A report from NFIB's Legislative Director in Pennsylvania
Governor Wolf’s 2020-21 Budget Proposal
Governor Wolf introduced his 2020-21 budget proposal last week, kicking off budget season in the state Capitol. Individual departments will have hearings over the next few weeks to present their plans for the coming year, after which the General Assembly must pass a final budget by June 30 to be signed by the Governor.
It was appropriate that the Governor’s budget address came the same week as Groundhog Day in Pennsylvania this year. Like Bill Murray in the movie by the same name, Pennsylvanians woke up to a repeat of years past, with proposals like raising the minimum wage to $15 and placing an additional tax on natural gas extraction. In fact, Governor Wolf’s budget proposal is filled with tax, spend, and borrow plans that will straddle the state with debt for years to come. This is the same recipe every one of Wolf’s proposed budgets has followed.
This year’s proposed budget totals $36 billion, a 6% increase over last year’s budget and a 4.2% increase over funding spent due to the administration’s overruns in this budget year. Although it contains no broad-based tax increases, spending adds up, and this new spending must be covered somehow. It again prioritizes education spending, as Wolf’s budgets have in the past. This year, it includes a proposed needs-based scholarship for state university students who agree to stay in Pennsylvania after graduating. But because it’s funded from the Pennsylvania Race Horse Development Trust Fund, an account created to save the dying horseracing industry, the scholarship proposal will likely face tough opposition. The Governor’s proposal also calls for reductions in charter school funding, which has also come under attack from school choice advocates.
The proposed national gas severance tax has again been tied by the Governor to a $4.5 bond issue for a state grant program called Restore PA, which is again being touted as a remedy for infrastructure, conservation, and other spending needs. New this year is a proposed $1 billion loan to rid all Pennsylvania schools of lead and asbestos.
Wolf again proposes to implement mandatory unitary combined reporting for corporate taxpayers in return for reducing corporate net income tax from 9.99% (one of the highest in the nation) to 5.99% over several years. There is considerable debate over the impact of this plan.
There seems to be no plan to address the main cost-drivers in the state’s budget, with the Department of Human Services’ budget increasing 9%, now comprising a full 40% of overall General Fund spending. State lawmakers passed a bill in 2018 to require work of able-bodied adults in order to receive medical assistance, which would help limit spending, but it was vetoed by the Governor.
The Governor’s plan to drastically raise the minimum wage will again be considered in the legislature. A compromise proposal, also opposed by NFIB, would have raised the minimum wage less, but failed in the state House. This year, he is pushing his original plan to increase the minimum wage immediately to $12 per hour and increase it gradually over the next few years until it reaches $15. If a $15 minimum wage will hurt your business, consider writing to your legislators to oppose the Governor’s plans.
On the plus side, Governor Wolf’s budget proposal has several workforce development proposals, an area where he has been able to reach agreement with lawmakers across the aisle in the past. Given that workforce is a key issue for small businesses, NFIB will be monitoring these proposals closely.
A final budget will be ironed out in the state Capitol over the next few months, and NFIB will be watching to see if lawmakers are able to tamp down on the tax and spend path the Governor is on, as they have largely been able to do in years past.
