June 1, 2020
Late last week, the legislature approved and sent to Gov. Tom Wolf several bills to fund government operations as the 2020-21 Fiscal Year approaches; along with legislation that appropriates a substantial portion of the federal CARES act dollars allocated to Pennsylvania.
House Bill 2387, a $25.1 billion General Appropriations bill, continues current levels of funding for the full fiscal year for education, mandated human services programs – including food security programs - state pension payment plans and the state’s debt service. The bill also funds other government operations for a period of five months, giving the legislature and the governor time to understand the full scope of the Commonwealth’s fiscal picture for the remainder of FY 2020-21.
Senate Appropriations Chairman Pat Browne, R-Lehigh, told reporters last week that the temporary funding was necessary, since the ongoing pandemic makes it difficult to see beyond 2021. “Considering all relevant circumstances in front of us, Pennsylvania’s current dire economic conditions, the lack of clarity as to when and how these conditions will adjust and hopefully improve during the next fiscal cycle, and the mounting revenue losses we are currently realizing, it is my sincere opinion – which I’m confident I share with the Governor’s Budget Secretary and my appropriations colleagues in the House – that our fiscal line of sight currently and unfortunately does not extend through June 30, 2021,” Browne said.
In addition, the governor also signed the 2020-21 budget’s preferred (for state-run agencies) and non-preferred (for state-related universities) appropriations bills; along with the code bills that implement the spending plan.
Another important fiscal measure sent to the governor’s desk last week is S.B. 1108, which appropriates a large portion of the $3.9 billion in federal CARES Act dollars that were sent to the Commonwealth. Approximately $2.6 billion in funding will be allocated toward the following programs:
The state’s Independent Fiscal Office last week announced that Pennsylvania is estimated to face a $1.3 billion to $1.5 billion revenue shortfall, though that number could be higher or lower due to the fiscal uncertainties surrounding the COVID-19 pandemic. The office also shared that $78 billion in federal dollars – which includes unemployment assistance, business tax cuts and loans, and grants to government and healthcare providers and educational institutions – has helped to soften at least some of the blow that COVID-19 would have otherwise had on the state’s economy. According to a story in Capitolwire, IFO Director Matt Knittel indicated his agency’s “optimistic” projection is that by the third quarter, the state will already be experiencing some economic recovery, based on the expected rebound of wage and salaries in Pennsylvania, as well as the number of payroll jobs. He warned, however, that the second quarter of the year is expected to show a 9.7 percent reduction in wages and salaries with a reduction of more than 1 million payroll jobs. He also indicated his belief that Pennsylvania could fare better economically than the rest of the nation.
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