PA Faces a Significant Revenue Shortfall

Commonwealth of Pennsylvania, Department Public Welfare - BUDGET UPDATE
May 6, 2010

PA Faces a Significant Revenue Shortfall.
To help the economy we must avoid cuts if we can. Targeted revenue increases are the best approach.
The Governor’s proposed budget for DPW focuses on sustaining services, quality results, and accountability. When Governor Rendell released the budget proposal in February, he noted a major financial risk if there was a shortfall of state general fund revenue. This week, the Governor announced a revenue shortfall of $1 billion as of the end of April. The state, like many across the country, faces calls for cuts.

Further cuts to the DPW budget harm the PA economy and could prolong the recession.

DPW funding supports jobs that sustain the economy
The health and human services sectors employ more than one in ten working Pennsylvanians.
• PA hospitals employ more than 270,000 people directly.
• Nursing facilities employ more than 75,000 people.
• More than 200,000 work in other health and human service settings supported through DPW’s public investment.

Every million dollars cut from health investments in the DPW budget results in a loss of $2.7 million in Pennsylvania business activity.

DPW spending brings federal dollars into the PA economy
DPW programs bring in more than $12 billion in federal funding that gets spent here in the PA economy. Almost any cut of state funds in DPW is compounded by a loss of federal dollars.

The Governor’s plans for raising new revenue will help us avoid harmful cuts, and will not harm the economy. In addition to drawing down more federal funds, the plan calls for:

Taxing tobacco make good sense for PA’s health and finances ($42 million next year)
A tax on cigars and smokeless tobacco is good public health policy. PA is the only state in the nation without a smokeless tobacco tax and one of two states without a cigar tax.

Closing tax loopholes for corporations is only fair ($66 million next year)
71% of corporations subject to PA Corporate Net Income Tax pay no tax at all. Major corporations enjoy an unfair advantage over PA’s small business because of loopholes in the law.

A natural gas severance tax is needed on Marcellus Shale reserves ($161 million next year)
Enacting a natural gas severance tax will ensure that big out-of-state gas companies, not taxpayers, pay the environmental and public costs of increased drilling.

Pennsylvania taxpayers can no longer afford to give big business a bonus for paying their sales taxes on time ($74 million next year)
Ordinary citizens don’t get a discount when they pay their personal income taxes by April 15. This antiquated incentive for big business should be eliminated.

The mission of the Department of Public Welfare (DPW) is to protect and serve Pennsylvania’s most vulnerable citizens, to promote, improve and sustain the quality of family life, and to break the cycle of dependency, while managing our resources effectively and promoting respect for employees. For more information about the DPW budget visit www.dpw.state.pa.us. For information on how to support funding for this critical program visit the non-partisan Pennsylvania Budget and Policy Center at http://www.pennbpc.org/