Governor Wolf Relents on Budget Impasse

Date: March 25, 2016

Governor Wolf announced that he would not veto the latest
budget sent to him by the Pennsylvania General Assembly, which is good news for
small-business owners and the rest of Pennsylvania.  With this move, critical funding which had
been held up will be released to school districts, state prisons, Pennsylvania
universities, and critical agriculture programs such as Penn State Agriculture Extension.  Many of these programs were on the brink of
closing their doors.

This is positive news for small-business owners as the final
spending plan for fiscal year 2015-16 contains no new or increased taxes.  The budget includes a $200 million increase
for school districts, which is less than the Governor wanted, but a sizable
increase.  Overall, it spends about $700
million less than the Governor had sought in December.  In total, it still represents a $1 billion increase
over the previous year, or about 3 percent growth.

 Small-business owners
should not take this no-tax-increase budget for granted, however, as
discussions are already underway for the 2016-17 budget which is due in just 3
months.  The Governor is again calling
for over $2.7 billion in tax increases. 
The largest component of this increase is an 11 percent increase in the
personal income tax, which is how most small-business owners pay their business
taxes.  Also in the mix are new taxes on
property and casualty insurance premiums, an increase in taxes on community
banks, tobacco and other tobacco product taxes, and a 6.5 percent severance tax
on natural gas.

In allowing the budget bill to become law, the Governor also
indicated he would veto the fiscal code, which is a separate piece of
legislation that typically accompanies the budget bill and includes various
provisions to direct or limit spending found in the budget bill.  This is troubling as the legislation also
includes several provisions that are important to small business.

The fiscal code legislation included a provision that would
have stopped regulations that are being rammed through by the Department of
Environmental Protection (DEP) that would unjustifiably link regulations for
conventional oil and gas well drillers to rules being pushed for larger
Marcellus shale drillers.  The
conventional, or shallow well, drillers have been operating in Pennsylvania for
over 100 years and are almost entirely small businesses.

Another provision in the fiscal code legislation would
update timelines to require more involvement with the Legislature as DEP moves
forward with development of Pennsylvania’s plan under the EPA’s Clean Power
Plan edict.  DEP continues to work on
this plan, despite the fact that the U.S. Supreme Court stayed implementation
of the Clean Power Plan due to numerous lawsuits brought forward including one
by NFIB’s Small Business Legal Center.

Lastly, the fiscal code legislation includes a provision
that would bar PennDOT from using taxpayer dollars to advertise for certain
businesses through official government mailings.  This came to light last year when PennDOT
partnered with Goodyear to include coupons for tire service in all vehicle
registration renewal mailings.  This
outraged many independent auto shop owners who viewed the move as the
government picking winners and losers by advertising for specific businesses
over others.

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