel preferences for families earning under $50,000 a year. He says they were more willing to stay closer to home or scale back a little on what they spend for hotels, eating out or shopping during  the trip. The average travel distance is expected to be down about 7%.

Lardear says families making $100,000 or more  indicated they’re going to spend a little more money on things like going to a sporting event at their destination.  Median spending is expected to be up 25% this year.

Lardear adds that Pennsylvania offers a variety of destinations that people can drive to on one tank of gas, if they’re interested in  a lake, an amusement park; there are a lot of ways to take a fun vacation without incurring a lot of additional costs.  He says you can scale it back, but still afford to get away and have a very nice time.

Lawmakers May Give Voters More Say on School Tax Hikes

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Governor Tom Corbett calls a local property tax reform bill crucial for this budget season.  Specifically, he supports the removal of exceptions that allow school districts to raise property taxes above the Act 1 inflationary index, without voter approval.  “I believe that if [school districts] are going to go beyond the rate of inflation than they ought to have the right to vote on it,” Corbett said on Radio PA’s monthly “Ask the Governor” program. 

An apparent compromise has started to move in the State House, which would remove many exceptions and tighten several others.  Executive director of the Pennsylvania Association of School Business Officials (PASBO) Jay Himes tells us the most important exceptions would remain: pensions and special education.  “It’s good that they’re in.  Unfortunately – particularly with regard to the pension exception – they are in with a very limited form.”  Himes says state-mandated pension costs aren’t controlled by inflation.  Rather, pension costs are going up by hundreds of millions of dollars every year, for the next several years. 

 The House voted 103 – 98 to amend SB 330 with the property tax reform language on Wednesday night.  During floor debate, Republican Leader Mike Turzai (R-Allegheny) said schools could still raise property taxes up to the Act 1 index (1.4% next year).  “You need referendum when it is at or above that index,” Turzai said.  But PASBO’s Jay Himes says Pennsylvania’s history with school property tax referenda has been one-sided.  “It’s going to be a huge uphill struggle that will take additional resources and additional efforts for school districts.”

Supporters say the change would hold school districts more accountable.  On “Ask the Governor” Corbett said teachers’ contracts are one of the biggest components of increasing school budgets.  “And I have seen across Pennsylvania, in the last few months, contracts that are 3, 4, 5% increases per year.”

Operating Budget Awaits Governor Tom Corbett’s Signature

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A $27.15- billion dollar state spending plan has now passed both chambers of the legislature, with zero Democratic support.  Wednesday night’s House vote was 109 – 92.  Two Republicans joined all House Democrats in opposition to the bill. 

House Republican Appropriations chair Bill Adolph (R-Delaware) says it represents about a 4% reduction in general spending.  “This is only the third time in nearly 40-years that Pennsylvania will be spending less than the prior year budget,” Adolph said during House floor debates.  He contends the budget is built upon realistic and sustainable revenues.  “This budget will not create a deficit by spending beyond our means.” 

The Republican-backed spending plan would tap into some of the higher-than-anticipated state revenues, which have accumulated this year, but Adolph says they do not rely on that money to sustain the budget.  Most state officials expect the final surplus number to be in the range of $700-million dollars.  While many Democrats say more of that money should be spent to mitigate painful spending cuts, Republicans are quick to point to a long list of liabilities, including: growing pension obligations, state debt payments, a potential Mcare settlement, an unresolved transportation funding gap and more.

As Republicans tout the fiscal responsibility of the spending plan, Democrats – like Appropriations chair Joe Markosek (D-Allegheny) – say they relied on gimmicks to keep the spend number artificially low.  “This is a budget that is full of hide and seek and sleight of hand,” Markosek said.  “This is not open government.”   

Democrats complained even more loudly about more than a billion dollars in cuts to basic and higher education.  The 14-universities in the State System of Higher Education will see an 18% funding cut, and we may soon learn whether it will significantly affect tuition rates.  The ‘basic education funding’ line item, in the budget, stands at $5.35-billion dollars.  That’s down from $5.77-billion dollars last year.  But that number included federal stimulus money, and Republicans say this year’s state investment in basic education is the largest ever.

In all, Pennsylvania is losing about $2.7-billion dollars in stimulus money, which was used to balance last year’s budget.  Senate Republican leaders say the loss of federal stimulus dollars means that difficult but necessary budget cuts needed to be made.   

The legislative work isn’t over yet, as there are still auxiliary budget bills that need to be enacted.  But, if Governor Tom Corbett signs the budget today, it will break a streak of eight consecutive late budgets in Pennsylvania.

Farm Bureau Firm in Opposition to Sunday Hunting

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The Pennsylvania Farm Bureau is reaffirming its opposition to Sunday hunting, following a resolution adopted by state game officials on Tuesday.   

 The Pennsylvania Board of Game Commissioners adopted a resolution to support Sunday hunting, by a 4 to 3 vote with one commissioner abstaining.  The resolution urges the General Assembly to repeal the ban, citing consistent declines in hunting participation by resident and nonresident hunters over the past several decades.  The resolution says Sunday hunting is an effective means of recruiting new hunters and is expected to generate a substantial increase in out-of-state license sales. Game Commission staff will present the resolution to the House Game and Fisheries Committee, which has been holding public hearings on the issue.

Pennsylvania Farm Bureau spokesman Mark O’Neill says farmers are overwhelmingly opposed to any expansion of Sunday hunting.  The reasons include basic property rights, wanting a day of quiet on their farms, and religious reasons.

O’Neill says farmers and other private land owners own about 80% of the huntable land in Pennsylvania. They feel strongly that their opinions should be taken very seriously.

O’Neill says farmers are also concerned that the legislature could leave a final decision up to the Board of Game Commissioners. He says there has been legislation in the past that would have done that, and they expect legislation to be proposed  later this year.  He says that’s also something the Farm Bureau strongly opposes.

O’Neill adds that farmers are not the only ones who want a day of rest from hunting.  He says hikers, bikers, horseback riders and others take advantage of  Sundays.

Forcing Act 47 on Harrisburg?

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    Under the state’s Act 47, cities can be declared financially distressed, setting the stage for debt restructuring and other recovery mechanisms. Under a bill passed by the Senate Tuesday, the process could be taken a step further, giving the state the power to establish a management board and mandate Act 47 for cities like Harrisburg.

Senator Jeffrey Piccola (R-Dauphin)

Piccola Seeks to Mandate Act 47 for Harrisburg

    The state’s capital city is in trouble, and officials are mulling over a possible bankruptcy filing that critics say would be devastating. The Senate bill, sponsored by Jeff Piccola (R-Dauphin) would block such a filing. The bill also includes a provision that would withhold state funding if the city or management board fails to “identify, sell, lease or dispose of its assets.”

    The management board would be comprised of three members, two appointed by the governor and one by county commissioners where the city is located. While the measure would affect any city of the 3rd class, the bill is a direct response to the ongoing problems in Harrisburg, which is groaning under the weight of enormous debt mostly tied to a financially disastrous incinerator project.

    Piccola says Harrisburg officials have “thumbed their nose” at Act 47 for over a year and bankruptcy is simply not an option.

    The bill now goes to the state House of Representatives.

State Capitol

Senate Passes Budget Bill as Deadline Looms

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Sen. Dominic Pileggi

Sen. Dominic Pileggi (R-Delaware)

The new fiscal year begins on Friday, but Pennsylvania may still have its first on-time budget in eight years.  The State Senate voted along party lines (30 to 20) to pass a GOP-backed $27.15-billion dollar spending plan Tuesday evening.   “This year marks a return to a state budget paid for with state revenues,” says Senate Republican Leader Dominic Pileggi (R-Delaware), referring to the $7-billion dollars in federal stimulus money Pennsylvania received over the past three years.  “It is difficult but necessary to reset state spending to reflect that new reality.” 

While the bottom-line is more than a billion dollars below the current General Fund budget, Senator Pileggi points out that the bill increases basic education funding by $268-million and higher education funding by $368-million, compared to the Governor’s March 8th budget proposal.

Senate Democrats still say the budget pain doesn’t have to be so severe. “We’re sitting on an extra, what will probably be by June 30th, an extra $700-million dollars in budget surplus,” says Democratic Appropriations Chair Vincent Hughes (D-Philadelphia). 

But that’s a “so-called” surplus, according to Governor Tom Corbett.  “Yes more revenue has come in, but we still have a deficit… We have spending that has to be done in the future, we don’t think that next year is going to be much rosier – if at all – than this year,” Corbett told reporters on Tuesday. 

While Corbett says spending matches revenues in the current budget bill, he knows that it’s not a done deal yet.  “Until there is a budget, until I have an opportunity to sign one, there is no budget,” he says.  The budget bill now awaits House action.