On July 8, Gov. Wolf signed into law SB 1100, the general appropriations law for the 2022-23 state fiscal year. The law, approved by the House with a vote of 180-20 and by the Senate with a vote of 47-3, sets General Fund expenditures for the year at roughly $45 billion, a 2.9 percent year-over-year increase. The spending bill came together on the strength of historic revenue collections for corporate, sales in personal income tax receipts, as well as several billion in unspent stimulus dollars.

Lawmakers agreed to a budget with the Governor that deposits an additional $2.1 billion into the Rainy Day fund, which now holds $5 billion for future use. The legislature is also holding over $3.6 billion in the General Fund for future budget years.

Additionally, the spending plan provides funding to start replenishing the state’s Unemployment Compensation Trust Fund, which was depleted due to claims paid out during the pandemic and business shutdown orders, forcing the state to borrow from the federal government. Continued federal borrowing will eventually trigger tax increases on employers estimated to total around $350 million over the next two years.  While it is reported that additional infusions of funding may be necessary to forestall these tax increases, employers appreciate this first installment and the acknowledgment that these costs should not be borne solely by employers.

The law also provides for a significant increase in the Educational Improvement Tax Credit, which expanded by $125 million, or 45 percent. A total of $405 million in tax credits are available to businesses for the fiscal year who contribute to qualifying educational and scholarship programs. The tax credits can be used by companies to offset a wide variety of state taxes. More information on applying for the EITC is available on the website for the Department of Community and Economic Development.

Legislators also ensured the continued phase-down of the Pennsylvania State Police’s reliance on the Motor License Fund, which collects the state’s gasoline and diesel tax revenues. The phase-down frees up an additional $175 million for road and bridge infrastructure projects this year.

The bill also provides for a record $7 billion in basic education funding, repeals punitive Department of Education regulations that targeted charter schools, and provides additional increases for early childhood education, school safety, mental health and career and technical education. For more information about the budget, visit the House Appropriations and Senate Appropriations’ majority committees dashboards.