Health Care - July 9, 2010

Below is a budget briefing from the majority staff of the House Appropriations Committee which was released yesterday:

"On June 30, 2010, the House passed the General Appropriations bill. This plan was developed as we emerge from the most serious economic emergency since the Great Depression. While we did not experience a revenue shortfall as serious as last year, we continue to grapple with the after-shocks of a wounded world-wide financial system and dramatic unemployment. Pennsylvania has fared better than many states, but the fiscal issues will demand careful consideration for years to come.

While most state programs received cuts, this budget protects the integrity of basic education funding with an increase of $250 million. The commonwealth’s 2010/11 operating budget contains total state and federal appropriations of approximately $52.8 billion, an increase of $1 billion, or two percent, over the revised 2009/10 budget of $51.8 billion. This includes appropriations for the state General Fund, federal funds, the Motor License Fund, and other special funds (i.e. Lottery Fund and Tobacco Settlement Fund).

State expenditures from all funds decrease by about $199 million for the 2010/11 budget year, or about 0.7%, and federal funds increase by $1.2 billion or 5.2%. In the recently enacted budget, state funds make up 54 percent of total funds compared with 55 percent in 2009/10 and 63 percent in 2008/09. The General Fund represents the largest portion of state and federal spending and is the fund over which policymakers have the most influence on expenditures. For 2010/11, the General Fund includes about $25.3 billion in state revenue and assumes $2.76 billion in federal American Reinvestment and Recovery Act (ARRA) enhanced Federal Medical Assistance Program (FMAP) and fiscal stabilization funds for a total of just over $28 billion. This budget is built on the assumption that the federal government will extend the ARRA FMAP for two quarters, through June 2011.

Significant cuts totaling nearly $1.02 billion are made to appropriations in an effort to align General Fund expenditures with available revenues. On the funding side, no broad based taxes are used to balance the budget; however, a variety of methods are utilized to close the budget gap, which includes transfers and efficiencies that are expected to generate revenue. Most administrative and discretionary appropriations (those without a state, federal or other mandate) are subject to a cut of at least 0.8%. Increases in the enacted budget largely reflect mandated payments (such as debt service and corrections costs) and an investment in basic education."

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