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Likely receipt of federal funding still leaves state with budget gap
PA Chamber monitoring legislative talks on how to make up for shortfall The 2010-11 state budget was crafted with the anticipation of $850 million in federal funding which, until recently, was neither delivered nor promised by Congress. Now, with a successful U.S. Senate vote to stop debate and position the emergency spending bill for a vote, Pennsylvania is likely to receive $595 million in FMAP funds (for welfare and education), or about 70 percent of what it was expecting. The federal spending bill still has to pass the full U.S. Senate and the U.S. House, but a successful cloture vote (end debate) was a pivotal step in its eventual enactment. During the tensest moments of the waiting game, Gov. Ed Rendell estimated that more than 12,000 state, county and local workers would lose their jobs due to budget cuts necessitated by the lack of funding. Layoffs could have occurred as early as September. The governor will now meet with legislative leaders to determine how, exactly, to close the budget hole, which is now projected to be around $255 million. Senate Republicans will likely look to scale back the slated increase to the state’s basic education subsidy, as a portion of the anticipated federal money will be earmarked for education. The federal funds include $378 million for school districts. Rendell, meanwhile, is renewing his call to end the sales tax vendor discount – a modest compensation that businesses receive for essentially serving as the state’s tax collector – as a way to close the funding gap. The governor estimates this measure could raise $73.6 million in revenue. The PA Chamber has advocated against this proposal, and there seems to be no momentum for it in the legislature. The PA Chamber will closely monitor the deliberations between the governor and legislative leaders, and weigh in if proposals harmful to the business community are put forth. ### Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state’s largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business. |
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