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2019-2020 Budget Recap

2019-20 Budget Recap

Governor-Wolf-Signs-Bill

The Governor signed the 2019-2020 General Appropriations budget. Our friends at the House Republican and Democratic Appropriations Committees offer their perspectives on key elements of the budget.

Some highlights of the 2019-2020 General Appropriations budget:

  • The budget spends $33.997 billion for the 2019-2020 fiscal year, a 1.8% increase.
  • Contains no new broad-based taxes or fees.
  • Maintains and expands several workforce development initiatives.
  • Agriculture investments increase, this is to couple with the Pennsylvania Farming First Initiative, which was recently voted on in the legislature.
    •    New line items include:
      • $4.5 million for Agriculture Business and Workforce Investment
      • $1 million for Livestock and Consumer Protection
      • $2 million for Animal Health and Diagnostics Commission
    • Overall Agriculture received a $19.5 million increase
  • Includes historic levels of school funding:
    • $160 million increase in Basic Education Funding
    • $50 million in special education funding
    • Overall increase of $432 million for pre-k-12 education
  • The Department of Human Services, receives a $97.3 million increase from the 2018-19 budget:
    • Additional $26.3 million for mental health services.
    • $12 million, a 5% increase, for homecare workers who care for seniors and those with physical disabilities.
    • $5 million for community-based family centers, providing access to home visiting services to 800 more Pennsylvania families.
    • Supports individuals with intellectual disabilities and autism services, and enhanced care for seniors.
  • Approximately $300 million invested for the state’s Rainy Day Fund.

FY 2019 / 2020 Code Bill Summaries

The State General Assembly also passed several budget-related bills on topics including Education, Agriculture, Elections, Taxes, Healthcare, and government operations. Highlights include:

Budget Implementation (Fiscal Code)

  • Nearly $500 million for debt service for Tobacco Settlement Fund, Tobacco Revenue Bond Debt Service Account, Race Horse Development Fund, and Farm Show Complex Restricted Revenue Account.
  • No monies from the Oil & Gas Lease Fund shall be transferred this year. In the previous year, $20 million was transferred from the Oil & Gas Lease Fund to the Environmental Stewardship Fund. Approx. $16 million will be appropriated from the General Fund to the Environmental Stewardship Fund. A $10 million decrease from FY 2018/2019.
  • Philadelphia Parking Authority received an extension until Dec. 31, 2020 for the 1.4% gross receipts fee to be paid by Transportation Network Companies.
  • The Secretary of the Budget will be required to deposit 100% of any FY 18-19 surplus to the Budget Stabilization Reserve Fund, adding nearly $300 million into the fund.
  • Small water and sewer projects received a boost in grant allotments, making $40 million available for water and sewer projects that range between $30,000 and $500,000.
  • No ordinance or tax on Plastic bags, single-use plastics, and other plastic container use may be enacted until impact studies are issued.  
  • Natural Gas Infrastructure Development Fund
    • Amendments were made to broaden the pool of eligible grant recipients to include large residential conversion projects and combined heat and power applicants.
    • The maximum grant amount increased by $500,000 to $1,500,000.
    • The CFA has been directed to develop streamlined guidelines for applicants submitting for grants of $75,000 or less.
  • Commonwealth Finance Authority (CAN) transfers:
    • $5 million shall be transferred from the CFA First Industries Program account to a new CFA account for research and development; organic transition, value-added processing and marketing grants in support of PA’s dairy industry.
    • $12 million shall be transferred from the CFA Building Pennsylvania Program account to a new CFA account established for blight remediation.
    • $24 million shall be transferred from the CFA New Venture PA Venture Capital Program account to be made available for distribution under the H2O PA Act.
  • Provisions were included that impact new and existing programs:
      • Dept. of Agriculture was granted legislative approval to develop PA Preferred Organics, hiring staff and communicating research to the USDA and General Assembly.
      • Dept. of Community and Economic Development received increased funds for Main Street, Elm Street and Enterprise Programs. The Dept also received a new line of funding for a broadband expansion pilot program.
      • Dept. of Education received historic funding, notably increasing appropriations to adult learning, mental health, pre-K and trauma-informed programming.
      • Dept. of Labor & Industry received funds to enhance Workforce Development and Training Programs, under guidance of the Governor to create new industry partnerships.

Election Code

SB 48 makes changes to the absentee ballot deadlines, process, and counting along with: elimination of straight-party voting.

  • Counties may apply for assistance to pay for new voting machines, up to $90 million in bonds may be issued.

Healthcare and Human Services

The General Assembly passed legislation that includes: General Cash Assistance program for single, eligible persons has not been funded for five years, but the program would be eliminated through HB 33. Re- reauthorizes the Philadelphia hospital assessment for an additional five years through June 30, 2024.


Senate Bill 695 provides for an analysis of non-emergency medical transportation and other human services transportation programs; provide for an analysis of a uniform Statewide preferred drug list; and extend the Nursing Facility assessment and the Intermediate Care Facilities for Persons with an Intellectual Disability.


Education

Several education bills were passed by the General Assembly. Highlights include historic levels of school funding, new career and technical education programs, reevaluated formulas for school repair & reimbursement, and measures to increase school safety.

  • $25 million increase in EITC for businesses and private school families.
  • Creation of “Innovation Schools”, groups of private, specialized and/or non-profit schools that provide alternatives to a public-school education.
  • New formula to assess school construction and repair reimbursements, likely to decrease reimbursements unless the facility is LEED certified.
  • Establishment of college scholarship program for foster or adopted children to state or state-related universities.
  • Students are now entitled to trauma-informed education, including: professional trauma training for teachers, funding for security infrastructure up to $3.2 million per project, and requirement of at least one professionally trained, mental health staff member.
  • Establishment of the Keystone Telepresence Education Grant, which provides funding for real-time telepresence equipment for students who must take a leave of absence from school due to serious medical conditions.
  • Students in need of financial assistance will receive funding support from PDE to help ensure all have access to Advanced Placement exams in preparation for college.

The legislation establishing “School-to-Work” and technical education funding did not make it to the finish-line and will be considered in the fall.


Taxes

Changes to the Sales Tax

  • Retail sales from large, online, out-of-state retailers, such as Amazon.com are now subject to PA sales tax. Revenues are estimated to $5 million in the upcoming Fiscal Year.
  • Clarification of applicability of sales tax at Brew Pubs
  • Elimination of the inheritance tax for those who inherit real estate under the age of 21.

Changes to the Personal Income Tax

  • Conformity with Federal Opportunity Zones for treatment of capital gains, where investors in Opportunity Funds can receive federal tax deferrals/eliminations and other tax benefits on unrealized capital gains associated with these investments.
  • Income Tax Returns will now provide an option to donate to the Veterans’ Trust Fund.

Corporate Net Income Tax

  • Expansions to the existing Manufacturing Innovation and Reinvestment Deduction program within the corporate net income tax (CNIT) to create two tiers of private investment levels, supporting businesses that make investments in the state and create new jobs.

Realty Transfer Tax

  • Raises the $25 million limit on RTT funds deposited into the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund PHARE Fund to $40 million annually.
  • Exempts sales of preserved agricultural lands to first time farmers.

Tax Credit Programs impacted include:

  • PA Film Tax Credit Program
  • Entertainment Economic Enhancement Program (Concert Rehearsal and Tour Tax Credit)
  • Tax Credit for New Jobs (Job Creation Tax Credit)
    • Repealed
  • Rural Jobs and Investment Act
    • Increases tax credit cap from $1 million per year over four years o $6 million per year over five years, to provide time to raise these funds.
    • Defined job creation metrics and goals requirements.
    • Businesses with 150 or fewer employees are eligible, down from 250 or fewer.
  • Neighborhood Assistance Tax Credit:
    • Adds “youth and adolescent development services” to the list of policy goals that are eligible for the credit.
      Historic Rehabilitation Tax Credit Fund: DCED shall institute an application processing fee based on the amount of tax credits applied for, not to exceed $2,000. Proceeds will be distributed to the Historic Rehabilitation Tax Credit Administration Account and allocated to Historic Rehabilitation Projects under its jurisdiction.
  • Keystone Opportunity Zones
    • Cambria, Clearfield and Lancaster Counties are now eligible to apply for KOZ tax credits.

Agriculture
Components of Governor Wolf’s Farm Bill were passed by the General Assembly, specifically:

Tax Credits

  • New tax credits for landowners who lease or sell farmland to first time farmers.
  • Resource Enhancement and Protection (REAP)
    • Increases the cap of the REAP tax credit from $10 million per fiscal year to $13 million per fiscal year, beginning with FY 2019-20.
    • The $3 million cap increase is targeted for geographic areas and best management practices for nutrient and sediment reductions within the Chesapeake Bay watershed area.
    • Raises and expands the existing cap per eligible applicant from $150,000 per lifetime to $250,000 in tax credits in any consecutive seven-year period.
  • Sediment Health and crop revitalization tax credits, including up to 90% of eligible costs to recoup riparian forest buffers, livestock stream support, stream crossings, cover crops, soil health, and best management practices and nutrient management.

Dairy-Related Programs and Reforms

  • Creation of the Pennsylvania Dairy Future Commission, reviewing agriculture education and dairy production for young or entering dairy farmers, then making recommendations to the Dept. of Agriculture and General Assembly.
  • Dairy Investment Program is established to support R & D, transition to organic, and marketing.
  • Milk Haulers now exempt from “State of Emergency” highway closures.

Farmer Education and Support

  • Several new programs to promote collaboration and education across the agricultural industry at a local level, including:
    • Agricultural Business Development Center
    • Agriculture and Youth Development Grants
    • Urban Agriculture Infrastructure Grant
    • Commonwealth Specialty Crop Block Grant Program
  • “Healthy Farms Healthy Schools” program enhanced and renamed to “Farm-to-School” program.
  • Soil conservation research funding.
  • Farm equipment transportation regulation rollback to allow tractors and other wide equipment onto certain roads and highways.

PA Preferred Organics Program. The Department is expected to hire staff, market the program and communicate with the USDA.

Administrative Code: House Bill 1461

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