Wolf Proposes 2020-2021 State Budget – Health Impact

February 11, 2020

On February 4, Governor Wolf announced his FY2020-21 general fund budget proposal, which calls for $36.06 billion in funding for state programs, a six percent increase over 2019-2020.  The budget has no general tax increases, but calls for additional borrowing, increased corporate taxes, a natural gas severance tax, and an increase of both the minimum wage and numbers of salaried employees eligible for overtime, all costs to businesses.
The state is in the process of spending about $800 million more than was budgeted last year, and his spending request is an increase of a bit more than $2 billion, or roughly 6 percent than last year’s budget. 
For the sixth time, he proposed a minimum wage hike, and he called for an increase to $12.00 on July 1, with a minimum wage of $15.00 in 2025.  Wolf said the minimum wage hike would generate $133.3 million more in tax revenue in FY2020-21, although the state’s Independent Fiscal Office has suggested any impact on state revenue collection wouldn’t be more than $50 million and spread out over several years.
Other proposals in the Governor’s speech included a proposal to spend more than $1 billion for lead and asbestos cleanup at schools in the state, a $1.17 billion increase in DHS spending, largely in long term managed care, and a call for gun control legislation.
The largest single piece of the state budget is funding for the Department of Human Services (DHS), which would get $14.3 billion, a $1.17 billion increase from the current year.  This includes almost $500 million to pay for underfunding of Medical Assistance programs this year.

The increases for DHS are being driven by increasing enrollments, decreasing federal matching funding (now 90% under FMAP) and several new initiatives.  On the bright side, the 2020-21 proposal doesn’t call for transferring funds from the JUA, as has been the proposal the last three years.

Currently 2,863,000 Pennsylvanians (22.3 percent) are participating in  Medical Assistance programs, with 759,000 qualifying under the ACA’s MA Expansion. The budget includes the final regional implementation of Community HealthChoices with managed care rate hikes budgeted for these programs.

The budget also eliminates $65 million in 2019/20 legislative initiatives for nursing facilities, hospitals, autism service providers, and local health organizations. The governor again proposed a significant reduction in MA funding for academic medical centers of $7,250,000, a 29.5% cut.  PA-ACP has worked with the General Assembly to get this funding reinstated for several years, after similar reductions were proposed.

The Department of Health’s budget would see an increase of $450,000 to the Primary Health Care Practitioner Program to increase access to primary health care services, but it eliminates or reduces numerous disease and research initiatives, including diabetes, ALS, lupus, Leukemia/Lymphoma programs, epilepsy support, and regional cancer institute funding.  PA-ACP will again be working to put this funding back in the final budget.

Gun Control
The Governor also used his budget address to push for further gun laws, including universal background checks and red flag legislation.  PA-ACP supports these bills as well.