As you already are aware, the FY24 budget for the Commonwealth of Pennsylvania is in a holding pattern. Both chambers of the General Assembly have passed a spending bill, but the debate over school vouchers and a deal that Gov. Josh Shapiro made and reneged on has Senate Republicans fuming and refusing to return to Harrisburg.
Why is that important? The state constitution requires that “The presiding officer of each House shall, in the presence of the House over which he presides, sign all bills and joint resolutions passed by the General Assembly, after their titles have been publicly read immediately before signing; and the fact of signing shall be entered on the journal.”
So what does this mean for you and me?
Question 1 – What is a budget impasse?
Answer: By June 30 of each year, the Commonwealth must approve a budget that sets funding levels for the following fiscal year (FY), which begins on July 1. If a budget has not been approved, the Commonwealth is prohibited from making many payments. This period, known as a budget impasse, continues until a budget is approved.
Question 2 – Will a budget impasse create any risks to the general public?
Answer: No. The Commonwealth will continue operations for all critical functions that impact the health, safety and/or welfare of the citizens of Pennsylvania.
Question 3 – Will a budget impasse affect public access to any Commonwealth operated facilities?
Answer: No. The Commonwealth will continue operations for Commonwealth-operated facilities, such as county assistance offices, prisons, youth development facilities and PennDOT locations. Citizens will continue to have access to state parks.
Question 4 – What Commonwealth operations will be impacted by a budget impasse?
Answer: Many Commonwealth expenditures cannot be made without an approved budget and will be delayed until that occurs.
Question 5: What type of payments can be made in a budget impasse?
Answer: The Commonwealth will continue to make payments and continue operations in all areas that affect the health, safety, and protection of Pennsylvanians or as required under Federal Law, state court decisions or the Pennsylvania Constitution, including:
- Public benefit programs administered by the state, including cash assistance, support for Women, Infants and Children (WIC)
- Health care services paid for through Medical Assistance, for hospitals, other healthcare providers and nursing homes
- Unemployment Compensation
- Child care subsidy payments
- Home and community based services, including attendant care, for seniors and people with disabilities
- Prescription drug coverage under the PACE program
- Pension programs for Blind and Paralyzed Veterans
- Medicare Part A and B premium payments
- Early intervention, autism and intellectual disability services
- State Workers’ Insurance Fund payments
- Commonwealth employee payroll
- Food and nutrition payments
- Public Protection payments
- Domestic Violence program payments
Question 6: What payments cannot be made during a budget impasse?
Answer: Most payments to vendors or to grantees for programs or expenditures incurred during FY 2023-24 that are authorized through the budget will be delayed until a budget is approved.
Question 7: How will the budget impasse affect education funding?
Answer: To the extent these funds must be appropriated by the General Assembly, payments will not be processed until a budget is approved for FY 2023-24.
Question 8: How will the budget impasse affect highway construction projects?
Answer: Construction can proceed for all work and payments funded from prior year appropriations. Examples of programs with available prior year funding include: Maintenance, Construction, Welcome Centers, Re-investment in Facilities, Aviation Operations, and Safety Administration. Vendor payments for goods or services incurred in FY 2023-24 will not be made until a budget is approved.
Question 9: Will Commonwealth agencies process invoices from vendors?
Answer: Yes. Vendors with state contracts who continue to provide goods and services to Commonwealth agencies can submit invoices and Commonwealth agencies will process all invoices received. All invoices held during the budget impasse will be sent promptly to the State Treasury for processing after the FY23-24 budget is enacted.
Question 10: How will the budget impasse affect existing contracts?
Answer: Most state contracts include language addressing this situation, which states that the Commonwealth’s obligation to make payments shall be subject to the availability and appropriation of funds and that contractors may not stop work or refuse to make delivery because of non-payment. If the Commonwealth’s untimely payment results in a default situation, the contractor may pursue the remedies set forth in the contract.
Question 11: Can Commonwealth agencies enter into new contracts for 2023-24?
Answer: Agencies may enter into new contracts for FY 2023-24. The contracts will clearly state that payment is subject to appropriation.
Question 12: Will Commonwealth revenues continue to be collected and deposited during a budget impasse?