J.

Rizzo Mertz, Director

Office of the Director of Public Policy
Millennials for a Better Pennsylvania

Preliminary Analysis of the Proposed 20152016 Budget for the

Commonwealth of Pennsylvania
Budget Overview:
2015-2016 Proposed Revenue- $29.9 billion (General Fund)
- Personal Income Tax: 40.8% of revenue ($12.2 billion)
- Sales & Use Tax: 31.1% of revenue ($9.3 billion)
- Corporate Net Income/Capital Stock & Franchise Tax: 8.2% of revenue ($2.5
billion)
- Gross Receipts Tax: 4.1% of revenue ($1.2 billion)
- Cigarette Tax: 3.9% of revenue ($1.2 billion)
- Non-Tax Revenue: 1.6% ($478 million)
- Other Taxes: 10.3% ($3.1 billion)
2015-2016 Proposed Expenditures- $29.9 billion (General Fund)
- PreK-12 Education: 32.7% ($9.7 billion)
- Medical Assistance & Long-Term Living: 23.2% ($6.9 billion)
- Other Human Services: 16.7% ($4.9 billion)
- Higher Education: 5.9% ($1.7 billion)
- Corrections/Probation & Parole: 8.1% ($2.4 billion)
- Debt Service: 4.3% ($1.2 billion)
- All Other: 9.1% ($2.7 billion)
2015-2016 Federal Funds to Commonwealth of Pennsylvania- $27.9 billion (Does not
include total funds transferred from federal government accounts to the
Commonwealth of Pennsylvania)
- Federal Funds are mandated for the following: Retirement and veterans
benefits, SNAP program, unemployment assistance, interstate highway
maintenance, and Medicare
2015-2016 Motor License Fund- $2.7 billion
- Fund expenses include: State Police, highway maintenance, Local
transportation system subsidies, the Pennsylvania Turnpike, highway &
bridge improvement, Safety Administration, other PennDOT programs, and
other general programs
2015-2016 Lottery Fund- $1.9 billion
- Revenue generated from retail sales of PA Lottery games
- Transfers profits to Commonwealth programs that benefit seniors
2015-2016 Augmentations & Fees- $3.2 billion
2015-2016 All Other Funds- $13 billion
Total Revenue (General Fund, Federal Funds & All Other Funds)- $78.6 billion

The Governors 2015-2016 Budget Proposal- Three

Central Themes: Jobs that Pay, Schools that Teach,
Government that Works
Jobs that Pay
- 2016: Reduce school district property taxes by $3.8 billion
- 5.99% Corporate Net Income Tax rate effective January 1, 2016, reduced to
4.99% by 2018
- Phase out Capital Stock & Franchise Tax by 2016
- Close the Delaware Loophole
- Adopt a revenue-neutral bank shares tax rate
- Budget would raise the minimum wage for Pennsylvania workers
- $1.75 billion for infrastructure investments
o Transportation, sewer, and water systems
o Alternative/Clean Energy
o Technology and Manufacturing focus
o Investments in proven economic development programs
- Community College investment: $15 million increase
- Workforce Development investment: $51 million increase
School that Teach:
- Invests $1 billion in Education for 2015-2016
- Restores Basic Education funding
- Restores 50% of Higher Education cuts
- Reforms Charter School funding ($160 million in savings to school districts)
- Audits expenditures for all final Charter School payments
- Provides $120 million increase for Pre-K programs to enroll an additional
14,000 children (75% enrollment increase)
- Provide 4 year commitment to increase funding for Basic Education, Special
Education, and Early Learning by $2 billion
Government that Works
- $150 million GO TIME Initiative
o Governors Office of Transformation, Innovation, Management &
Efficiency
o Identifies cost savings and efficiency improvements within certain
state government operations
- Pension funding plan
o Establish dedicated restricted account
o $3 billion debt refinancing paid through increase in Liquor Control
Board profits
o Proposed savings of $10 billion
- State Employee Pension Investment Reform
o School districts: 5 year savings of $370 million
o Commonwealth: 5 year savings of approximately $900 million
o Restructure management fees to reduce costs
- Consolidate Corrections and Probations and Parole

o Propose future sentencing reforms

Medicaid Expansion (Affordable Care Act)
o 2015-2016 savings: $500 million
Medicaid Managed Long-Term Care
o Long-Term Care (LTC) services include both Home and CommunityBased Services (HCBS) and LTC Facility Services
o PA Department of Health program for disability, elder care, special
needs, HIV/AIDS
Restore $28 million in County Human Services cuts (First year of 3 year
commitment)
Intellectual Disabilities/Autism waiting list reductions and services through
$45.9 million funding increase
Expand Home and Community-Based Services through $38.3 million funding
increase
$7.5 million increase to address heroin use and opioid addiction

Proposed Budgetary Savings:

- $11.9 billion
Minimum Wage Increase:
- $7.25/hour to $10.10/hour
Summary of New Revenues:
- Personal Income Tax: 3.07% to 3.7% ($2.3 billion in new revenue)
- Sales Tax: 6% to 6.6% with removal of some item exemptions (soda,
candy, etc.) ($1.5 billion in new revenue)
- Cigarette Tax: Increase of $1 per pack ($358 million in new revenue)
Summary of Tax Cuts:
- Corporate Income Tax: 9.99% to 5.99%, then to 4.99%
- Reduction of school district property taxes (in some cases, totally
eliminated for certain taxpayers)
- Rent rebate for renters capped at $500 for those with an annual
income of $50,000 or less