Every year Pennsylvania’s Governor presents a “budget proposal” to the General Assembly. Governor Wolf’s budget addresses have typically included items that would be harmful to Pennsylvanians. For example, Wolf has requested a new extraction tax on natural gas producers every year. And every year, the General Assembly declines. They point to the impact fee that generates millions of dollars per year for the Treasury to justify their correct decision.
Governor Wolf decided that simply recycling his standard bad ideas just wouldn’t cut it this year. Instead, he added a request for a massive personal income-tax increase. How large of a tax increase does he want? The Governor is asking the General Assembly to increase the personal income tax rate by 46 percent. He notes that Pennsylvania has a “structural deficit” and that his tax increase would increase education funding. (See, he’s doing it for the kids.)
Governor Wolf didn’t mention that the structural deficit was caused by chronic overspending by the General Assembly. Nor did he say that he made it worse due to his unilateral decision to shut down vast swaths of the Pennsylvania economy last year. It must have surprised him to learn that shuttered businesses wouldn’t provide the same level of tax payments as open ones. As a side note on educational funding, Pennsylvania spends over $20,000 per year per pupil and ranks ninth in the country for per-pupil spending.
The Governor also included a call for increasing Pennsylvania’s minimum wage to $15 per hour. We doubt that he has considered how many of the businesses who survived his shutdown can now afford higher labor costs.
It’s doubtful that the Republican-controlled General Assembly will go along with either proposal. It’s hard to rule it out entirely, though. Remember that Pennsylvania now has one of the country’s highest gasoline taxes thanks to a Republican Governor, Tom Corbett, and Republicans in the General Assembly. However, we don’t anticipate either the House or the Senate going along with much of Governor Wolf’s budget proposal. We’ll keep you informed as the budget process moves forward over the next few months.
For a more in-depth examination of the Governor’s budget proposal, watch the video below. CAP CEO Leo Knepper sat down with Carl Marrara, Vice President of Government Affairs for the Pennsylvania Manufacturer’s Association, to discuss the Governor’s budget address and its impact on the Commonwealth’s economy.