State 2020-2021 Budget Finalized and Signed

Concerns about COVID-19 exposures in the state House of Representatives on Friday delayed things, but after switching to a virtual session, the state House of Representatives managed to approved the remaining 7 months of the 2020-21 state budget and accompanying fiscal code bill, with the Senate having approved the fiscal code earlier in the day, and then posting a quick concurrence vote on the budget bill Friday evening.

The House voted 104-97 for SB1350, with most Republicans voting for the bill and most Democrats voting against it, though a few, including the Democratic Caucus leaders, did support the budget; the Senate voted 31-18 along mostly party lines, though three Democratic Caucus leaders voted for the bill.

Governor Wolf signed the two bills on November 23.  The $35.5 billion state spending plan through June 30, 2021, is balanced and requires no loans or new taxes, but is a 2.2 percent decrease from the $36.2 billion allocated last year.

Earlier this year, state lawmakers passed a five-month stopgap budget, which flat-funded the majority of state agencies, including the Department of Education. The governor’s office said that the budget prioritizes public education by protecting the level of investment in schools. The budget makes use of more than $3 billion in federal stimulus money to backfill pandemic related revenue losses in the state instead of being used to provide support for those suffering as a result of state and federal orders to control COVID-19.  $1.3 billion in CARES Act funding will go towards staffing costs and contractual obligations for the Department of Corrections, State Police and various items in the health and human services allocations.

A spokesperson for Wolf said the budget recognizes the importance of public education, and protects against furloughs and deep cuts. “Although this budget fills necessary gaps in our state funding, there are still many Pennsylvanians in need of additional support due to COVID-19. The governor will continue to advocate for federal funding to support recovery efforts at the state and local level, including additional funding for Pennsylvania municipalities and the restaurant industry. We need our federal leaders to step up and provide Americans with the support they desperately need.”

The fiscal code also includes a few expenditures - such as $16 million in medical assistance (MA) day-one incentive payments to qualified non-public nursing homes for fiscal year 2020-21, $3.97 million for grants to address PFAS contamination in Montgomery County, and $4 million for annual agricultural fairs – as well as authorization for the City of Harrisburg to continue to levy a local services tax at a rate of $156 for 10 years, at a rate of not more than $104 for the five years after that and not more than $52 thereafter.

The Commonwealth also received unexpected news that the federal government would be continuing its enhanced matching payments for the Medicaid program. The enhanced Federal Medical Assistance Percentage (FMAP) will provide nearly $2.1 billion more to Pennsylvania’s Medical Assistance (MA) Program than had been initial planned by the state’s budget experts.

And in the final FY2020-21 budget, Department of Human Services spending increases substantially from FY2019-20 – by nearly $1.1 billion, or 7.9 percent – but the previously mentioned enhanced FMAP helps to address that increase.  Nevertheless Medical Assistance funding is increased in the final budget, and CHIP funding is doubled.

Rank-and-file members from both parties who voted against the bills sounded similar concerns: the use of one-time dollars to balance the state budget, particularly $1.3 billion in federal CARES Act funding that many of them wanted to see spent on those impacted by COVID-19 and the government mitigation efforts pursued in an attempt to slow the spread of the virus. Supporters of the state budget note the $1.3 billion is being used to support the state’s public health and safety frontline workers, but nearly $1 billion used for the state’s correctional institutions and $225 million for the Pennsylvania State Police.