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Lawmakers Finalize Spending Plan for Remainder of 2020-21 Fiscal Year

From PA Chamber of Business & Industry

The 2020-21 budget process concluded last week with the passage of legislation that funds state government and related operations for the remaining seven months of the current fiscal year. The final bill, which Governor Wolf signed on November 23rd, does not impose any new taxes or fees on businesses – which are already facing financial hurdles operating during the COVID-19 pandemic; and does not rely on public borrowing. The legislation is balanced using $531 million transferred in available special funds, and $100 million from the state’s Rainy Day Fund, which will have $243 million remaining. The budget also relies on about $1.3 billion in federal Coronavirus relief aid.

According to a story in Capitolwire, the Commonwealth also received unexpected news that the federal government will be continuing its enhanced matching payments for the Medicaid program. The enhanced Federal Medical Assistance Percentage will provide nearly $2.1 billion more to Pennsylvania’s Medical Assistance program than had been initial planned by the state’s budget experts.

In May, lawmakers approved a partial, stopgap budget, hoping to have a better understanding by November of how the pandemic and economic fallout would impact tax revenues. Fortunately, revenues over the last several months have been higher than anticipated. In addition to the May budget, the state’s total operating expenses through June 2021 is now $36.5 billion – a roughly 4 percent spending increase compared to the previous year – but a 9.8 percent decrease from the governor’s initial budget request in February.

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