Today, a contingent of House Republicans—with the support of House leadership—released a plan to balance the state budget without borrowing or imposing broad-based tax increases. This is a positive development for working families in Pennsylvania.
The plan includes more than $1.2 billion in transfers from 41 different shadow budget funds to pay for last year’s bills. It also calls for fund transfers from the Joint Underwriter’s Association Fund, the Pennsylvania Liquor Control Board, and the legislature’s own accounts. These fund transfers provide non-recurring revenue. However, the plan does call for recurring revenue sources as well.
Among these revenue sources include the permanent transfer of surplus funds from the shadow budget—$100 million in total—as well as a reduction in tax credits. While the House proposal does include a sales tax expansion and an increase in assessments on hospitals, the vast majority of the revenue realized is from funds already collected from taxpayers. Here’s a breakdown of the House’s revenue plan:
As the table shows, two of the recommendations specifically dedicate revenue to bills the state has already incurred from the 2016-17 fiscal year. In other words, lawmakers are proposing the use of one-time revenue sources to cover a one-time debt.
This fact is conveniently ignored by critics who are already misrepresenting the plan, preferring the Senate’s alternative of broad-based tax increases and irresponsible borrowing. Yet, as this latest House proposal makes clear, large tax increases and $1 billion + in borrowing is not necessary to balance the state budget.
Overall, the plan’s recommendations would free up more than $2.4 billion to cover deficits for the two most recent fiscal years. While the plan is a reasonable alternative to the tax-and-borrow approach, it represents just one option for lawmakers.
Liquor privatization and gambling expansion are also on the table and could raise a considerable amount of recurring revenue. Incorporating these proposals in “The Taxpayers’ Budget” could serve as a compromise for sober critics who believe the state needs more recurring revenue but also reject harmful tax hikes.
This encouraging development should give hope to taxpayers who know Pennsylvania already places too great a tax burden on working families.