State Government Overview

Chapter 3:
State Government Overview

What is a Commonwealth?

A Commonwealth refers to the “weal” or well-being of the public. It is of English origin and most likely came from the early colony of William Penn, which was known as the Quaker Commonwealth. This region later became Pennsylvania. Interestingly, Pennsylvania was called a Commonwealth and a State in its first Constitution in 1776. State Constitutions since then have used these two words to mean the same place. Legally, there have been no major differences between the two terms. There are three other Commonwealths in the United States: Virginia, Kentucky, and Massachusetts.

The Pennsylvania Constitution and Branches of Government

Pennsylvania state government is made up of the Legislature, the Executive Branch, and the Judicial Branch. Each branch has a separate chapter in this book. The powers of these three branches are spelled out in separate sections (articles) of the Pennsylvania Constitution. For instance, the Legislature is granted powers by Article II, the Executive Branch by Article IV, and the Judiciary by Article V of the Constitution.

The Legislature (General Assembly)

The Pennsylvania Legislature, also known as the General Assembly, has two parts (which is called a bicameral legislature) that consists of a Senate and a House of Representatives. The main role of the Legislature is to write (draft), change (amend), and pass laws in Pennsylvania. There are 50 Senators in the Senate and 203 Representatives in the House of Representatives. All members of the Pennsylvania Legislature are elected. Senators serve a term of four years while Representatives serve a two year term.

The Executive Branch

The Executive Branch must carry out the laws passed by the Legislature. It also creates a vision for the future of the Commonwealth and guides that vision among the other branches of government. Both elected (the Governor and Lt. Governor) and appointed officials (cabinet secretaries) make up the Executive Branch.

There are many departments in the Executive Branch. As a group they are under the office of the Governor, Pennsylvania’s highest office. The Governor, an elected official, runs all the departments. Examples include the Pennsylvania Department of Education, the Pennsylvania Department of Transportation, and the Department of Labor and Industry, to name a few. The head of each department serves in the Governor’s Cabinet. Second in Command to the Governor is the Lieutenant Governor, who is also elected.

There are also offices in the Executive Branch that operate separately from the Governor’s Office. These include the Office of the Attorney General, the Office of the Auditor General, and the State Treasurer’s Office. The head of these offices is elected by the citizens of Pennsylvania.

The Judicial Branch

The main job of the Judicial Branch is to understand (or to “interpret”) and apply the laws of the Commonwealth of Pennsylvania. At the top of the Judicial Branch is the Pennsylvania State Supreme Court. Every court in Pennsylvania falls under the supervision of the Supreme Court. In addition to the Supreme Court are two appellate courts, the Superior Court, and the Commonwealth Court. Each county has a Court of Common Pleas. There are also community courts, district justices, municipal/traffic courts of Philadelphia, and police magistrate courts in Pittsburgh.

How State and Local Governments Work Together

All three branches of State Government work with counties, cities, boroughs, townships, and school districts in Pennsylvania. First, the legislators work with the citizens they represent. Legislators bridge the gap between the residents they represent and the state legislature, working to make sure their needs are being heard and addressed. Legislators often work with state agencies in the Executive Branch to ensure services, information, and programs are provided to their residents.

The Executive Branch serves communities through the state agencies it oversees. For example, the Pennsylvania Department of Community and Economic Development (DCED) provides financial assistance, technical assistance, and training for municipalities in Pennsylvania. The Pennsylvania Department of Transportation (PennDOT) provides municipalities with transportation and engineering information and services. The Pennsylvania Department of Conservation and Natural Resources may provide grants and technical assistance to help municipalities preserve land, historic landmarks, and recreational facilities.

The Judicial Branch provides interpretations of the law when a municipality is involved in a lawsuit. Courts will hear cases when there is a disagreement between municipalities or between a municipality and a citizen or business and deliver a verdict. These verdicts can be appealed to a higher court in the system, all the way up to the Pennsylvania Supreme Court.

Financing State Government

State Government is financed through a system of taxes administered by the Pennsylvania Department of Revenue as outlined in Pennsylvania law. These taxes may apply to individuals or businesses.

Some of the taxes collected by the Pennsylvania Department of Revenue include:

Pennsylvania State Taxes
TaxDescription
Personal Income Tax

Tax on income (salaries and wages) of residents, nonresident individuals, estates, trusts, partnerships, and some types of businesses. The following types of income are taxed in Pennsylvania:

  • Compensation (pay for work, like wages)
  • Interest
  • Dividends
  • Net Profits from the operation of a business
  • Income from the sale of property
  • Income from rents, royalties, patents, and copyrights
  • Income derived from estates or trusts
  • Gambling and lottery winnings (but not Pennsylvania Lottery winnings)
Sales and Use Tax

This tax is placed on what you buy, what you consume, what you rent in Pennsylvania. Some services you buy from businesses are also taxed. But some things are not taxed, including:

  • Food (not ready-to-eat)
  • Candy and gum
  • Most clothing
  • Textbooks
  • Computer services
  • Pharmaceutical Drugs
  • Heating fuels (e.g. oil, electricity, gas, coal and firewood) for your house
Corporate Taxes

Corporations pay taxes to Pennsylvania that include the corporate net income tax, corporate loan tax, capital stock tax, and foreign franchise tax.

Other Taxes

An inheritance Tax is paid when someone leaves you property or money in a will. How much you pay depends upon your relationship to the person who left you the property.

When land or a building is sold there is a tax. If you buy a house a percent of the cost will be collected in taxes.

There are also four types of taxes of fuels in Pennsylvania.

  • Liquid fuels and fuel tax (the tax you pay at the pump)
  • Motor carriers road tax/IFTA (Fuel taxes imposed on certain vehicles used in interstate operations)
  • Alternative fuels tax (Tax on others fuels used in vehicles such as natural gas, liquid propane gas, and gasoline-alcohol mixtures)
  • Oil company franchise tax (Tax paid by oil companies operating in Pennsylvania) Other State Taxes Cigarette Tax, Hotel Occupancy Tax, Malt Beverage & Liquor Tax, Public Transportation Assistance & Vehicle Rental Tax, Small Games of Chance

State Revenues and Expenditures

The budget is first prepared by the Office of the Budget and starts the discussion about what should be spent on which government services. Each budget follows a “fiscal year” which in Pennsylvania begins July 1 and ends June 30. As provided in the Pennsylvania Constitution, the Governor must submit a budget each year for adoption by the General Assembly. The Governor then sends the budget to the Generally Assembly where changes may be made and a final vote is taken. The Assembly sends a signed budget to the Governor.

The Governor can do several things when the signed budget is returned. The Governor can sign the budget into law, or can send it back to the General Assembly for change. In this case a new budget will be sent for signature. Or, the Governor can choose not to sign the budget presented by the General Assembly and let it become law in ten days without the Governor’s signature. The General Assembly can add, change or delete any items in the proposed budget. The Governor can veto parts of the budget and then sign it into law. However, the Governor’s veto can be overridden by a two-thirds majority in the Senate and the House of Representatives.

The Pennsylvania Budget is created to plan how state dollars will be spent. Each agency has its own part of the budget. Much of the budget provides dollars to support programs that must be provided by law. Sometimes these laws come from the federal government, but the state must still provide the dollars (sometimes the cost is shared by Pennsylvania and the federal government). In the budget, there is a section that highlights the state’s priorities and how the state plans to address these priorities.

Types of Revenues

Pennsylvania collects most of the money it needs to run the government through taxes. These include the income tax (a percent of your pay and investment income), sales and use tax, taxes on corporations, a portion of money you inherit, taxes when you buy or sell real estate, and taxes on gasoline at the pump. The state has sources of money in addition to taxes such as fees for using state parks, special funds (see below), and the Federal Government.

Special Funds

Examples of special funds are listed in the following table.

Pennsylvania Special Funds
Special FundHow is it CollectedWhat is it Used For?
Motor License Fund Taxes on liquid fuels and aviation fuels, federal aid for highway projects, and fees (driver licenses, license plates, etc.) Highway and bridge repairs; Department of Transportation licensing and safety activities; State Police highway patrol operations; providing subsidies to counties and municipalities for construction and maintenance of roads and bridges
Banking Fund Fees, assessments, charges and penalties collected from persons, firms, corporations, or associations under the supervision of the Department of Banking and Securities Funding the Department of Banking and Securities which regulates the financial services industry.
Fish Fund Collected from fishing license fees, fines, penalties, federal contributions and other sources. Used for administration and enforcement of the fish laws.
Game Fund Collected from hunting license fees, sale of wood products, fines and penalties, interest, rents and federal contributions Used for administration and enforcement of the game laws as well as the protection of game species.
Lottery Fund Collected from lottery ticket sales Used for lottery prizes and programs to support older Pennsylvanians including help paying property taxes and rent assistance, community care programs, mass transit fare subsidies, and prescription drug costs
Racing Fund Collected from taxes and license fees by the State Harness Racing Commission and the State Horse Racing Commission Regulation of horse and harness racing.

Federal Government Funds

The federal government gives money to Pennsylvania in two ways: categorical grants and block grants. Categorical grants can only be used for a specific purpose, while block grants can be used for any reason allowed by federal law. Block grants are often set by a formula.

Examples of Block Grants:

Examples of Pennsylvania Block Grants
Block GrantWhat does it do?
Community Services Provides funding for community-based programs which offer health, nutrition, housing, and employment-related services for low-income persons.
Maternal and Child Health Services Provides funding for planning, promoting and evaluating health care for pregnant women, mothers, infants and children with special health care needs.
Preventive Health and Health Services Includes funds for programs for preventive health services such as feasibility studies and planning for emergency medical services systems, programs for community and school-based fluoridation, and activities to affect improvements in health status through achievement of the National Year 2010 Health Objectives.
Workforce Investment These funds go to three main program components: Adult, Youth and Dislocated Workers. The main goals of this funding are to improve the education and career skills of residents in Pennsylvania to increase earnings and maintain productivity. Child Care and Development Fund Assists in providing child care to children of low-income working parents and to help parents become self-dependent.
Low-Income Energy Assistance Assists low-income individuals and families in paying for the cost of heating their homes.
Mental Health Services Funds services for adults and children who have serious mental illness or emotional disturbance.
Social Services Funds programs that are designed to help with individuals and families becoming self-dependent.
Temporary Assistance to Needy Families (TANF) Provides temporary cash and other benefits to help needy families become self-dependent.
Justice Assistance Grant (JAG) Provides resources for state and local governments to implement a wide range of drug enforcement and correctional treatment projects.

How the State Spends Money

Pennsylvania uses the dollars it receives from taxes, special funds, and federal grants to fund programs included in the annual state budget. Most dollars go to the same needs year after year, such as help to pay for schools. Other programs are based upon needs of the moment (paying for disasters) or upon the goals and main concerns of those who run the government. Because priorities can change from year to year, some plans for spending money also change from year to year.

Direction and Supportive Services

“Direction and Supportive Services” is a term used to describe programs that support and improve how state government works. These programs help those who run the state find ways to do more with the people’s dollars. Words such as “efficiency” or “doing more with less” or ”streamlining” are often used to tell what is important. These programs, and the state offices that make the programs work, change when the needs of the state change or perhaps when a new group of leaders is elected to state office. In other words, these programs can change year to year. Past goals have included Administrative and Support Services, Fiscal Management, Physical Facilities and Commodities Management, Legislative Processes, and Interstate Relations.

Agencies included in the program:

  • Governor’s Office
  • Executive Offices
  • Lieutenant Governor
  • Auditor General
  • Treasury
  • Civil Service Commission
  • Department of General Services
  • Department of Revenue
  • Ethics Commission
  • Health Care Cost Containment Council
  • eHealth Partnership Authority
  • State Employees’ Retirement System
  • Government Support Agencies
  • The Legislature

Protection of Persons and Property

The state also spends money to protect Pennsylvania’s citizens from natural and man-made disasters, and from those who break the law or act in unfair ways. This portion of the budget funds services such as environmental protection services, banking protection services, juvenile services, consumer protection services, and public protection and law enforcement.

Major agencies included in this program:

  • State Police
  • Department of Banking and Securities
  • Attorney General
  • Department of Corrections
  • Public Utility Commission
  • Liquor Control Board
  • Pennsylvania Emergency Management Agency
  • Board of Probation and Parole
  • Judiciary
  • Milk Marketing Board
  • Department of State
  • Insurance Department
  • Executive Offices
  • Department of Environmental Protection
  • Department of Agriculture
  • Department of Labor and Industry
  • Department of Military and Veterans Affairs
  • Department of Transportation

Education

The Education program provides educational support services for Pennsylvania’s 500 school districts and the 14 Universities in the Pennsylvania State System of Higher Education. Educational programs such as Pre-Kindergarten and financial assistance to college students are funded through this program.

Major agencies included in this program:

  • Department of Education
  • Department of Revenue
  • Department of Public Welfare
  • Department of Labor and Industry
  • Higher Education Assistance Agency
  • State Tax Equalization Board

Health and Human Services

Health and human services require a major portion of the state’s budget. Hence, many of the tax money collected by the state is needed for these services. The state has several major goals, including needed health care for all citizens, especially children, equality of medical care for all citizens, support people seeking self-sufficiency, provide military readiness and assistance to veterans and maximize opportunities for individuals and families to participate in society.

More specifically, this program addresses the following:

  • Research
  • Prevention and treatment of physical, mental health and intellectual disabilities
  • Maternal and child health care
  • Financial assistance for older Pennsylvanians and medically needy individuals and families in transition

Major Agencies:

  • Department of Aging
  • Department of Health
  • Drug and Alcohol Programs
  • Department of Public Welfare
  • Department of Agriculture
  • Department of Labor and Industry
  • Department of Military and Veterans Affairs
  • Department of Revenue

Community and Economic Development

Community and Economic Development programs are tasked with creating jobs and resources to help train Pennsylvania citizens to fill existing and newly created jobs, to provide a range of housing opportunities and to build healthy and sustainable communities. The program accomplishes these tasks through grants and loans, working with state authorities and agencies, and through public/private partnerships that help bridge the gap between a company’s needs and the needs of Pennsylvania residents to fill the jobs offered by the company.

Major agencies include:

  • Department of Community and Economic Development
  • Pennsylvania Economic Development Financing Authority
  • Infrastructure Investment Authority (PENNVEST)
  • Executive Offices
  • Auditor General
  • Housing Finance Agency
  • Department of Education
  • Department of Labor and Industry
  • Department of Revenue

Transportation

This Commonwealth Program supports the roads, highways, bridges, multimodal transportation, and other infrastructure in Pennsylvania to ensure that residents can travel from one place to another safely and efficiently.

Major agencies include:

  • Department of Transportation

Recreation and Cultural Enrichment

The Recreation and Cultural Enrichment program supports parks, forests, fishing, boating, and wildlife management in Pennsylvania. In addition, the program provides local museum assistance, state library services, state historical preservation, and development of artists and audiences.

Major agencies include:

  • Department of Conservation and Natural Resources
  • Department of Education
  • Historical and Museum Commission
  • Fish and Boat Commission
  • Game Commission
  • Council on the Arts

Debt Service

The Debt Service program is tasked with ensuring that payments of commonwealth debt obligations are made on time and in full. Debt is used to help finance the major operations in Pennsylvania to meet specific goals outlined by the administration or the residents of Pennsylvania. For example, relief programs for emergencies caused by natural disasters would most likely be funded through the issuance of bonds or debt.

Major agencies include:

  • Treasury

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