The Governor unveiled his proposed $40.2 billion Fiscal Year 2021-22 General Fund Budget in February. He is asking for a $3.1 billion (8.2 percent) increase in state spending, an increase in the state personal income tax (PIT) rate from 3.07 percent to 4.49 percent (a 46.3 percent hike) and an immediate increase to $12 per-hour in the state’s minimum wage, with incremental increases until it plateaus at $15 per-hour.
Obviously, there is zero possibility of the Governor getting his wish list through the General Assembly intact this year as we continue to struggle in the wake of the pandemic and I’m rather sure he knows that.
Even so, this year is likely the last chance that he will have as Governor to put his sweeping agenda on the table for consideration. Next year is a gubernatorial election year and every state Representative seat and half of the seats in the Senate are up for grabs. Historically, the budget debate tends to be rather restrained during those years.
Essentially what the Governor put out in February was simply his opening bid in what will certainly be a lengthy negotiation process that hopefully will be completed by the end of the state’s current fiscal year on June 30.
I am hopefully that my bill to increase the minimum wage to $10 per-hour with annual cost-of-living adjustments will be a part of those negotiations. Let’s take a quick look at some of his other proposals.
The Governor claims his PIT increase would not hurt working families, and yet over a million small businesses in Pennsylvania would see a 46 percent tax increase because S corps and LLC’s are taxed at that rate. On top of that, our restaurant and hospitality industry is barely hanging on by a thread now and that tax increase would devestate many of those businesses.
One item that I vehemently disagree with the Governor on is his proposal to “repurpose” $199 million from the Race Horse Development Fund. That fund was set up as an agreement between the Legislature and the racing industry to bring casinos to Pennsylvania. We should keep our word to them. That fund is why we have horse racing at Presque Isle Downs.
I agree with the Governor that education is extremely important, but his $1.35 billion or 21.6 percent increase to the basic education appropriation is simply not possible — not without a massive tax increase regardless of how he spins it. In a surprise to me, the Governor cut the school safety and security line item by 61 percent. This will need more scrutiny.
And I saved my biggest surprise of this budget proposal for last. The Governor flat funded our nursing homes after the incredibly difficult year in that area, I find that unconscionable.
These are just a few of the issues before the Legislature as we consider the Governor’s spending plan. Currently, the Senate Appropriations Committee is holding a series of budget hearings with officials representing various state agencies. As a member of the Committee, I appreciate the opportunity to hear from – and question — cabinet secretaries and other Administration officials about state spending and various policies.
Highlights from the those hearings are now available on my webpage, www.senatorlaughlin.com, and my Facebook page, https://www.facebook.com/senatorlaughlin/. These sites provide local residents with a good way to keep up to date on state government news – including the state budget — and learn more about state services and agencies.
Contact: Matt Azeles mazeles@pasen.gov