What’s in the Governor’s 2014-15 Budget?

Chris Lilienthal |

Governor Tom Corbett has proposed a 2014-15 state General Fund budget that would spend $29.4 billion, $927 million, or 3.3%, more than the current fiscal year.

The plan also shifts $70 million in unused current year funding to pay for other needs this year and counts on $250 million in lapsed prior year funding.

Below is an overview of the budget proposal from the Pennsylvania Budget and Policy Center. Check out our charts and infographics on the budget and find other resources.

Revenue Outlook

The budget projects a $216 million year-end balance in 2013-14 to carry over into the new fiscal year, although that cushion may disappear if revenue collections fall short of estimate. (They are already $41 million below projections through January.)

There are few revenue changes in the 2014-15 plan, and budgeters are counting on optimistic revenue growth to balance the budget. Here are some of the highlights:

  • The plan is built on stronger tax revenue growth in 2014-15 (3.9%) than in 2013-14 (2%). Sizable growth is predicted for a number of taxes, including personal income tax (5.5%), sales tax (3.4%), realty transfer tax (14.4%), and bank taxes (9.2%).
  • The capital stock and franchise tax remains on schedule to be reduced in 2015 and fully eliminated in 2016.
  • Total corporate tax collections are predicted to decline for a second straight year, with continued annual declined expected through 2017-18.
  • $150 million would be raised by changing the timing on when unclaimed property may be claimed by the state.
  • $75 million would be generated by land leases for gas drilling in state forests and parkland. The last leases were signed in 2008, when a moratorium went into effect.


  • Funding for the basic education subsidy would remain unchanged at $5.5 billion.
  • $241 million would be combined with the existing $100 million accountability block grant to create the new Ready to Learn block grant for public schools. The program would have four tiers of school districts depending on school performance profiles. 72% of schools would be in the top two tiers. School districts would be permitted to spend money allocated through the block grant on existing programs funded by the Accountability Block Grant, but new funding would be limited to a restricted list of expenditures. The block grant would fund curriculum development and training to support early literacy and STEM education and extended learning opportunities in grades K-3, with additional options for tier 3 and tier 4 school districts.
  • Special education, which has been flat funded at $1.027 billion for the past six years, would get a $20 million increase.
  • Pre-K Counts would get a $10 million increase to provide early learning opportunities to an additional 1,670 children.

Higher Education

  • Funding for the state’s higher education institutions (including Penn State, the other state-related universities, and the State System of Higher Education) remains flat, maintaining deep cuts in effect since 2011-12.
  • The plan includes $25 million for new “Ready to Succeed Scholarships” offered through the Pennsylvania Higher Education Assistance Agency (PHEAA). The merit-based scholarships would be targeted to families with incomes up to $110,000 and would require legislation to create.


  • The plan relies on far-from-certain pension changes that would save the state and its 500 school districts a combined $300 million. Savings generated will be paid for by unspecified pension reforms.
  • The Governor’s budget also relies on a one-time transfer of $225 million from the tobacco settlement fund (cash reserves and private equity investments) to the Public School Employees Retirement System. Tobacco settlement funds typically support health care programs.
  • Reduction in pension collars will mean less of the pension debt is paid off each year. While this reduces expenditures for the state, it increases the cost of repaying the pension liabilities in the long term.

Health Care and Human Services

  • The budget incorporates the Governor’s Healthy PA plan. Rather than adopting an expansion of Medicaid under the Affordable Care Act, the Governor proposed a plan that would reduce health benefits for current and new Medicaid enrollees and allow the state to use federal Medicaid expansion funding to enroll newly eligible individuals on the health insurance exchanges. The budget includes $125 million in savings from the reduced benefit package. The plan requires federal approval, which is uncertain.
  • The total Department of Public Welfare (DPW) budget will increase by $428 million, or 3.9%. The proposed budget replaces $340 million in federal funds due to a decline in the state’s federal matching rate for the Medicaid program.
  • The DPW budget includes a number of one-time funds and transfers, including $394 million in delayed payments to Medicaid Managed Care providers, $130 million in Long-Term Care funding transferred from the Lottery Fund, and $62.5 million directed from the Tobacco Settlement Fund to nursing homes.
  • The budget expands Home and Community-based Services for seniors and people with disabilities by $51 million, increasing slots in Long-Term Care Managed Care, Attendant Care, Services to People with Disabilities, and the ID Community Waiver program.
  • The budget increases the Child Care Services Line, using $15 million in additional federal funds to reduce the waiting list. The Child Care Assistance appropriation, which pays for child care for Temporary Assistance to Needy Families (TANF) recipients, is level funded but declines by $15.3 million as a result of reduced federal dollars.
  • Services for victims of sexual assault receive a 10% increase.
  • Family Centers, Nurse Family Partnerships, the Human Services Development Block Grant, and Legal Services are all level funded.

Other Highlights

  • $5.3 million is sought in the Department of State budget to advertise and publish three proposed Constitutional Amendments (there was no description of what these amendments entail).
  • The cost of running state prisons increases by $78 million, to more than $2 billion in 2014-15. This represents an increase of 4%. The prison population is expected to drop by approximately 1,000 inmates in 2014-15. The state’s cost to incarcerate an individual climbs to $41,100 per year.
  • More of the cost of running state forests and parks has been shifted from the General Fund onto the Oil & Gas Lease Fund (which collects royalties from wells on state land). The Oil & Gas Lease Fund now provides over $4 for each $1 the General Fund provides to the Department of Conservation and Natural Resources.
  • The Department of Environmental Protection receives a General Fund increase of $10 million, or 8%. This is due to an anticipated loss of federal funding.

PBPC will have more detailed budget analysis later today.