2009-10 State Budget Overview
from State Rep. Kathy Watson
It is often said that the most impor- years. It became painfully obvious to duced in May as House Bill 1416. The
tant – and complex - charge of the me and many of my House Republican Senate, as is customary, presented
state legislature is enacting a Com- colleagues, that in order to put the their budget plan also in early May.
monwealth Budget. As in past years, state on financially sound footing for Senate Bill 850 spent $27.3B, and was
budget negotiations for the FY 2009-10 the long-term, we needed to reduce a counter-proposal and the starting
Budget were filled with fundamental dis- state spending and refrain from raising point for negotiations.
agreements about revenue spending taxes on a citizenry already struggling As you can readily see in the “Gen-
and tax policy; but unique to the dis- to make ends meet. eral Fund Spending” chart, both pro-
cussion was the backdrop of the worst My guiding principles during the nu- posals fell short on the revenue side,
recession since the Great Depression. merous budget votes taken between even with the addition of stimulus
With greater transparency, the public July and October were: government funds. To further complicate mat-
gained a better understanding of the has to function as a safety net for ters, each side held firm to specific
issues involved – and the government those who are unable to take care of budgetary ideals: Governor Rendell
operations and services that would themselves, and the core functions of wanted big dollar increases in public
ultimately be saved or cut. state government must be maintained. education and public welfare, even
Before I go any further, however, All of those items which are not core above the federal stimulus subsidy;
let me say that the prolonged budget functions, albeit great additions to our and the Senate wanted a smaller-but-
process was unacceptable and must quality of life, would have to be cur- still-substantial increase (11-14%) in
not be repeated. To that end, I am tailed or suspended during this fiscal public education, but would balance
researching possible legislation I will crisis. This is the same process we all the budget with substantial cuts to
introduce to require the introduction employ in our own household budgets many other programs.
and vote on a budget bill before the during harsh economic times. Recognizing his spending plan
June 30 deadline. This might possibly A quick refresher on the annual would require additional revenue,
be accomplished by amending the budget procedure: In early February Governor Rendell proposed a 16%
House rules so that legislative lead- each year, the Governor presents increase in the state’s personal in-
ers in either party will not be able to his proposed state budget. This year come tax (from 3.07% to 3.57%), as
hold up the process for political gain. the budget address was on February well as a host of new taxes and fees,
It bothers me greatly that an institu- 6 and he proposed spending $29B. including: an increase in the sales
tion that should be a source of pride The House Appropriations Commit- tax; taxes on tobacco products; taxes
for Commonwealth residents became tee then held budget hearings on the or fees on licensing and drilling in the
the butt of many political jokes and proposal during February and March. Marcellus Shale natural gas and oil de-
much constituent anger. Using state Governor Rendell’s budget was intro- posits; the legalization of video poker
employees, textbooks to non-public
schools, human service organizations,
pre-schools, daycare and the like as
pawns simply to gain a perceived tacti-
cal advantage in budget negotiations
must never happen again.
As the nation’s economy goes, so
goes the state’s economy; and those
results were reflected in Pennsylva-
nia’s budget this year. When jobs,
stocks, and the banking and auto
industries took nosedives, so too did
the revenue sources for the Common-
wealth of Pennsylvania. As a result,
actual revenues did not match projec-
tions, leaving the state with a $3.2B
deficit in the FY2008-09 Budget.
With most states facing similar short-
falls, the federal government made
available “stimulus money” – money
that could only be used to plug gaps
in revenue, and only over the next two
total budget while still maintaining all
of state government’s core functions,
without raising taxes or instituting new
taxes. They extolled the “tighten the
belt” approach which would mimic at
the state level what taxpayers were
doing in their household budgets.
The two economic philosophies were
diametrically opposed. The result -- a
stalemate.
It is important to remember that
this clash of economic philosophies
played out against the backdrop of
the Governor’s spending proposal of
$29B, approximately $1B more than
what had been spent the previous
fiscal year; and his insistence that an
increase to the Personal Income Tax
(PIT) was warranted. I am a believer
that since we are living through a
devastating recession, with an unem-
ployment rate of almost 10 percent, it
is incumbent upon state government
machines; and licensing table games However, no additional programs to decrease its spending. Consistently
for the state’s slot machine parlors. would be funded because their future and through lots of rhetoric, the House
While House Democratic Leadership would be fiscally uncertain. Minority caucus held firm and, after
agreed to most of these proposals, the Sadly, this compromise proposal more than two months, the Governor
Senate Majority leadership would not, went nowhere. Under House Rules, finally agreed to compromise and re-
nor would the House Minority. the Majority party’s Leader and Appro- duce his spending number.
By mid-June, what became clear priations Chairman decide what bills This ultimately led to the compro-
to me and many of my House rank- will be voted on. Both men decided mise budget between the Senate and
and-file colleagues was: 1) the budget not to call up the Governor’s budget House Democrats. Unfortunately,
would have to contain cuts in state because they believed it would not repeated tries by the House Minority
spending across-the-board, including get a majority vote; they believed caucus to have their two proposals
the Legislature’s spending; 2) addi- the Senate Republican budget might that would have balanced the budget;
tional revenue would need to be gen- actually pass, but would be vetoed made fair across-the-board cuts to
erated, merely to get through the year; by the Governor; and calling up the programs and services, for now, in
3) the Governor’s above-and-beyond House Republican budget for a vote these bad economic times; and did
education increases would artificially would have divided their own caucus. not require any new or increased taxes
raise the “hold harmless” education Therefore, with the budget deadline (see House Bill 1943) were never given
spending, which would require local approaching and passing, they chose a hearing in either the House or Sen-
taxpayers to make up the difference to do nothing. ate chambers, nor discussed by the
when the stimulus money ends in two By early July, state employees were Conference Committee, even when
years; 4) the Senate Republicans’ working but not being paid because they could not agree on a plan.
House Bill 850 was too drastic in its cuts there was no current budget from The final FY2009-10 Budget relies
to social services and counties, leav- which to pay them. The House passed heavily on draining many of the state
ing counties to make up the shortfalls the Governor’s spending plan (largely reserve accounts and increasing
by taxing their residents; and 5) the on party lines), but without the ac- certain taxes. The rest of the money
House, speaking in a bipartisan voice, companying tax code to provide for will come from one-time only, federal
would not approve a personal income the revenue. The Senate amended dollars, available through the American
tax increase. the plan, and reduced spending to a Recovery Reinvestment Act (ARRA) ,
Working from those conclusions, the $27.1B proposal, triggering a Con- totaling approximately $2.62B (see
House Republican caucus crafted a ference Committee made up of the chart).
“No-Tax-Increase Budget” (a/k/a the leaders from both chambers. The Reserve funds that are being tapped
Civera amendment). The amendment Conference Committee deliberations, include: the Rainy Day Fund for $755M
made fair cuts to many programs and shown on live television in late July, (completely drains the fund); the
trimmed operating expenses from only served to highlight the fundamen-
the Legislature itself. It was a com- tal differences in opinion. Underlying
promise and took a middle ground the intransience of the leaders and the
on education spending. Many of the Governor was still the disagreement
Basic�Education�F
supplemental grant programs (includ- on the best way to bring the Com- School�District 2008�09
ing those known derisively as WAMs), monwealth out the recession. The
were eliminated for the duration of this Governor and the House Majority cau- Centennial $�����������11,531,564 $���
budget. A tax amnesty program was cus wanted to increase spending and
proposed to generate enough revenue raise taxes to increase revenue, thus Central�Bucks $�����������15,727,052 $���
to fill the existing budget shortfall, and spending their way out of the reces- Pennridge $�������������9,491,606 $����
the monies from the Rainy Day Fund sion. The House Minority caucus pro- Souderton $�������������8,046,459 $����
would be used to balance the budget. posed to cut spending and reduce the
MCare Fund with the money physi-
cians pay as an assessment for liability
claims, $100M; the Healthcare provider
Retention Account, $708M (completely
drains the fund); and the Tobacco
Settlement Fund, $150M.
Draining the state’s reserve accounts
to balance this budget means there will
be no available funds next year. This
could be devastating in the event the
economy does not turn around. Given
the fact that state revenues are al-
ready $140 million short of predicted
collections, as of September 30, this
is a realistic concern.
Taxes that are being implemented
include: the Capital Stock and Fran-
chise Tax which is returned to its
2008-09 level of 2.89 mills and repre-
sents a $374M tax on businesses; a
gross receipts tax applied to Medicaid
managed care organizations that is
predicted to generate $525.5M; an
additional tax on cigarettes of 25 cents education needs by school districts, other services.
per pack which is estimated to gener- will increase the local tax burden in two While there are some positive eco-
ate $97M in revenue; and a new tax years when federal stimulus funds are nomic signs that point to the begin-
gone. (See chart below on what funds ning of the recovery from this reces-
on cigarillos, little cigars, of $1.60 per
local districts will receive.) sion, it is important to remember that
pack which should generate $16M.
It is important to remember that this governments, whether state, local or
These new and increased taxes
was an uncommonly difficult budget federal take an additional 18 months
would not have been necessary un-
year. No matter which budget plan to recover because of lost revenues.
der the compromise budget proposal
ultimately passed, there were going Therefore, when the new budget
I endorsed, House Bill 1943. In addi-
to be cuts to many programs because season begins in February 2010, all
tion, only partial withdrawals from the
state government could no longer be elected officials must put aside politi-
reserve accounts would have been cal gamesmanship and craft a budget,
“all things to all people and programs.”
necessary under this plan. on-time, that is realistic in keeping with
However, House Bill 1943 and its de-
On the revenue side, I could not sup- the greatly reduced revenue dollars
rivatives made fairer across-the-board
port taking the Mcare funds and drain- that will be available. The successful
cuts, instead of steep decreases in
ing the Healthcare Provider Retention funding to some programs, and not budget for 2010-11 must demonstrate
account. I believe those “takings” will to others. that we can live within our means; fund
be challenged by the doctors and hos- That being said, I was especially state government’s core functions;
pitals in court as an illegal appropria- disappointed in cuts in funding to the support those who cannot take care
tion of their funds – and they will win EITC program, public libraries and of themselves; and encourage busi-
that challenge. Then this budget will be higher education. Education has al- ness development which provides
anywhere from $100M to $800M out- ways been a priority of mine and the family-sustaining jobs. If those goals
of-balance. Based on what I know will EITC program goes a long way in help- are met, Pennsylvania will be far along
be an uncertain fiscal environment in ing low-income families afford to send the road to recovery.
2010 and into 2011, I voted NO on the their children to the school of their
FY2009-10 Budget, both the spending choice, giving them the chance for a
and revenue plans. better education with more opportuni-
To be sure, basic education did ties. Also, public libraries are essential
receive a funding increase totaling to providing children and individuals
an additional $300M over last year’s of all ages with the materials neces-
appropriation. However, much of that sary to advance their learning, provide
money comes from one-time stimulus access to computers, and assist in
funds and, if not used for one-time promoting literacy, job placement and
Funding $�Increase %�Increase Special�Education Total�ARRA�Federal Total�BEF,�SEF,�ARRA %�Increase
2009�10 Funding Stimulus�Funds Funding over�08�09
������11,762,195 $�������230,631 2.00% $����������������������������2,859,355 $���������������� 1,718,211 $������������������������ 16,339,762 13.5%
������16,271,654 $�������544,602 3.46% $����������������������������6,863,618 $���������������� 2,978,849 $������������������������ 26,114,121 15.6%
��������9,854,752 $�������363,146 3.83% $����������������������������3,073,799 $���������������� 1,432,951 $������������������������ 14,361,501 14.3%
��������8,515,664 $�������469,205 5.83% $����������������������������2,828,191 $���������������� 1,283,706 $������������������������ 12,627,561 16.1%
WATSON INTRODUCES LEGISLATION IN THE 2009-2010 SESSION
ENERGY-EFFICIENT HOME would establish the Adult Day Resource By expanding the use of commu-
ASSISTANCE PROGRAM and Referral Act. This bill would assist nity-based health clinics, the imme-
Continuing efforts to increase energy and protect those Pennsylvania senior diate impact would be felt by those
conservation and preserve the environ- citizens who are care-dependent but Pennsylvanians who need health care
ment, Rep. Watson introduced House prefer an alternative to long-term nurs- services the most. Included among the
Bill 790 (formerly HB 543), which would ing home care. services provided by the provisions
establish the Energy- Efficient Home The demand for adult day services of House Bill 1626 is vital pre-natal
Assistance Program, a two-year pilot provided either in the home or in a care enabling mothers and babies
program administered by the Pennsyl- community-based setting continues in underserved areas to receive the
vania Housing Finance Agency. to rise. There is a need for a com- care they need to be healthier. Many
Under the provisions of House prehensive source of up-to-date, individuals whose medical needs are
Bill 790, buyers of new construction accurate information, cataloguing the currently underserved would find a
homes which meet certain efficiency availability of these services by geo- medical home where they would have
standards and/or contain certain al- graphic area. access to complete medical services
ternative energy systems, would be House Bill 269 would require the instead of making a trip to a hospital
eligible to receive grants up to $5,000. Pennsylvania Department of Aging to emergency room.
The buyer could use these funds to contract with public or private entities In an effort to help uninsured and
offset closing costs, provide down- across the state to assume the role underinsured Pennsylvanians, Rep.
payment assistance or a mortgage of the adult day resource and referral Watson amended House Bill 1626 into
rate buy-down. agent for their geographic area. The House Bill 1. However, the amendment
A grant of $2500 would be available Department would compile information was not endorsed by the House Major-
to buyers whose homes include solar from these contracted agencies to cre- ity Leader and the measure failed on
heating, wind energy or other alterna- ate and maintain a central database of June 10 by a 97-97 vote. Rep. Watson
tive energy systems. Another $2500 adult day services including a list of will not give up this initiative.
grant would be awarded if the home state-approved older adult daily living
is certified as an “Energy Star” home, centers and the services they provide. LEGISLATION TO PROTECT
and exceeds the energy and water Establishing this system will help fami- HOSPICE PATIENTS
conservation requirements as set forth lies to find quality and appropriate care In response to an inquiry regarding
in the statewide Uniform Construction and day services for their older family the requirement to move a hospice
Code. House Bill 790 was endorsed by members. patient who is a resident of a personal
the House Environmental Resources House Bill 269 is currently in the care home during a DPW-mandated
and Energy Committee and was re- House Aging and Older Adult Services monthly fire drill, Rep. Watson has
committed to the House Appropria- Committee awaiting consideration. introduced House Bill 1893 . This
tions Committee for consideration. legislation will allow a resident who is
VOLUNTEER FIRST RESPONDER being treated or cared for by a licensed
AGGRAVATED HARASSMENT BY LOAN FORGIVENESS ACT hospice provider and who has signed
A PERSON IN CUSTODY House Bill 634 establishes the Vol- a written waiver to be exempted from
House Bill 751 (formerly HB 1466) unteer First Responder Loan Forgiveness participating in a regularly scheduled
would further protect the health and Act, whereby an active volunteer first fire drill if a licensed clinician has made
well-being of local law enforcement responder who completes a post-sec- a determination that participating in a
officers by providing for the offense ondary degree or certification program fire drill will accelerate or hasten death.
of aggravated harassment of a law in a Pennsylvania post-secondary House Bill 1893 is in the House Aging
enforcement officer by a person in institution may be eligible for a total of and Older Adult Services Committee
custody. The need for this legislation $16,000 in loan forgiveness. awaiting consideration.
became evident following an incident House Bill 634 was referred to the
in Bucks County where a suspect in House Education Committee. LEGISLATION REQUIRING
custody spat on a police officer and CARBON MONOXIDE
hospital personnel. That individual TELEMARKETER REGISTRATION DETECTORS IN CARE FACILITIES
could not be charged with a crime ACT Rep. Watson is reintroducing legis-
because as it is written, the current law House Bill 728 would amend the lation that would require carbon mon-
specifically refers to a prisoner. Un- Telemarketer Registration Act, commonly oxide detectors in care facilities such
der House Bill 751, this offense would referred to as the “Do-Not-Call List” as domiciliary care homes, long-term
include a person in police custody as Law to prohibit all telemarketing calls care nursing facilities, older adult liv-
well as one who has been charged on standard federal legal holidays. ing centers, personal care homes and
with a crime. It would be classified as House Bill 728 is awaiting consider- assisted living residences. House Bill
a felony of the third degree. ation in the House Consumer Affairs 2062 is similar to Watson’s previous
Therefore, a person in custody is Committee. legislation, but the new bill incorpo-
guilty of aggravated harassment if, rates recommendations provided by
while in custody, the individual “in- COMMUNITY-BASED HEALTH the Philadelphia Fire Commissioner
tentionally or knowingly causes or CENTERS and his staff.
attempts to cause another to come House Bill 1626 would redirect state
into contact with blood, seminal fluid, funding that already exists to allow If you would like to receive a copy of
saliva, urine or feces by throwing, toss- community-based health centers to these or any House Bills, please call
ing, spitting or expelling such fluid or extend their hours, expand services the Warminster or Hilltown office. In-
material.” House Bill 751 is presently and serve more people. This leg- dividuals wishing to track the progress
in the House Judiciary Committee islation creates a $25 million grant of any legislation may do so by visiting
awaiting further consideration. program for community-based health the General Assembly’s website at
clinics, including Federally Qualified www.legis.state.pa.us and clicking on
THE ADULT DAY RESOURCE AND Health Centers (FQHC), rural health “Session Information” under the sec-
REFERRAL ACT clinics, hospital-based clinics, nurse- tion labeled “Find”.
House Bill 269 (formerly HB 689) managed health centers, and volun-
teer health care clinics.
