Governor Wolf’s 2015-2016 PA Budget Announcement was offered today from the State Capitol in an address to the General Assembly. It was the most comprehensive budget announcement that has been made in years, proposing a balanced budget while at the same time promising an overall reduction in the personal tax burden by 13%.
If you’d like to read more about how we propose and pass a budget, read the Commonwealth’s docu-resource entitled “The Budget Process in Pennsylvania.” You can also view the most recent budget news, including the full text of the Governor’s budget proposal, through Pennsylvania’s Budget Office web page.
The major points of the 2015-2016 budget proposal are as follows:
- Invest in schools
- Cut corporate taxes to attract companies that pay middle class wages
- Cut property taxes paid by the average homeowner
- Reduce the overall tax burden on the average middle class family
Governor Wolf’s 2015 – 2016 PA Budget Announcement
The Governor expressed 3 major goals he hopes will define his tenure as Governor of Pennsylvania:
- Education: Every child must have access to a great education and teachers must have the tools they need to deliver that education. The goal is to put good teachers back to work in the classroom.
- Economy: We need to partner with the private sector to create jobs that pay middle class wages.
- Government that works: We need a government that is more efficient and less wasteful. We need a new approach that questions decisions previously made by government officials.
The Governor espoused the need for a great system of public education that teaches our kids the things they need to succeed in the future. Previous education cuts resulted in thousands of good teachers being furloughed and forced too many schools to cut art and music. To bring about a change in our education system, Governor Wolf is proposing to restore the $1 billion in cuts to education that occurred under Corbett’s administration, to increase investment in public schools at every grade level, expand access to early childhood education, and to increase funding to community colleges by $15 million.
Currently, the state contributes approximately 35% of the State’s public education cost, causing the remainder (and majority) of the cost to be pushed-off on local school districts. This results in an unfair tax burden on lower-income residents through local school and property taxes. The Governor’s budget proposes a 50% contribution to the state education system, which he believes will create a more fair distribution to schools and reduce the burden on residents currently paying to make up that difference.
On the Economy
The Governor touched on his plan to rebuild the PA economy. Specifically, he proposed we build on public/private investments to turn our state into a world-class transportation hub and bring manufacturing jobs back to our state. Also, that grant and loan programs will give priority to PA companies, and job training and apprenticeship programs would return to our local companies.
Governor Wolf called on the state legislature to raise the minimum wage to $10.10 per hour to ensure that families with full-time workers avoid living below the poverty line. He is also proposing a change to our corporate net income tax – currently set at 9.99%, and rife with loopholes that either drive companies out of the state or allow companies in the state to avoid paying any taxes at all.
The new budget proposes a cut to the corporate net income tax by 40% in its first year and 50% by 2018. That will take us from one of the highest corporate net tax states to the lowest in the country, while also ensuring that corporations pay their fair share. Additionally, the new budget proposes a phase out of the capital stock and franchise tax in PA.
In specific response to new healthcare needs, the budget propose an expansion to the Medicaid program by accepting funds made available under the Affordable Care Act, and by restoring funding at the county level for Health and Human Services for our most vulnerable residents.
On Government That Works
The Governor mentioned extreme waste in the bureaucracy of government citing several examples; among them state-run liquor stores and the state pension system. The proposed budget calls for privatization of state liquor stores and improvement of the State pension systems by removing management fees paid to Wall Street firms. The latter is expected to save as much as $1.3 billion over the next five years and as much as $10 billion in the unfunded liability.
How We Pay for the Changes
The Governor’s budget proposes several changes in current tax bases as follows:
- Creation of a 5% severance tax on extraction of natural gas, which is expected to generate more than $1 billion in revenue
- An increase to the personal income tax to 3.7%
- An increase of the sales tax to 6.6%
Despite the increase in specific taxes, the Governor’s budget proposal estimates the average PA resident will actually see a 13% reduction in the overall tax burden, including a 50% reduction in property taxes, putting more than $1,000 each year into the pockets of the average homeowner, potentially more for seniors living on fixed incomes.
Closing Remarks to the Budget Announcement
The Governor closed the announcement on the budget proposal by saying:
I want people to see PA as the best place to begin a career and succeed…We have the most resilient, innovative people anywhere. There is no reason we can’t have the best schools and the strongest middle-class. If we work together, there is nothing we can’t accomplish. We are the state that built America and we must be the people to rebuild Pennsylvania.
Comment On Governor Wolf’s 2015-2016 PA Budget Announcement
The budget must be finalized by the end of June, and will now move to the chambers of the Assembly for comment. But for now, it’s your turn to comment on the budget proposal.
If you’d like to add your comments we encourage you to leave a reply in the comment boxes at the end of this post.