PA Budget Passes: Not So Great for Construction

As expected, the Commonwealth’s legislature passed a 2018-2019 budget yesterday, sending to the governor a spending bill that creates a surplus for the Rainy Day Fund without raising taxes. The budget also increases funding for education and, specifically, props up the ailing PASSHE system schools. In a gubernatorial election year such cooperation was expected, but the healthy bump in revenues through five months (that is expected to continue into 2019) made the budgeting process smoother.

For the construction industry, however, the budget is a continuation of the under-investment that has marked the Corbett and Wolf administrations, which saw Republican majorities in the state houses. The new budget does nothing to fix PlanCon, contrary to promises made by members of the advisory committee for the reform of the K-12 reimbursement mechanism. There is also less funding for capital projects statewide. And nothing was done to address the looting of the funds generated by the gas tax increase in Act 89 of 2013. That highway bill was designed to add $3.5 billion to annual bridge and highway funding by 2019 but more than $700 million has been “appropriated” to make up a gap in state police funding. The gap is due to PA State Police patrols of communities that cannot afford local police forces.

The PlanCon situation is particularly troublesome for the industry, because the system has been under a moratorium since mid-2015. Projects not already well along with the design process at that point have been stuck in PlanCon purgatory since. Some districts have found ways to deliver projects without the additional funding that PA would provide by reimbursement, but some unknown number of capital programs will remain stuck through at least mid-2019.

New Castle School 005Funding for projects already in the process has been allocated, which is some good news. Firms involved in public construction hoping for improvement in the coming year got little other good news yesterday.

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