Pennsylvania State Budget
Within hours of receiving the Legislature’s budget, Governor Wolf issued a blow to working families by vetoing the on-time, no-tax-hike spending plan. The truth is, Gov. Wolf’s own plan is grossly out of line with every other state in the union put together. All 49 other states combined are decreasing spending by $1.5 billion, yet Wolf is demanding a $4.6 billion increase for Pennsylvania.
June 30, 2015, HARRISBURG, Pa.—Today, the General Assembly passed a state budget that respects Pennsylvanians’ hard-earned incomes by avoiding tax hikes while investing responsibly in the state’s future.
Family ties can bind us together across any cultural or class boundary. Maintaining and promoting them should be our first priority. But while politicians routinely give lip service to helping families like yours and mine prosper, I’ve found that their solutions often do more harm than good.
Recent Blog Posts
Today marks the 10th anniversary of the midnight pay raise. Although it was ultimately repealed, the pay raise was a dark hour in Pennsylvania political history. Over the past decade, though, state government has steadily moved toward increased openness, transparency, and accountability.
Here are a few reforms lawmakers have enacted to shed more light on state government:
- the open records law and creation of the Office of Open Records
- PennWatch, a searchable database of state expenditures
- the lobbying disclosure law
- the Independent Fiscal Office (IFO), which releases independent revenue projections and selected analysis of legislative proposals
- legislative rules preventing middle of the night votes
- the posting of roll call votes and fiscal notes online
Thanks to these measures, the public is better informed. Take Gov. Tom Wolf's budget proposal, for instance. Gov. Wolf may claim that his budget provides "property tax relief," but the IFO estimates it would amount to a $4.5 billion tax hike on Pennsylvanians in EVERY income level. That's just one example of how enhanced transparency helps taxpayers uncover the truth.
In that same spirit, the latest legislative push for transparency would shine light on negotiations for state worker contracts. Currently, taxpayers are kept in the dark about a process that adds millions of dollars each year to the cost of government.
Transparency alone will not return Pennsylvania to prosperity, but it serves as a powerful tool combating half-truths that are used to justify greater burdens on Pennsylvania families.
Throughout this state budget debate, Gov. Wolf has touted his natural gas severance tax to fund education. And some reporters refer to the severance tax as the "cornerstone" or "centerpiece" of his plan.
Except it isn't. The severance tax makes up a slim portion of Gov. Wolf’s proposed tax increases. In fact, his plan to tax health care and day care would raise more revenue than slapping an additional tax on the natural gas industry.
He never talks about his sales tax proposals—probably because they are so unpopular. His entire tax plan couldn't garner one single vote in the House. It failed 0-193. Yet, he hasn't said whether he is still demanding a $4.6 billion tax increase.
Even if Gov. Wolf has dropped the majority of his massive tax hikes, that’s no reason to accept a new severance tax. As Dawn pointed out yesterday, the severance tax is bad for all energy consumers, no matter your income level.
Proponents of a new natural gas tax—which would be in addition to the existing impact fee (tax) and other taxes extractors already pay—ignore the consequences new taxes will have on working people.
In contrast, the Independent Fiscal Office's analysis of Gov. Wolf's severance tax proposal finds Pennsylvania families and businesses will pay the tax through higher energy prices. Even though 80 percent of the tax will be borne by consumers in other states, Pennsylvania residents will still shoulder a significant burden.
Households earning less than $100,000 will pay $180 million more annually in higher utility bills as a result of Gov. Wolf's proposal.
|Tax Incidence for Pennsylvania Residents, FY 2018-19|
|Net tax increase by household income under Wolf proposed budget, in millions|
|Under $25,000||$25,000-$49,999||$50,000-$74,999||$75,000-$99,999||$100,000-$250,000||More than $250,000||Total, Households less than $100,000|
|Sales and Use||$367||$616||$606||$512||$1,283||$721||$2,101|
|Corporate Net Income||($25)||($45)||($41)||($35)||($87)||($75)||($146)|
|Net Severance tax||$44||$56||$47||$34||$60||$23||$181|
|Source: Independent Fiscal Office: http://www.ifo.state.pa.us/resources/PDF/Revenue_Proposal_Analysis_April2015.pdf|
If enacted, Gov. Wolf's proposed tax would be the highest effective rate in the country.
Further, as I pointed out in recent testimony, the tax would hinder job creation and economic growth. Using the STAMP model developed by the Beacon Hill Institute at Suffolk University, we found the proposed severance tax, with no other tax changes, would result in 4,138 fewer private sector jobs in fiscal year 2017.
Encacting a severance tax won't result in free money from pots of gold found at the end of rainbows—it will be paid for by families through higher energy bills and by residents in the form of fewer job opportunities.
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.