Pennsylvania state budget and finances

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Pennsylvania budget and finances

General information

Budget calendar: Annual

Fiscal year: 2017

State credit rating: AA- (as of 2017)

Current governor: Josh Shapiro

Financial figures

Total spending (state and federal funds): $78,011,000,000 (estimated 2016)

Per capita spending: $6,102 (estimated 2016)

Total state tax collections: $37,394,589,000 (2016)

Per capita tax collections: $2,925 (2016)

State debt: $47,052,095,000 (2014)

Per capita state debt: $3,678 (2014)

State budget and finance pages • Total state expenditures • State debt • Tax policy in Pennsylvania

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In Pennsylvania, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS

Between fiscal years 2015 and 2016, total government spending in Pennsylvania increased by approximately $4.5 billion—from $73.5 billion in fiscal year 2015 to an estimated $78.0 billion in 2016. This represents a 6.1-percent increase.

In Pennsylvania in fiscal year 2015, 51.6 percent of total tax revenues came from sales taxes and gross receipts. Income taxes accounted for 38.5 percent of total state tax collections.

Education accounted for 20.9 percent of state expenditures in fiscal year 2015, while 37 percent went to Medicaid.

Definitions

The following terms are used to describe a state's finances:

• Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
• Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
• State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
• The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
• State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
• Federal funds are "funds received directly from the federal government."
• Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Revenues

2016 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.

State tax collections by source ($ in thousands), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2016 population	Per capita collections
Pennsylvania	$43,124	$19,284,374	$2,159,170	$14,388,463	$1,519,458	$37,394,589	12,784,227	$2,925
Maryland	$748,389	$8,939,430	$884,363	$9,646,537	$675,480	$20,894,199	6,016,447	$3,473
New Jersey	$4,638	$13,173,332	$1,499,889	$15,585,479	$1,283,382	$31,546,720	8,944,469	$3,527
New York	N/A	$24,790,017	$1,794,987	$50,690,443	$4,078,516	$81,353,963	19,745,289	$4,120
United States	$18,364,298	$442,909,995	$52,164,396	$392,286,910	$24,538,146	$930,263,745	322,762,018	$2,882.20
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

The table below lists 2016 tax collections by source as percentages of total collections. About 51.6 percent of Pennsylvania's total state tax collections came from sales taxes and gross receipts.

State tax collections by source (as percentages), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
Pennsylvania	0.1%	51.6%	5.8%	38.5%	4.1%
Maryland	3.6%	42.8%	4.2%	46.2%	3.2%
New Jersey	0.0%	41.8%	4.8%	49.4%	4.1%
New York	N/A	30.5%	2.2%	62.3%	5.0%
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.

The table below notes what share of Pennsylvania’s general revenues came from the federal government in 2014. That year, Pennsylvania received approximately $21.6 billion in federal aid, 30.8 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $1,692 in federal aid per capita. Figures from surrounding states are provided for additional context.

Federal aid to state budgets, 2014
State	Total federal aid ($ in thousands)	Federal aid as a % of general revenues	Ranking (by % of general revenues)	Est. 2014 population	Aid per capita
Pennsylvania	$21,647,328	30.8%	30	12,790,565	$1,692
Maryland	$10,670,601	29.4%	32	5,967,295	$1,788
New Jersey	$15,438,821	27.3%	39	8,925,001	$1,730
New York	$48,168,577	32.8%	24	19,718,515	$2,443
Sources: United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017 Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2014.

Spending

Estimated 2016 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2016 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.

The total estimated government spending in Pennsylvania in fiscal year 2016 was $78.0 billion.

Total estimated state spending, FY 2016 ($ in millions)
State	State funds	Federal funds	Total spending	Population	Per capita spending
Pennsylvania	$50,858	$27,153	$78,011	12,784,227	$6,102
Maryland	$29,634	$11,549	$41,183	6,016,447	$6,845
New Jersey	$42,398	$17,440	$59,838	8,944,469	$6,690
New York	$101,232	$49,476	$150,708	19,745,289	$7,633
Per-capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census Bureau estimates. Source: National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017

Spending by function

See also: State spending by function as a percent of total expenditures

State spending in Pennsylvania can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.

In fiscal year 2015, Medicaid accounted for 37 percent of Pennsylvania's total expenditures.

State spending by function as a percent of total expenditures, FY 2015
State	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Trans- portation	Other
Pennsylvania	18.5%	2.4%	1.6%	37.0%	3.4%	10.4%	26.6%
Maryland	18.3%	14.2%	3.4%	24.2%	3.9%	10.8%	25.2%
New Jersey	22.9%	8.0%	0.7%	24.2%	2.8%	8.9%	32.5%
New York	19.0%	7.4%	2.6%	31.7%	2.2%	6.6%	30.5%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

Spending trends

The table below details the spending trends in Pennsylvania in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.

Spending by function from 2010 to 2015 (as percentages)
Year	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Transportation	Other
2015	18.5%	2.4%	1.6%	37.0%	3.4%	10.4%	26.6%
2014	18.7%	2.6%	5.5%	33.3%	3.4%	9.6%	26.8%
2013	14.9%	2.1%	1.5%	26.9%	2.6%	7.5%	44.6%
2012	18.4%	2.8%	1.9%	33.2%	3.5%	9.3%	30.8%
2011	19.5%	3.2%	2.1%	31.8%	3.2%	8.8%	31.4%
2010	19.8%	3.3%	2.2%	29.6%	3.4%	10.1%	31.6%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

State debt

See also: Pennsylvania state debt

State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, Pennsylvania had a debt of $47,052,095,000 in fiscal year 2015. The state debt per capita was $3,678. This ranked Pennsylvania seventh among the states in debt and 20th in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.

Economic indicators

See also: Economic indicators by state

Pennsylvania's GDP increased by 1.8 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes, in turn, may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.

Most Pennsylvania residents earned incomes above 400 percent of the federal poverty level in 2013, with a median annual income of $52,481. The state's unemployment rate was similar to the national rate at 5.7 percent.

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state
State	Distribution of population by FPL* (2013)				Median annual income (2011-2013)	Unemployment rate		Total GSP (2013)†
	Under 100%	100-199%	200-399%	400%+		Sept. 2013	Sept. 2014
Pennsylvania	13%	17%	30%	40%	$52,481	7.3%	5.7%	$644,915
Maryland	10%	16%	28%	46%	$69,518	6.5%	6.3%	$342,382
New York	15%	20%	26%	39%	$51,962	7.5%	6.2%	$1,310,712
Ohio	14%	21%	33%	32%	$46,672	7.4%	5.6%	$565,272
United States	15%	19%	30%	36%	$52,047	7.2%	5.9%	$16,701,415
* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government." † Median annual household income, 2011-2013. ‡ In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state." Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

Budget process

State documents and agenciesBelow are links to official Pennsylvania budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office. Pennsylvania CAFR Pennsylvania budget agency

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:

1. Budget instructions are sent to state agencies in August.
2. State agencies submit their requests to the governor in October.
3. Agency hearings are held between December and January.
4. The governor submits his or her proposed budget to the state legislature in February. In a governor's first term, the budget proposal is submitted in March.
5. The legislature adopts a budget by June 30. A simple majority is required to pass a budget. The fiscal year begins July 1.

Pennsylvania is one of 44 states in which the governor has line item veto authority.

The governor is legally required to submit a balanced budget proposal. Likewise, the legislature is required to pass a balanced budget.

Agencies, offices, and committees

The following standing committees in the Pennsylvania State Legislature deal with budget and finance matters:

1. Appropriations Committee, Pennsylvania House of Representatives
2. Appropriations Committee, Pennsylvania State Senate
3. Finance Committee, Pennsylvania House of Representatives
4. Finance Committee, Pennsylvania State Senate
5. Legislative Budget and Finance Committee, Pennsylvania General Assembly

The Pennsylvania Auditor General has been the state's fiscal watchdog since 1809, when the position was created by an act of the General Assembly. The auditor general was appointed by the governor until 1850 when the position became an elected office. State and local audits reports are published online.

Public Interest Research Group 2016 report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. According to the report, Pennsylvania received a grade of B and a numerical score of 83, indicating that Pennsylvania was "Advancing" in terms of transparency regarding state spending.

Noteworthy events

• On June 30, 2017, the Republican-controlled Pennsylvania General Assembly sent Gov. Tom Wolf (D) a $32 billion spending plan for the fiscal year that began on July 1. The budget increased by 1.6 percent over the 2016-2017 budget, leaving a projected $1.5 billion shortfall from the previous year. Collectively, the state began the 2018 fiscal year with a $2 billion budget gap. The House approved the budget 173-27, while the Senate approved it 43-7.
• On July 6, the credit-rating agency S&P Global Ratings announced that it had placed Pennsylvania on what it called a "negative credit watch." The agency stated, "Pennsylvania has repeatedly had protracted budget negotiations that failed to result in structural alignment." A decreased credit rating would increase borrowing costs for the state.
• On July 10, Wolf announced that he would allow the budget to become law without his signature and without a revenue plan in place. In a statement, he said, "In the coming days, it is my hope that the General Assembly will come together to pass a responsible solution to balance our books." In Pennsylvania, the governor has 10 days to sign or veto legislation after receiving it or it automatically becomes law. Wolf did not sign the 2016-2017 state budget either, which also went into effect without a revenue plan in place.
• On July 27, the state Senate, with support from Gov. Tom Wolf (D), passed a revenue package that included a severance tax on gas and oil companies worth an estimated $100 million per year. A severance tax is a tax placed on the extraction of nonrenewable resources. Energy companies in the state opposed the severance tax, arguing that it would make the state less competitive and hurt consumers. The senate plan also proposed increases for utility bills and borrowing $1.3 billion against funds that the state receives from a 1998 legal settlement with tobacco companies. The legislation passed 26-24 with support from both Democrats and Republicans and was sent to the House.
• On October 25, the legislature approved a gambling expansion bill that would legalize online casino and lottery games, authorize 10 new casino locations in the state, and allow casino-style gambling games in truck stops and airports. That bill would raise an estimated $200 million per year in license fees and taxes on higher gambling losses. A $1.5 billion borrowing plan and estimated tax increases of $140 million per year were approved that same day; patching up about $1.8 billion of the $2.3 billion budget deficit. On October 31, Gov. Wolf signed the budget legislation.

Background

• Major proposals for revenue packages throughout the 2017 legislative session included borrowing money, expanding gambling and liquor sales in the state, and tax increases. Senate and House Republicans voiced support for temporary measures to borrow against state accounts, while Republicans in the House also advocated for delaying a vote on legislation that provides funding various universities in the state. Wolf advocated for tax increases on certain business practices and the natural gas industry.

• The Pennsylvania constitution states that spending “shall not exceed the actual and estimated revenues and surplus available.”

Budget and finance ballot measures

Voting on state and local government budgets, spending, and finance
Policy
Budget policy
Ballot measures
By state
By year
Not on ballot
Local City budgets County budgets Spending limits School budgets

See also: State and local government budgets, spending and finance on the ballot and List of Pennsylvania ballot measures

Ballotpedia has tracked the following ballot measures relating to state and local budget and financial matters in Pennsylvania.

1. Pennsylvania Question 4, Municipal Fire and EMS Services Loans Measure (May 2021)
2. Pennsylvania Financial Assistance for 1971-1972 Flood Damage Amendment (1972)
3. Pennsylvania Question 1, Redirect Bonds to Rehabilitation Homes Measure (1982)
4. Pennsylvania Question 1, Increase Debt Limit of Vietnam Conflict Veterans' Compensation Act Amendment (1973)
5. Pennsylvania Question 1, Local Government Debt Limit Increase Amendment (May 1966)
6. Pennsylvania Question 1, Refund of Taxes and Fees Amendment (1961)
7. Pennsylvania Convention Proposals 3 and 4, Borrowing Limit Amendment (April 1968)
8. Pennsylvania Convention Proposal 5, Reimbursement of Local Taxing Authorities Amendment (April 1968)

Budget and finance legislation

The following is a list of recent budget and finance bills that have been introduced in or passed by the Pennsylvania state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

The link below is to the most recent stories in a Google news search for the terms Pennsylvania budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Pennsylvania state budget and finances - Google News

See also

• Historical Pennsylvania budget and finance information
• Tax policy in Pennsylvania
• Pennsylvania government sector lobbying
• Pennsylvania public pensions
• Governor of Pennsylvania
• Pennsylvania State Senate
• Pennsylvania House of Representatives
• Pennsylvania State Legislature