Updates

Governor Wolf's 2015-16 Budget Proposal and the World Class Agenda

March 6, 2015

 

The Economy League assesses how Governor Wolf's recently-proposed state budget aligns with the priorities and strategies identified in the World Class Greater Philadelphia agenda.

 

It’s budget season and governors from all three states in the region have unveiled 2015-2016 budget proposals. For Governors Chris Christie in New Jersey and Jack Markell in Delaware, each in their second terms, these budgets represent a continuation of their long-term priorities. Governor Christie’s budget continues planned business tax cuts intended to create a more competitive business environment in the state. Among the highlights of Governor Markell’s budget are increased funding for schools and improvements to the Port of Wilmington. 

 

With the election last fall of a new governor in Pennsylvania, the budget proposal unveiled by Governor Tom Wolf this week looks markedly different from recent years. Governor Wolf’s inaugural budget proposes a number of bold changes on both sides of the ledger, with significant tax reforms as well as increased spending.

 

The Economy League has sorted through the many components of Governor Wolf’s proposal and assessed how it aligns with the priorities and strategies identified in the World Class Greater Philadelphia agenda. Click below for a brief analysis of how this budget proposal would advance each of the three World Class focus areas – education and talent development, business growth, and infrastructure.

 

>> Click here for analysis of Governor Wolf’s budget proposal and the Education and Talent agenda.

>> Click here for analysis of Governor Wolf’s budget proposal and the Business Growth agenda.

>> Click here for analysis of Governor Wolf’s budget proposal and the Infrastructure agenda.

>> Click here for an overview of how Governor Wolf plans to fund these investments.


 

Education and Talent Development

 

With the possible exception of his proposed tax changes, Governor Wolf’s education budget has received more attention than any other part of the state budget. His proposal expands resources across the education pipeline – from early childhood to workforce training.

 

Early Learning

 

Priority World Class Strategy:

 

  • Increase the number and accessibility of high-quality early childhood education slots

Governor Wolf's proposal to increase state funding by $120 million in 2016 will significantly expand access to pre-k in the state. His budget doubles funding for Pre-K Counts, the state’s high-quality public pre-k program, which serves three-and four-year-olds in low- and moderate-income families. In addition, he has requested a 51 percent increase in funding for Head Start. These dollars supplement federal Head Start funding and are used to serve children living in families in poverty (less than $24,250 for a family of four) or with other significant risk factors.

 

These increases would bring the total share of children served to almost 25 percent of all three- and four-year-olds in the Commonwealth, a healthy increase over the 18 percent of children currently served. High-quality pre-k, and these programs specifically, have been proven to get children ready for school and decrease the need for special education and remedial services.

 

As part of the World Class agenda, the Economy League, in partnership with nine statewide partners, founded the Pre-K for PA Campaign to elevate this issue in the 2014 state elections. Since then, the campaign has been working with the new administration and legislators to find ways to expand access.

 

K-12 Education

 

Priority World Class Strategies:

 

  • Improve K-12 teacher effectiveness and school leadership

  • Strengthen connections between education and career opportunities

While the World Class agenda does not directly address K-12 school funding, it’s clear that the strategies identified to move the region forward – having effective teachers and school leadership, making strong connections between education and careers, and family engagement – cannot be pursued without adequate funding levels. Currently, Pennsylvania provides a smaller share of school district funding than most states do and is one of just three states without a school funding formula. Governor Wolf’s proposal to increase the share of school funding provided by the state and ongoing efforts to establish a funding formula have the potential to ensure both more funding for and equity across local districts. For 2016, the governor has proposed a $400 million, or 7 percent, increase in basic education funding.

 

Governor Wolf’s budget also provides funding to strengthen connections between K-12 and college and career opportunities. The budget restores a small portion of state funding to support dual enrollment for high school students, which allows students to enroll in college courses and earn credits before they graduate. At its height in 2010, the state provided $63 million for dual enrollment. Wolf’s proposed funding for 2016 is modest – $9 million.

 

In addition, the budget calls for $23 million in additional funding for career counselors for middle and high school students and to support partnerships among school districts, higher education institutions, employers, and labor organizations to train students for high-demand, well-paying jobs.

 

Postsecondary Credentials

 

Priority World Class Strategies:

 

  • Improve postsecondary access and completion rates

  • Increase access to and completion of industry-valued credentials

Lack of affordability is a key barrier to students enrolling in and completing postsecondary degrees. Budget challenges resulted in significant cuts to state-funded colleges and universities over the last four years, and those cuts have been dealt with largely through tuition increases. Governor Wolf’s budget restores $159 million, or about half, of the recent cuts to higher education in the state. This total includes $15 million for community colleges. In exchange for the increase, the governor has asked that community colleges and state system universities freeze their tuitions. 

 

Workforce Readiness

 

Priority World Class Strategy:

 

  • Align education and training programs with regional opportunities

Governor Wolf’s budget places a priority on supporting effective partnerships between job training systems and employers. Toward this, the budget proposes a six-fold increase – from $1.8 million to $11.6 million – in funding for the state’s Industry Partnerships program, which brings together companies in related industries to identify common skill needs and develop training programs. The budget also provides an $8 million increase for the Workforce and Economic Development Network of PA, which designs employer-driven, customized job training programs in partnership with higher education institutions.

 

Business Growth

 

As might be expected from a former business owner, Governor Wolf’s proposed 2015-16 budget places an emphasis on spurring business and job growth. It features proposed funding increases for several existing economic development programs, in particular those focused on job training and international business development.

 

While initial coverage of Wolf’s budget has emphasized proposals to halve the corporate income tax and expand use of job creation tax credits, neither of these approaches were identified in the World Class agenda as long-run priorities to spur job growth in Greater Philadelphia. The following items in the governor’s budget proposal align directly with World Class business growth priorities around starting and growing businesses, spurring innovation, and selling to the world.

 

Starting and Growing Businesses

 

Priority World Class strategies:

 

  • Strengthen entrepreneurial networks

  • Increase availability of growth capital

  • Support cluster-focused talent development

Pennsylvania First is one of the Department of Community and Economic Development’s largest programs, providing grants to support job creation and retention, infrastructure projects, and workforce development – all efforts that help with starting and growing businesses. The governor proposes more than doubling the PA First budget, with an additional $25 million geared particularly toward increased investments in customized job training.

 

One of the most dramatic proposed line item increases in Wolf’s budget supports cluster-focused talent development. Funding for Pennsylvania’s nationally-recognized Industry Partnerships program, which supports employer-led consortiums within industry sectors in meeting their training and workforce development needs, would have a six-fold increase from $1.8 million to $11.6 million.

 

Innovation

 

Priority World Class strategy:

 

  • Connect industry and universities to drive technology transfer

Two items in the proposed budget focus on investing in innovation assets to accelerate technology transfer and commercialization. The proposal maintains stable funding at $14.5 million for the Ben Franklin Technology Development Authority, which promotes advanced technology in traditional and emerging industries. BFTDA funding supports Ben Franklin Technology Partners of Southeastern Pennsylvania in our region, as well as venture capital investments in Pennsylvania companies, grants for research consortia, and university research commercialization grants.

 

The budget brings back state support for seven Industrial Resource Centers (IRCs) across the Commonwealth that provide technical assistance and other services to small- and medium-sized manufacturers. The $12 million allocation for IRCs would focus on connecting Pennsylvania universities and manufacturing firms to advance technology transfer and commercialization.

 

Selling to the World

 

Priority World Class strategies:

 

  • Advance the region’s position as a hub for global business

  • Market the region’s business assets and success stories

Following a sharp decrease in the current year budget, Governor Wolf proposes restoring funding for the World Trade PA program to prior levels. This $1 million increase supports domestic and international services to increase exports from Pennsylvania businesses and to attract foreign direct investments to the Commonwealth. Economist and Economy League board member Joel Naroff called out the importance of this program in a Philadelphia Inquirer column earlier this week. The Economy League is working in partnership with the World Trade Center of Greater Philadelphia, PA Office of International Business Development, the City of Philadelphia, the Brookings Institution, and an array of regional stakeholders to develop a metro epxort plan during 2015 that will support and leverage the nationally recognized World Trade PA program.

 

The budget also includes increases for two business marketing programs. There is an additional $1 million for economic development marketing and advertising to attract businesses to the Commonwealth and an extra $2 million devoted to tourism promotion.

 

Prepping for Regional Collaboration

 

The success of the entire World Class business growth agenda depends upon sustained regional collaboration, and the governor’s proposed budget maintains level funding ($11.9 million) for the Partnerships for Regional Economic Performance (PREP) program, which supports integration and coordination of regional economic development efforts.

 

Infrastructure

 

Much of the funding for infrastructure included in the governor’s budget is driven by Act 89, which established historic levels of dedicated transportation funding when approved by the legislature in late 2013. While many transportation infrastructure funding decisions are out of Wolf’s hands, the governor's budget address did provide an indication of what he considers to be priorities moving forward, a number of which align with the World Class infrastructure agenda.

 

The governor has more in the way of budgetary discretion around the sustainable systems portion of the World Class agenda, and his proposals would change the funding landscape for energy, water, and open space networks.

 
Global and National Connections

 

Priority World Class strategies:

 

  • Develop Philadelphia International Airport as a world class facility

  • Improve intercity rail connection with key metros

While the Commonwealth’s general fund does not directly fund airport and rail (PennDOT’s multimodal transportation fund is responsible for this), it does provide funding to increase exports and attract foreign direct investment (as noted in the business growth budget analysis). Growing exports and deepening international business relationships represent a powerful driver for increased investments in airport and rail capacity. In his budget address, Governor Wolf emphasized the economic development potential of the Commonwealth’s ports in Philadelphia, Pittsburgh, and Erie.

 

Regional Mobility

 

Priority World Class strategies:

 

  • Bring the region’s transit systems up to a state of good repair

  • Upgrade aging roads and bridges

  • Strengthen connections between the region’s economic hubs

Governor Wolf’s budget proposal continues ramped-up investment in transportation projects based on Act 89. Funded projects total more than $500 million through 2017. While unveiling his budget, he also gave a nod to the importance of public-private partnerships as a model for driving continued investment in transportation.

 

Sustainable Systems

 

Priority World Class Strategies:

 

  • Modernize and protect the region’s existing water infrastructure

  • Enhance regional energy infrastructure

  • Preserve and expand the region’s networks of parks and open space

This budget restores most of the funding that was cut last year from the Delaware River Basin Commission. The commission includes Pennsylvania, New York, New Jersey, and Delaware and is charged with protecting water quality in the Delaware River, which supplies drinking water to 16 million people across member states. 

In alignment with the need to capitalize on emerging energy sector opportunities that was identified in the World Class agenda, Governor Wolf proposed a $225 million clean energy bond that would provide $100 million for alternative energy, $50 million for solar power installation rebates, and $50 million for energy efficiency. An additional $25 million would go to support “last mile” natural gas distribution line development.

 

The state’s park system is also in line for additional funding. This budget provides a 2.4 percent increase for the Department of Conservation and Natural Resources. State park and forest operations are set to receive an increase of nearly $20 million. The budget also shifts how DCNR is funded, moving away from reliance on royalties from natural gas drilling on public lands and instead funding the department through the general fund.