Wage Tax Relief 

                If the Governor’s budget were to be enacted for FY 2007-08 $643 million dollars would be available for property/wage tax relief throughout the Commonwealth.  Philadelphia would receive $93.6 million of this in order to provide wage tax relief.  The result of this infusion would be a reduction of the wage tax for residents in FY 2007-08 from 4.219% to 3.9199% and for non-residents from 3.7242% to 3.5504%. 

Human Services

* Includes $12 million in additional community behavioral health money

** Includes some local matching funds 

The cornerstone of the Governor’s health care plan in his FY2007-08 is his Prescription for Pennsylvania (Rx for PA) proposal.   The Rx for PA is an all encompassing package of health care reforms designed to expand access, increase affordability, and encourage quality throughout the health care system in Pennsylvania. 

This plan is likely to have a significant effect on Philadelphia given the cities position as a national leader in the health services industry.  The Governor’s budget proposal calls for $151 million dollars of new state money which will be used to leverage an additional $104 million dollars in federal matching funds.   

The majority of these funds will be going towards the Governor’s new Cover All Pennsylvanians (CAP) proposal which is the largest fiscal component of the Rx for PA plan.  Although enabling legislation will need to be passed and therefore the details have not yet been finalized, the Governor proposes a CAP program which will supplant adultBasic as the primary mechanism through which the state tries to tackle the problem of uninsured adults. 

While it is unclear exactly how this new infusion of funds will effect Philadelphia because it is largely dependant on enabling legislation, it is clear that Philadelphia would be a large beneficiary of any improvements to the commonwealth’s health care system. 

The Cover All Pennsylvanians program can be viewed as expansion to adults of the Governor’s Cover All Kids initiative of 2006-07.  The enabling legislation for Cover All Kids was passed this fall and $12.2 million dollars is included in the Governor’s FY2007-08 budget to cover an additional 21,000 kids statewide in the coming fiscal year. 

The Department of Public Welfare has certified child welfare expenditures of $689 million for the City of Philadelphia for FY2007-08.  This represents an increase of 2.7% over what the Department expects the city to spend in FY 06-07.  Additionally, the city will receive $12 million of new MA realignment money for Community Behavioral Health. 

The Human Services Development Fund (HSDF) continues to be a key issue for the City of Philadelphia.  This year the Governor has proposed decreasing funding for the HSDF by $2.5 million, if this funding level were to be enacted it would cost the city about $500,000.  Further, it means that Philadelphia will not regain the money it lost because of the elimination of IGT money in recent years. 

            The appropriation for Psychiatric Services in Eastern PA (EPPI), which was completely eliminated in the original FY 2003-04 budget proposal, is continued at the fully restored level of $3.5 million for FY 2007-08.      

Aging Services

In the City of Philadelphia, state funds for aging services are allocated to the Philadelphia Corporation on Aging.  Services include nutrition, employment, transportation, domestic care, personal protection, long-term care assessment and both basic and intensive in-home services.  Under the Governor’s FY 2007-08 budget proposal, the Philadelphia Corporation on Aging could expect to receive approximately $53.2 million next year.

            The Governor’s budget proposal also provides for a 3% COLA for direct care workers.        

Public Library Services

            The Governor’s FY 2007-08 budget proposal provides for slight increase in the Public Library Subsidy.  Given the size of the increase enacted in last year’s budget, however, the funding for libraries throughout the commonwealth remains at historically high levels. 

            Although a distribution formula for FY 2007-08 has not yet been adopted, it is estimated that the Free Library of Philadelphia would receive roughly $9.4 million in public library subsidies under the Governor’s plan, given what percentage of the total money they received last year. 

School District of Philadelphia

* The traditional $25 million line item for the Philadelphia School District was rolled into their Basic Education Subsidy

** $75 million of the additional $100 million that the Governor is proposing will be allocating on a competitive basis

            The Governor’s FY 2007-08 budget proposal provides for a 3.48 percent increase in the basic education subsidy, which translates into a $30 million increase for the School District of Philadelphia.  State appropriations for special education would increase by 3.4 percent, resulting in approximately $4.1 million in additional funding for the city. 

            The $25 million line item for the School District first appeared in the state budget in FY2002-03.  In the enacted FY2006-07 budget, this money was rolled into the School District’s basic education subsidy, thereby guaranteeing it in future fiscal years.  The Accountability Block Grant program sees an increase of $100 million, $75 million of this additional funding will be disbursed on a competitive basis to fund pre-k expansion so it is unknown what impact this would have on the School District’s allocation.  The remaining $25 million would be allocated for the expansion of full day kindergarten programs, Philadelphia should receive approximately $5.3 million of this money. 

            The Governor has requested that funds for the Reimbursement of Charter School be increased by $30.6 million dollars which should result in nearly $15 million in additional money for the School District.  

            The new funding in the Governor’s FY2006-07 budget proposal will result in approximately $55 million in additional money for the Philadelphia School district.

Higher Education

            The Governor has requested modest increases or level funding in the appropriations for most state-aided colleges and universities, which includes most of those listed above.   

            The Governor’s proposed budget also calls for a 3 percent increase in Community College funding in FY 2007-08.  Although the Community College of Philadelphia’s allocation will not be determined until a new distribution formula is adopted, CCP can expect to receive roughly $35.6 million next year. 

Health Services

* Rounds to less than $0.1 Million

            Governor Rendell’s FY 2007-08 budget proposal maintains most of the Department of Health’s appropriations for health research, preventative health, and health treatment services at current year levels. 

            The FY 2007-08 budget proposal also calls for a modest increase in the Assistance to Drug and Alcohol Programs line which should result in approximately $200,000 in additional money for the city.           

Transportation Services

                Pennsylvania has been struggling over the past few years to deal with both a looming funding crisis for mass transit and the continuing deterioration of the commonwealth’s highways and bridges.  The Governor mitigated this problem by temporarily flexing federal highway funding to subsidize mass transit.  This flexed funding, however, expired on January 1, 2007.   

Last year, the Governor created a Transportation Funding and Reform Commission to try to comprehensively lay out the problems facing all of transportation and map out a possible solution.   The Commission met throughout the past year, finishing their work and presenting a final report in November. 

            The Commission performed comprehensive audits of many of the mass transit agencies across the state and found that the funding crisis which many of them face is both real and immediate.   The Commission deemed that funding for public transit is inadequate for a variety of reason, including an almost complete elimination of Federal operating subsidy, and the lack of growth in the primary state operating subsidies. 

            The Governor’s budget proposal builds on the suggestion of the Commission and recognizes that the significant funding shortfalls in mass transit must be met.   The Governor proposes instituting a new Oil Company Gross Profits Tax in order to raise an additional $760 million a year for the Commonwealth’s mass transit agencies.           

In anticipation of the fact that a solution to this crisis will likely not arrive until June, transit agencies across the Commonwealth are already taking measures to ensure their viability for the rest of the current fiscal year.  In Philadelphia this is being done by reallocating funds that were earmarked for capital projects in order to maintain operations over the coming months.  While this solution does allow SEPTA to make it through this fiscal year without any drastic cuts in service or fare increases it will be hurtful in the long term as money is being diverted away from much needed capital maintenance projects.  Further, these solutions are only temporary.  Beginning in fiscal year 2007-08 SEPTA, and other transit agencies across the state will face gaping holes in their operating budgets.  These operating deficits will likely only be able to be addressed with crippling service cuts and fare increases unless additional state funding is provided. 

            Due to the fact that the Governor expects a permanent funding solution to be found before the next fiscal year he has level funded the Mass Transportation Assistance line item.           

Homeowners Emergency Mortgage Assistance Program (HEMAP)

            HEMAP offers loans to homeowners who have fallen behind in monthly payments due to unemployment or family medical emergencies.  Since its inception in 1983, over $45 million in HEMAP assistance has been distributed to Philadelphia homeowners.           

            It is estimated that Philadelphians would receive approximately $2.2 million in FY 2007-08 through this appropriation, although that will ultimately depend on the quantity and the magnitude of the applications that are filed for HEMAP assistance. 

Housing and Redevelopment Assistance

            Under the Governor’s budget proposal, DCED’s appropriation for Housing and Redevelopment Assistance would increase $5 million to $35 million dollars, Philadelphia will continue to receive a fifth of this money and could therefore expect an additional $1 million under the Governor’s proposed budget. 

Probation and Parole Services

             The Governor is recommending level funding in the state’s appropriation for the Improvement of Adult Probation Services. 

Growing Greener II

* Competitive Grant program.

**Philadelphia will receive approximately $1.5 million dollars in funding between FY07-08 and FY 09-10, the disbursement of these funds will be dependant on timing of projects.

            The Growing Greener II initiative was new in last year’s budget.   The state will issue $625 Million in bonds - $100 million in each of the first five years and $125 million in the sixth year.  From this $100 million, a county environmental program block grant of $18 million dollars is budgeted for all counties for FY2007-08.  

            Additionally, the Growing Greener Bond Fund will remain at $10 million this year.  This money will be used to supplement Main Street and Downtown redevelopment activities. The money is disbursed through a competitive grant program so the money available for Philadelphia will depend on the number and quality of applications from the city and the rest of the state.
 

Port Development

            The enacted FY 2006-07 budget provided $16.2 million for debt service and operating subsidies in Philadelphia. 

            While the Governor’s budget calls for a severe cut to this funding statewide, it is expected that the General Assembly will restore this funding to last year’s level statewide, which should again result in approximately $16 million for the city. 

PURTA Distribution to Local Governments

            Each October, the Department of Revenue distributes checks to municipalities and school districts from PURTA tax revenue collected in the previous fiscal year.  In 1999, the PURTA tax was “fixed” to provide a reliable tax collection stream.
 

            Historically, PURTA has been a wildly volatile and unpredictable revenue source for the Commonwealth.  Under present estimates, however, the City of Philadelphia should receive roughly $4.0 million through this appropriation in the upcoming year.
 

Judiciary

*   Rounds to less than $0.1 Million

** Funds disbursed to the counties as needed.  

            In general, Philadelphia’s appropriations for the judiciary are level-funded under the Governor’s plan.  There is a small increase in the Municipal Courts line.