By: Todd Brysiak
Back in February, our team here at Triad asked me to compile my thoughts on Gov. Tom Wolf’s final budget proposal as part of the Triadvocate. With a slew of major funding items on the docket under the governor’s plan, there certainly wasn’t a shortage of things to discuss.
But now with the 2022-23 state budget finalized after a month-plus of contentious debates, it seems like a good time to see how the final plan shaped up when compared with our February assessment.
Before writing this little review, I took my own look back on what I laid out and how it may – or may not – have been on point. And while I am far from a Nostradamus-like prognosticator, I did smirk a bit when I read the closing graphs in Our Final Take.
“But with so many other issues complicating matters and a political environment that gets more contentious with each day, my gut tells me negotiations are again going to be uniquely challenging. Those at the budget table are going to be faced with a host of tough decisions, and getting the parties to agree won’t be easy.” – Todd Brysiak, February 2022
Better Late Than Never
Just prior to Memorial Day, there was some chatter in Harrisburg about the potential for an early budget. Folks looked at the prospective balance sheet for the year and simply assumed the amount of cash-on-hand would make for easier discussions.
I mean, it was a certainly a stark contrast from previous years’ deficits and the shake-the-couch-cushions-for-loose-change mentality that was in place from 2015 through 2018. But anyone with experience in budgeting knew this year’s dynamics would create some real challenges.
The more money on hand, the more there is to fight over. Everyone’s funding priorities were now covered in their own minds-eye, so they should be funded. Right?
Personally, I never bought into the “early budget” theory because I assumed the excess revenue would complicate matters far more than folks expected. That said, I didn’t see it going a week beyond the June 30 deadline either. So, what prompted this delay?
With all due respect to the governor, the scope of his original proposal was from the “dream big” playbook. That surely complicated matters going into discussions, especially with a Republican-controlled General Assembly that has grown more conservative over the last several years. But that didn’t seem to be to only hurdle to clear this year, nor do I believe it was the most impactful.
An array of complex policy proposals was also shopped as part of the budget code bills, which accompany the annual spending plan. These matters – things like gaming expansions, new medical marijuana licenses, education system reforms, new property tax relief support, and election code changes – more likely than not proved a greater factor in the late budget than the actual spending plans.
History tends to show that when tier-one policy items get wedged into negotiations during budget debates, the likelihood for a smooth process diminishes dramatically. The give-and-take of spending plans are far less contentious when the environment allows all parties to win in some way. But when policy matters with complex perspectives are attached to negotiations on funding streams, it makes for a messy budget table. And while it would be naïve to think this was the lone factor in this year’s week-plus delay on enactment, it seems pretty clear it was a rather significant one. More on these policy matters later, but suffice it to say some of these policies crossed the finish line while others hit the brakes.
The Deal
Ok, so it took a little longer than most expected. But at the end of the day, the 2022-23 budget negotiations left folks throughout the commonwealth with a solid product. Major priorities were covered with record investments under the $45 billion spending plan, and several tier-one policy issues were finally addressed after years of focus.
The combination of record state surplus revenues and $2 billion-plus in remaining COVID-relief funds set the stage for a broad swath of wins for advocacy groups. Both pots of funding were used to cement this budget. Of course, some argued the budget spent too much during a time of economic uncertainty. But when folks look at the final vote count in both the House (180-20) and Senate (47-3), it’s hard to argue the true benefits and bipartisan nature of the plan.
Preparing for the Future
There is a perpetual debate that never ceases among lawmakers when it comes to budgeting, especially during times when cash is in excess and state coffers are fat: investment vs. preparation.
This year’s budget saw a glut of funds, the likes of which Pennsylvania has never seen. Heading into the final days of June, budgeteers were looking at $12 billion in surplus revenues – this combined federal COVID-relief funds, above-estimate revenue collections and the balance of the Rainy-Day Fund.
Rarely are there fool-proof certainties when it comes to budget discussions. But this year, one undeniable definitive was the plan to sock more money into the Rainy-Day Fund.
On two occasions leading up to the final deal, I had the opportunity to chat with a two of the top players at the state’s budget table: Governor Wolf and House Majority Appropriations Chairman Stan Saylor. And in both cases – weeks before the budget was signed – each leader indicated they would like to see the Rainy-Day Fund balance hit $5 billion with the new budget. Well, mission accomplished.
With one heck of a deposit totaling more than $2 billion, the state’s savings account hit the mark touted by the pair of negotiators months back. And while certainly not alone in sharing the credit for this plan-for-tomorrow effort, Governor Wolf and Chairman Saylor deserve some kudos for being so forward about their goals. After trudging through huge deficits and multiple impasses, recognizing that steps to prevent future occurrences should have been prioritized.
Whoever wins the November gubernatorial election will be fortunate to have a nice backstop in place should state revenues decline. This is – without question – a win-win for all those involved in future budget discussions.
Education
They say governors want to leave office with legacy. If this is true – and there’s no reason to believe it’s not – Governor Wolf clearly wants that legacy to be centered on public education. And judging by the scope of funding in this year’s budget, it seems safe to say he hit his mark.
The 2022-23 budget was a record year for education. School districts will see $525 million in new basic education funds, which will bring the state’s tally for that funding line to more than $7 billion. Another billion-dollar-plus allocation will be slotted for special education services, and a new $200 million investment was created for school safety and school mental health initiatives.
Sitting in negotiations with Governor Wolf for each of this first three budgets, I’ve probably heard him say “historic investments in education” a thousand times. And to be fair, I’d wager to say that each time it was almost immediately followed with House and Senate Republican leaders declaring their support for the state’s Educational Investment Tax Credit program. Given the outcome of the budget, it seems safe to say this year was not different.
Funding of the EITC program has a been a top priority for legislative Republicans for years. In their minds, it has always been a fundamental component to a comprehensive education system for all. This year, in addition to the support for the billions in school funding, the EITC program saw a massive $125 million increase. All told, the program will now provide $405 million in scholarships for parents looking for more choice in their student education.
The agreement in striking a balance between traditional public education funding and the options afforded through the EITC program offer a glimpse into how all parties found a sense of compromise when etching out the details of the new budget.
And let’s not forget the new cash flowing to the state’s higher education needs. Lawmakers are touting a $220 million increase in funding to support students attending the state’s colleges and universities through a variety of funding streams. At a time when the cost of higher ed and student debt remain hot issues, there was no doubt these dollars would be prioritized.
Mental Health and Behavioral Health
In my nearly 20 years of work in the public policy space, I’m not sure any issues have garnered more acute attention in a shorter time than those centered in the mental and behavioral health space. Undoubtedly compounded by the pandemic and the ongoing opioid crisis, lawmakers have done well in making key investments to help those in their communities who need help, especially in recent years.
The new budget designates more than billion dollars for services supporting in the behavioral health and mental health space. Through the Department of Human Services alone, the increases in state dollars here were notable. Couple this with a new $100 million program designed to support a collaborative care mental health initiative and $100 million in a school mental health initiative via the School Safety and Security formula, and it is evident lawmakers were going to ensure their investment focus in this space would continue in 2022-23.
Breaking the stigma associated with anxiety, depression and substance abuse has been a process over the years. But far more folks are now making support for individuals facing them a priority in public policy debates. While all matters funded in the budget are important, an argument could be made that these dollars will be the most impactful in the long term.
This funding was tied to bipartisan policy efforts driven by lawmakers such as Rep. Mike Schlossberg, Rep. Frank Farry and House Speaker Bryan Cutler. This team, along with support from colleagues in the House and Senate, helped get critical legislation to the governor’s desk in the days leading up to the budget deal. Schlossberg, who has been very open with his own challenges, has been among those who have ensured these matters have remained atop discussions year-round.
All told, I think it’s now evident that funding support for these areas has now crossed into the spectrum of guaranteed-increases in future state budgets.
Public Safety and Violence Prevention
It’s hard to look at funding levels for public safety matters without relating them to the recent string of shootings and other violent actions occurring throughout the country. Lawmakers have always considered these issues a priority, but the momentum behind funding commitments have undoubtedly gotten a push following the tragedies on South Street in Philadelphia, Uvalde, Texas and Highland Park, Illinois.
Funding for violence prevention and law enforcement would have likely received increases in this budget no matter what. Far too many lawmakers have demanded support for this over the years, and with surplus funds available, it seemed a foregone conclusion that increases would be included this year. In terms of timing and needs, the recent events prove more state investments here are critical.
There’s no doubt the added investment in mental health support could be included as a supplement to the public safety needs in this budget. But the individual program funding is certainly key. Altogether, the new fiscal plan allots $260 million in public safety initiatives and funding via the state police for a new 200-troop cadet class, as well as $7.7 million for mobile video and body cameras.
It would be naïve to think these funds will solve all community safety concerns. The fight over legislation to deal with gun-related matters isn’t going anywhere, especially after being front-and-center during June’s budget deliberations. But no matter on which side of these issues lawmakers align, it seems fair to note the shared care for community safety measures was evident in this new spending plan.
To sum up the impact of these dollars, I would turn to Sen. Sharif Street – one of the state’s leading advocates for community safety supports. In his statement on the 2022-23 budget, the senator called the new investments “one of the most important things we’ve done.”
Community Investments and Grant Funding
When there’s more than $2 billion in one-time funding available from the feds, and the state needs to spend it, there’s no better place to invest than in community projects and state grant programs. Lawmakers love advocating for their communities and local needs. Whether they be infrastructure-related, economic development centered or resident-support focused, folks would be hard-pressed to find an elected official who is not going to implement a full-court press for local funding.
Nobody was surprised when these types of initiatives were funded last week. Where there was some surprise was in the scope of funding and the diversity of the programs. Given the allocations to programs supporting water and sewer projects, environmental and clean-stream needs, community housing supports and many others, there are going to be a lot of opportunities for communities throughout the state to secure grant funding in the coming year.
Lots of things stood out in this space, but a few clearly seemed to pique the interest of lawmakers and lobbyists alike.
If folks are tallying wins, those pushing for new dollars as part of the Whole Home Repairs Program had to feel this budget was a big one for their constituents. Not every community will understand the challenges that come with unaffordable home repairs for families, but those that do realize the severity of the problems. Seeing an investment of $125 million to support those facing these challenges exemplifies the breadth of considerations given during budget negotiations. This program is a big deal, and it should have a lasting impact.
We have all heard it for years: Pennsylvania’s aging infrastructure is creating real challenges for communities. There are few places where this is more evident than communities working to upgrade local water-and-sewer assets. This is an area where the needs far exceed available resources.
With this budget setting aside several hundreds of millions of dollars for these types of projects, there will be many potential applicants across the state dusting off the plans for repair and update efforts in their communities. Third-class cities and smaller municipalities have to be breathing a mild sigh of relief, as this funding brings new opportunities. Couple this with the level of new environmental funding, and these investments will give lawmakers high marks in community-support space.
Looking at some newer concepts, those focused on the state’s tourism industry and its impact on the economy had to have been pleased with the creation of the new Arts and Culture Recovery Grants program and the Sports Tourism and Marketing Account. New funds set aside for these initiatives will help communities recover from the negative impacts from the pandemic, and also create new event draws in the state.
Delving into every detail of grant funding and community benefit would in this budget would take far more words here than folks are willing to read, so let’s cut short here by saying this: with the scope of local investment and community support set aside in this spending plan, there should be little surprise the vote tallies were so strong in the two chambers.
Stay tuned for 2022-2023 Budget Recap (Part 2) tomorrow where we review policy issues and share our final take.