Pennsylvania Lawmakers Reach Budget Agreement

The Pennsylvania General Assembly gave final approval to a $28.05 billion spending plan on June 30, and passed other budget-related measures just prior to the July 4th holiday. Governor Rendell will sign the bills into law this week.

After addressing a $1.2 billion revenue shortfall, lawmakers agreed to a 2010-11 state budget that increases spending by 1% over the current year's $27.9 spending plan. Detailed allocations include a $250 million increase in education funding and a $600 million increase in the borrowing limit on the Redevelopment Assistance Capital Program (RCAP).

To balance the state's budget, many departmental appropriations are reduced, requiring about 1,000 layoffs. Below are some of the spending reductions:

• 9.1% reduction in library funding ($5.5 million)
• 9.2% cut to the Department of Environmental Protection ($14.6 million)
• 11% cut to the Department of Conservation and Natural Resources ($10.2 million)
• 10% reduction to the Department of Labor and Industry ($9.2 million)
• 11.7% cut to the agriculture programs ($7.9 million)

The state's new budget and tax plan does not include earlier proposals for combined reporting, elimination of the vendor discount, or taxes on tobacco products. The package does, however, obligate the Legislature to pass two particular bills by October 1, with January 2011 effective dates, to create a legislative fiscal office and to establish a severance tax on natural gas drilling. The agreement also directs Governor Rendell to meet with legislative leaders to discuss further cuts if Pennsylvania does not receive $850 million in anticipated federal Medicaid funds. View detailed information on the Pennsylvania budget here.

Prior to summer adjournment, state lawmakers also gave final approval to legislation that will change the composition of the Pennsylvania Higher Education Assistance Agency and create a new cabinet-level agency to deal with drug and alcohol addiction.