Wolf’s Big, Bad Budget Leaves Families Behind

Feb. 3, 2021, Harrisburg, Pa. —Following Gov. Tom Wolf’s pre-recorded state budget address, Commonwealth Foundation Vice President Nathan Benefield, who has been studying the state budget for more than a decade, released the following reaction and analysis (click here for full version):

Wolf’s Tax Hike Targets Families and Small Businesses.

The centerpiece of Wolf’s budget proposal is the largest tax hike in Pennsylvania history—a massive 46% increase in the state income tax on working middle-class families and small businesses.
While Wolf proposes a questionable “tax forgiveness” scheme, families at the median family income—with fewer than five children—would pay more. Even with the tax forgiveness, Wolf’s proposal is a net $2.96 billion tax increase, representing $232 per resident (or $927 per family of four).
Notably, Wolf’s massive tax hike hammers local, small businesses. Most small businesses—sole owners, partnerships, LLCs, and S-Corporations—pay the Personal Income Tax. Approximately 855,000 small business owners paid the Personal Income Tax in 2018.

Wolf’s Education Plan Funds Empty Buildings, Not Parents and Students.

Pennsylvania school districts have already received more than $3 billion in emergency funding while sitting on $4.6 billion in fund reserves. Districts haven’t seen any reductions in state subsidies—even though enrollment has declined by 50,000 students this year as parents seek other options during the pandemic.
Roughly 40% of districts remain physically closed, in many cases against parents’ wishes. Wolf’s plan to pump more money in school districts while stifling charter schools and scholarship programs undermines education equity and exacerbates pandemic learning loss, harming the most vulnerable.

Wolf Ignores Overspending, Unemployment, and Pa’s Economic Woes.

Under Wolf, state spending has dramatically accelerated without improving Pennsylvanians’ standard of living. Total operating spending has increased by more than $24.5 billion (more than $1,900 per person), and two of the last six budget cycles have resulted in tax increases. Wolf has made no effort to control overspending during the current recession.
Instead, he continues to pile debt onto our children and grandchildren. Wolf has repeatedly overspent the approved budget—by $400 million in 2016–2017, $673 million in 2018–2019, and more than $1 billion in 2019–2020. Lawmakers should expect another hefty supplemental request in June to cover these hidden spending increases.
Pennsylvania’s Independent Fiscal Office projects it will take six years for employment to recover from the recession caused by COVID and Wolf's lockdown. Wolf’s spending proposals will do nothing to help families and small businesses recover.

“Wolf’s tax increase plans threaten Pennsylvania’s ability to recover from the pandemic,” said Benefield. “Thankfully, Wolf’s plans are likely dead on arrival in the Legislature. Lawmakers should send the governor a realistic budget that includes an agenda prioritizing kids and communities rather than bureaucracy. That agenda should address our structural budget deficit, give families education lifelines, help small businesses with regulatory and tax relief to stay afloat, and offer patients more options to access care.”

See Commonwealth Foundation’s report, The Race to Rebuild: How Pennsylvania Can Bounce Back After COVID-19, for more solutions that will help all Pennsylvanians flourish.

Commonwealth Foundation experts are available for comment. Please contact Michael Torres 850-619-2737 or [email protected] to schedule an interview.

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