Pennsylvania’s budget basics
According to the National Association of State Budget Officers (NASBO), Pennsylvania’s total expenditures in fiscal year (FY) 2021 were $103.8 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, Pennsylvania’s combined state and local direct general expenditures were $146.0 billion in FY 2020 (the most recent year census data were available), or $11,237 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.
Pennsylvania’s largest spending areas per capita were public welfare ($3,225) and elementary and secondary education ($2,510). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
Pennsylvania’s combined state and local general revenues were $143.2 billion in FY 2020, or $11,024 per capita. National per capita general revenues were $10,933. Pennsylvania uses all major state and local taxes. After federal transfers, Pennsylvania’s largest sources of per capita revenue were charges ($1,667), such as state university tuition and highway tolls, and property taxes ($1,644).
Governor Tom Wolf, a Democrat, was elected in 2018 with 58 percent of the vote. The next gubernatorial election is in 2022.
Pennsylvania has a divided government. Republicans control both the House of Representatives (113 Republicans to 89 Democrats) and Senate (28 Republicans to 21 Democrats and 1 independent). All Pennsylvania House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2022, and the other half will be up for election in 2024.
Pennsylvania’s budget institutions, rules, and constraints
Pennsylvania uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Pennsylvania does not have any other tax or expenditure limits. The state does limit total authorized debt and debt service incurred by the state.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
Pennsylvania’s current budget
Pennsylvania enacted its FY 2022 budget in June 2021. According to the governor, the enacted budget included $38.6 billion in general fund spending, a 13 percent increase over FY 2021. (Pennsylvania’s definition of its general fund spending is not the same as NASBO’s definition, so the historical totals reported below are not comparable. See NASBO’s report for more detail.)
Under the American Rescue Plan, Pennsylvania will receive $7.3 billion in direct state fiscal aid and $5.2 billion in local government aid from the federal government. As of January 2022, Pennsylvania had spent part of its ARP funds on revenue replacement, public health programs, and education spending.
According to NASBO, Pennsylvania’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
FY 2022: $34.0 billion
FY 2021: $34.0 billion/$103.8 billion
FY 2020: $36.3 billion/$96.0 billion
FY 2019: $36.3 billion/$89.6 billion
For more on Pennsylvania’s budget, see
Pennsylvania’s economic trends
Pennsylvania’s per capita income (per the Bureau of Economic Analysis) was $64,054 in 2021, ranking 17th among the states. It was above the national average of $63,444, but below the Mideast regional average of $71,946. The state’s median household income (five-year estimate) was $63,627 in 2020, ranking 22nd among the states and below the national average of $64,994. Pennsylvania’s poverty rate was 12 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.
Although Pennsylvania’s averages tell a story about the entire state, Pennsylvania is composed of diverse localities. For example, the city of Chester’s median household income was $32,867, and its poverty rate was 30.4 percent; the city of Bethel Park’s median household income was $84,304, and its poverty rate was 4.7 percent.
Pennsylvania’s unemployment rate historically tracks the national average. The state’s rate was slightly below the national average following the Great Recession, but it has again paralleled the US rate for the past few years.
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Pennsylvania, the average unemployment rate in 2021 was 5.8 percent for white residents, 12.5 percent for Black residents, and 12.2 percent for Hispanic or Latino residents.